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GTAP Resource #1702

"Innovative energy technologies and climate policy in Germany "
by Schumacher, Katja and Ronald Sands

Germany is one of the largest carbon emitters in the European Union. Substantial mitigation possibilities in the electricity sector exist in the form of reducing demand through more efficient end-use technologies, or on the generation side through advanced generating technologies or substitution of less carbon-intensive fuels. Various environmental and energy policy efforts are undertaken to continue bringing down emissions and increasing the share of climate friendly technologies in Germany. At the same time, Germany is facing a major renewal and restructuring process. Within the next two decades up to 50% of the current electricity generation capacity is going to retire because of end of plant lifetime and the nuclear phase-out pact from 1998. This may provide a window of opportunity for new and innovative technologies to play an even more substantial role in the future electricity mix.

Those new technologies and their role within a future German electricity mix are the focus of the current paper. We introduce advanced electricity technologies such as integrated gasification combined cycle (IGCC), natural gas combined cycle (NGCC), wind power, and CO2 capture and storage into a computable general equilibrium model for Germany, the Second Generation Model (SGM), and analyze the costs of mitigating carbon emissions with and without those technologies under different policy scenarios. SGM-Germany is a dynamic recursive, multi-sector general equilibrium model based on national economic input-output data, on national energy balances and on national engineering cost information for each electric generating technology.

We develop a baseline simulation for estimating the costs to Germany of complying with the Kyoto target and the national emissions reductions target. Conducting different policies scenarios, we investigate the effect of introducing a carbon price either through emissions trading or through a carbon tax. We are interested in analyzing at what carbon price level those new technologies, both without and with CO2 capture and storage, become economically competitive. In particular, we determine the break-even carbon price that would indicate the crossover point to carbon capture and storage for either IGCC or NGCC technologies. In addition, we focus on the role of renewable energy and conduct the same break-even analysis for wind technologies.

Resource Details (Export Citation) GTAP Keywords
Category: 2005 Conference Paper
Status: Published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Created: Schumacher, K. (4/28/2005)
Updated: Schumacher, K. (4/28/2005)
Visits: 1,769
No keywords have been specified.

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