Decarbonization of Europe’s Energy Supply and Energy-Intensive Industry: Development of Technology-Driven Models for Policy Support

Climate change demands a rapid reduction of CO2 emissions. This poses an immense technological challenge, which may lead to the deployment of emerging technologies such as Carbon Capture and Storage (CCS) or Utilization (CCU). To guide cost-efficient decarbonization, the European Union (EU) instated the EU Emissions Trading System (ETS). ETS obliges large CO2 producers to submit an Emission Allowance per ton of CO2 emitted. This research proposal wants to fundamentally investigate technological options, costs, and barriers for CO2 emission reductions in the ETS sector.

There is an urgent need for an integrated optimization model to calculate the cost-efficient industrial CO2 abatement options in the long term. Such a model must explicitly represent alternative policy options in relation to these new technologies. Current research and literature fail at fulfilling this need: existing models are insufficiently applicable due to their strong simplifications of technology and/or policy. The proposed optimization model will be complemented by equilibrium models to investigate possible deviations from optimal scenarios due to market design and incentive structures. Equilibrium models hereby show the important perspective of interactions between actors which is not covered by the optimization model. The final constituent of this research proposal serves to analyze and answer recent evolutions and policy questions building upon these two types of models.