CO2 quota attribution effects on the European electricity system comprised of self-centred actors

Abstract

Abstract We propose to rethink collaboration between the European countries to robustly materialise the electricity system of the near future. The European countries all agree that carbon dioxide ( CO 2 ) emissions need to be decreased. The dividing question is who must contribute by how much. Three aspects of collaboration are investigated and set into relation to one another. First, the individual countries can be attributed a CO 2 emission quota in different ways. Second, they can collaborate by relaxing their need for autonomy, e.g. becoming less self-sufficient by placing generation capacity in countries with better prerequisites. Third, collaboration can also be strengthened by extending the cross-border transmission grid. We investigate a near future European electricity system where the primary source of emission-neutral electricity is coming from different variable renewable energy sources, but which also includes current and planned nuclear, coal, lignite and gas-fuelled power plants. We show that different CO 2 emission quota attributions have an immense effect on the required local CO 2 prices. Furthermore, we investigate how this influences the technology mix in the individual countries. We conclude that it is significantly easier for certain countries to decarbonise their electricity production than for others. The difficulty in the specific country depends strongly on how emission allowances are allocated in Europe. Deep collaboration between the countries leads both to a lowered total system cost and, perhaps even more importantly, to CO 2 emissions and required CO 2 prices that are much more equal between the European partners.