• Energy Research

In a climate constrained future, hybrid energy-economy model coupling gives additional insight into interregional competition, trade, industrial delocalisation and overall macroeconomic consequences of decarbonising the energy system. Decarbonising the energy system is critical in mitigating climate change. This chapter summarises modelling methodologies developed in the ETSAP community to assess economic impacts of decarbonising energy systems at a national level. The preceding chapter focuses on a global perspective. The modelling studies outlined here show that burden sharing rules and national revenue recycling schemes for carbon tax are critical for the long-term viability of economic growth and equitable engagement on combating climate change. Traditional computable general equilibrium models and energy systems models solved in isolation can misrepresent the long run carbon cost and underestimate the demand response caused by technological paradigm shifts in a decarbonised energy system. The approaches outlined within have guided the first evidence based decarbonisation legislation and continue to provide additional insights as increased sectoral disaggregation in hybrid modelling approaches is achieved.

Renewable energy promotion has been one of the key driving forces of the world’s climate change mitigation strategy. Policymakers have argued that the transition towards a low-carbon energy system has sound economic and social reasoning, since generates economic growth and employment. This central premise has not, however, been consensual in literature, which requires additional research. In this context, the goal of this paper is to analyze and provide empirical evidence of the relationship between renewable energy deployment and job creation, by employing econometric methods from panel data analysis. The research is focused on European Union’s 28 member states, analyzing the relationship between historical values of renewable power generation installed capacity and employment over the period 2000–2016. Results suggest a positive relationship between these two variables, showing an increase of 0.48% in employment for each 1% increase in renewable power generation capacity. The outcomes of the present analysis enable better understanding of the social context of renewables, providing relevant insights that can constitute an auxiliary instrument to support decision-making. Keywords: Econometric analysis, Employment, Renewables, European union, Panel data regressions

Air pollution and climate change are closely interlinked, once both share common emission sources, which mainly arise from fuel combustion and industrial processes. Climate mitigation actions bring co-benefits on air quality and human health. However, specific solutions can provide negative trade-offs for one side. The Portuguese Carbon Neutrality Roadmap was developed to assess conceivable cost-effective pathways to achieve zero net carbon emissions by 2050. Assessing its impacts, on air pollutant emissions, is the main focus of the present work. The bottom-up linear optimization energy system the integrated MARKAL-EFOM system (TIMES) model was selected as a modeling tool for the decarbonization scenarios assessment. The estimation of air pollutant emissions was performed exogenously to the TIMES model. Results show that reaching net zero greenhouse gas (GHG) emissions is possible, and technologically feasible, in Portugal, by 2050. The crucial and most cost-effective vector for decarbonizing the national economy is the end-use energy consumption electrification, renewable based, across all end-use sectors. Decarbonization efforts were found to have strong co-benefits for reducing air pollutant emissions in Portugal. Transport and power generation are the sectors with the greatest potential to reduce GHG emissions, providing likewise the most significant reductions of air pollutant emissions. Despite the overall positive effects, there are antagonistic effects, such as the use of biomass, mainly in industry and residential sectors, which translates into increases in particulate matter emissions. This is relevant for medium term projections, since results show that, by 2030, PM2.5 emissions are unlikely to meet the emission reduction commitments set at the European level, if no additional control measures are considered.

