Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector.


The EU Green Deal calls for 2030 emission reductions of 50-55% vs. 1990. Achieving these reductions requires a substantial tightening of the EU emissions trading system (EU-ETS).
This paper explores how the power sector would have to change in reaction to a tighter EU ETS target, and analyses the technological and economic implications. To cover the major ETS sectors, we combine a detailed power sector model with a marginal-abatement cost curve representation of industry emission abatement.
We find that tightening the target would speed up the transformation by 3-15 years for different parts of the electricity system, with renewables contributing two-thirds of the electricity in 2030, EU-wide coal use almost completely phased-out by 2035 instead of 2050, and zero electricity generation emissions reached by 2050. Carbon prices within the EU ETS would more than double to 60€/tCO2 in 2030, reducing cumulated power sector emissions from 2020-2055 by 45% compared to a scenario with the current target. This transformation would come at limited costs: total discounted power system costs would only increase by 5%. We test our findings against a number of sensitivities: increased electricity demand, no transmission expansion beyond 2020 levels, and unavailability of CCS or nuclear.

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