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A utility-eye view of the CO2 compliance-decision process in the European power-sector

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  • Söderholm, Patrik
  • Strömberg, Lars
Abstract
The purpose of this paper is to provide a utility eye-view of the European power-sector's CO2-compliance decision process under a tradable emissions scheme. The cost analysis indicates that, in the medium term, many utilities are likely to consider options based on traditional power technologies such as converting existing coal-fired capacity to burn gas, extending the lives of nuclear capacity, and replacing old coal-fired plants with more efficient gas- or even coal-fired units. The long-term economic potential of future options is highly uncertain, and utilities are likely to respond to this by maintaining flexibility in fuel choices and avoid large investments that lock them into a specific compliance method before more efficient and cleaner technologies have crystallized. Given the multitude of possible CO2-mitigation options, there is a strong case for emissions trading and for refraining from policies that build on mandatory fuel-requirements, higher rates of capital stock turnover and technology standards.

Suggested Citation

  • Söderholm, Patrik & Strömberg, Lars, 2003. "A utility-eye view of the CO2 compliance-decision process in the European power-sector," Applied Energy, Elsevier, vol. 75(3-4), pages 183-192, July.
    • Handle: RePEc:eee:appene:v:75:y:2003:i:3-4:p:183-192
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    References listed on IDEAS

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    Cited by:

    1. Rong, Aiying & Lahdelma, Risto, 2007. "CO2 emissions trading planning in combined heat and power production via multi-period stochastic optimization," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1874-1895, February.
    2. Pettersson, Fredrik & Söderholm, Patrik, 2009. "The diffusion of renewable electricity in the presence of climate policy and technology learning: The case of Sweden," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(8), pages 2031-2040, October.
    3. Lin, Boqiang & Chen, Yufang, 2019. "Impacts of policies on innovation in wind power technologies in China," Applied Energy, Elsevier, vol. 247(C), pages 682-691.
    4. Berglund, Christer & Soderholm, Patrik, 2006. "Modeling technical change in energy system analysis: analyzing the introduction of learning-by-doing in bottom-up energy models," Energy Policy, Elsevier, vol. 34(12), pages 1344-1356, August.
    5. Lindman, Åsa & Söderholm, Patrik, 2016. "Wind energy and green economy in Europe: Measuring policy-induced innovation using patent data," Applied Energy, Elsevier, vol. 179(C), pages 1351-1359.

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