Abstract The deep decarbonisation of the power sector coupled with electrification of end-use sectors will be crucial towards a carbon neutral economy, as required to achieve the Paris Agreement's goal. Several studies have highlighted the relevance of electrification under deep decarbonisation. However, previous work does not explore what would be the major shifts towards electrification, i.e., in what economic activities it will likely occur and when up to 2050 considering gradually stricter GHG emissions constraints. This is of upmost relevance since relatively small variations in emission caps may trigger substantial modifications in specific components of the energy system, namely the shift for the electrification of a particular energy end-use, with impacts on the power sector’s portfolio. In this paper, we analyse the extension of the electrification of the energy system as a cost-effective strategy for deep decarbonisation. We set a large number of increasingly stringent mitigation caps to assess: (i) the degree of electrification of different energy end-uses across all economic activities, (ii) the impact in power sector portfolio and costs and (iii) investment needs. The novelty of this paper relies on the anticipation of electrification of activities traditionally supplied by non-electricity energy carriers, by exploring when and how such transformation may occur in the future, and how much it would cost. We assess the case of Portugal till 2050 by using the TIMES_PT model to generate 50 increasingly stricter decarbonisation scenarios. In the long term, incremental changes (+1%) in more aggressive decarbonisation targets (beyond −70% reduction) induce substantial increase in the share of electrification growth rates. Electric private vehicles, electricity-based steam and heat production in ceramic industrial sector and heat pumps in buildings are the most cost-effective electric technologies. We found that a decarbonisation up to near −80% of 1990′s levels of the Portuguese energy system does not have a significant impact on the power sector unit costs, and does not surpass historic values for some years. However, it should be noted that incremental changes (+1%) in more aggressive decarbonisation targets may increase sharply electricity costs in 2050 (+9%). Thus, focusing in only few scenarios may narrow the role of electrification (or other mitigation options) and its associated costs for deep decarbonisation. This paper allows researchers, planners and decision makers to enhance awareness regarding the relevance and cost-effectiveness of electrification under decarbonisation, namely its feasibility and affordability, providing fruitful insights.

Abstract This paper quantifies the contribution of Portuguese energy policies for total and marginal abatement costs (MAC) for CO2 emissions for 2020. The TIMES_PT optimisation model was used to derive MAC curves from a set of policy scenarios including one or more of the following policies: ban on nuclear power; ban on new coal power plants without carbon sequestration and storage; incentives to natural gas power plants; and a cap on biomass use. The different MAC shows the policies’ effects in the potential for CO2 abatement. In 2020, in the most encompassing policy scenario, with all current and planned policies, is possible to abate only up to +35% of 1990 emissions at a cost below 23 € t/CO2. In the more flexible policy scenarios, it is possible to abate up to −10% of 1990 emissions below the same cost. The total energy system costs are 10–13% higher if all policies are implemented—76 to 101 B€—roughly the equivalent to 2.01–2.65% of the 2005 GDP. Thus, from a CO2 emission mitigation perspective, the existing policies introduce significant inefficiencies, possibly related to other policy goals. The ban on nuclear power is the instrument that has the most significant effect in MAC.

Abstract This paper proposes a new methodological framework to assess in a holistic approach the sustainability of energy scenarios. It combines endogenous modelling outcomes, from the hybrid technological-economic modelling platform HYBTEP, with external indicators to evaluate the environmental, economic and social performance of distinct power sector scenarios. Results for Portugal show that a shift to mature and cost-effective renewable power technologies conducts to positive impacts at environmental, economic (GDP) and social spheres (employment), while costly emergent technologies are counterproductive. This tool and its outcomes can provide valuable insights for the design of technology-oriented policies that allow fostering sustainability targets.

In a climate constrained future, hybrid energy-economy model coupling gives additional insight into interregional competition, trade, industrial delocalisation and overall macroeconomic consequences of decarbonising the energy system. Decarbonising the energy system is critical in mitigating climate change. This chapter summarises modelling methodologies developed in the ETSAP community to assess economic impacts of decarbonising energy systems at a global level. The next chapter of this book focuses on a national perspective. The range of economic impacts is regionally dependent upon the stage of economic development, the level of industrialisation, energy intensity of exports, and competition effects due to rates of relative decarbonisation. Developed nation's decarbonisation targets are estimated to result in a manageable GDP loss in the region of 2 % by 2050. Energy intensive export driven developing countries such as China and India, and fossil fuel exporting nations can expect significantly higher GDP loss of up to 5 % GDP per year by mid-century.