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Innovative Energy Technologies and Climate Policy in Germany

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  • Katja Schumacher
  • Ronald D. Sands

Abstract

Due to the size and structure of its economy, Germany is one of the largest carbon emitters in the European Union. However, Germany is facing a major renewal and restructuring process in electricity generation. Within the next two decades, up to 50% of current electricity generation capacity may retire because of end-of-plant lifetime and the nuclear phase-out pact of 1998. Substantial opportunities therefore exist for deployment of advanced electricity generating technologies in both a projected baseline and in alternative carbon policy scenarios. We simulate the potential role of coal integrated gasification combined cycle (IGCC), natural gas combined cycle (NGCC), carbon dioxide capture and storage (CCS), and wind power within a computable general equilibrium of Germany from the present through 2050. These advanced technologies and their role within a future German electricity system are the focus of this paper. We model the response of greenhouse gas emissions in Germany to various technology and carbon policy assumptions over the next few decades. In our baseline scenario, all of the advanced technologies except CCS provide substantial contributions to electricity generation. We also calculate the carbon price where each fossil technology, combined with CCS, becomes competitive. Constant carbon price experiments are used to characterize the model response to a carbon policy. This provides an estimate of the cost of meeting an emissions target, and the share of emissions reductions available from the electricity generation sector.

Suggested Citation

  • Katja Schumacher & Ronald D. Sands, 2005. "Innovative Energy Technologies and Climate Policy in Germany," Discussion Papers of DIW Berlin 509, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp509
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    References listed on IDEAS

    as
    1. Sands, Ronald D., 2004. "Dynamics of carbon abatement in the Second Generation Model," Energy Economics, Elsevier, vol. 26(4), pages 721-738, July.
    2. Christopher N. MacCracken & James A. Edmonds & Son H. Kim & Ronald D. Sands, 1999. "The Economics of the Kyoto Protocol," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 25-71.
    3. McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
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    Cited by:

    1. Praetorius, Barbara & Schumacher, Katja, 2009. "Greenhouse gas mitigation in a carbon constrained world: The role of carbon capture and storage," Energy Policy, Elsevier, vol. 37(12), pages 5081-5093, December.
    2. Dai, Hancheng & Silva Herran, Diego & Fujimori, Shinichiro & Masui, Toshihiko, 2016. "Key factors affecting long-term penetration of global onshore wind energy integrating top-down and bottom-up approaches," Renewable Energy, Elsevier, vol. 85(C), pages 19-30.
    3. Cai, Yiyong & Arora, Vipin, 2015. "Disaggregating electricity generation technologies in CGE models: A revised technology bundle approach with an application to the U.S. Clean Power Plan," Applied Energy, Elsevier, vol. 154(C), pages 543-555.
    4. Melchior, Tobias & Madlener, Reinhard, 2012. "Economic evaluation of IGCC plants with hot gas cleaning," Applied Energy, Elsevier, vol. 97(C), pages 170-184.
    5. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    6. Tabatabaei, Sharareh Majdzadeh & Hadian, Ebrahim & Marzban, Hossein & Zibaei, Mansour, 2017. "Economic, welfare and environmental impact of feed-in tariff policy: A case study in Iran," Energy Policy, Elsevier, vol. 102(C), pages 164-169.
    7. Fujimori, Shinichiro & Masui, Toshihiko & Matsuoka, Yuzuru, 2015. "Gains from emission trading under multiple stabilization targets and technological constraints," Energy Economics, Elsevier, vol. 48(C), pages 306-315.
    8. Gnanapragasam, Nirmal V. & Reddy, Bale V. & Rosen, Marc A., 2009. "Optimum conditions for a natural gas combined cycle power generation system based on available oxygen when using biomass as supplementary fuel," Energy, Elsevier, vol. 34(6), pages 816-826.
    9. Kraeusel, Jonas & Möst, Dominik, 2012. "Carbon Capture and Storage on its way to large-scale deployment: Social acceptance and willingness to pay in Germany," Energy Policy, Elsevier, vol. 49(C), pages 642-651.
    10. Vallentin, Daniel, 2007. "Inducing the international diffusion of carbon capture and storage technologies in the power sector," Wuppertal Papers 162, Wuppertal Institute for Climate, Environment and Energy.
    11. Schumacher, Katja & Sands, Ronald D., 2007. "Where are the industrial technologies in energy-economy models? An innovative CGE approach for steel production in Germany," Energy Economics, Elsevier, vol. 29(4), pages 799-825, July.
    12. Evans, Annette & Strezov, Vladimir & Evans, Tim J., 2009. "Assessment of sustainability indicators for renewable energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(5), pages 1082-1088, June.
    13. Liu, Chung-Ming & Liou, Ming-Lone & Yeh, Shin-Cheng & Shang, Neng-Chou, 2009. "Target-aimed versus wishful-thinking in designing efficient GHG reduction strategies for a metropolitan city: Taipei," Energy Policy, Elsevier, vol. 37(2), pages 400-406, February.
    14. Ron SANDS & Katja SCHUMACHER, "undated". "Decomposition Analysis and Climate Policy in a General Equilibrium Model of Germany," EcoMod2008 23800124, EcoMod.
    15. Zhang, Guoqiang & Yang, Yongping & Jin, Hongguang & Xu, Gang & Zhang, Kai, 2013. "Proposed combined-cycle power system based on oxygen-blown coal partial gasification," Applied Energy, Elsevier, vol. 102(C), pages 735-745.
    16. Fujimori, Shinichiro & Dai, Hancheng & Masui, Toshihiko & Matsuoka, Yuzuru, 2016. "Global energy model hindcasting," Energy, Elsevier, vol. 114(C), pages 293-301.
    17. Thure Traber & Thure Traber & Claudia Kemfert, "undated". "Future European Electricity Technologies under Emission Trading: The Potential Role of Fossil Fuels and Carbon Capture and Sequestration (CCS)," Energy and Environmental Modeling 2007 24000060, EcoMod.
    18. Janne Kettunen, Derek W. Bunn and William Blyth & Derek W. Bunn & William Blyth, 2011. "Investment Propensities under Carbon Policy Uncertainty," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 77-118.
    19. Bruninx, Kenneth & Madzharov, Darin & Delarue, Erik & D'haeseleer, William, 2013. "Impact of the German nuclear phase-out on Europe's electricity generation—A comprehensive study," Energy Policy, Elsevier, vol. 60(C), pages 251-261.
    20. Isabel Teichmann, 2015. "An Economic Assessment of Soil Carbon Sequestration with Biochar in Germany," Discussion Papers of DIW Berlin 1476, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Climate policy; Energy technology; General equilibrium modelling; CO2 capture and storage;

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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