The Economics and Policy of Decarbonization Carriers

This book examines three scenarios of decarbonization to assess the efficiency and effectiveness of allocating carbon pollution-free sources across sectors (uses). For this purpose and looking at the EU target, the LSCOA (levelized social cost of abatement), the abatement speed (AS) and the cost of the avoided carbon cumulation (COACC) are estimated. The main conclusion is that accelerating the use of pollution-free sources in contestable end uses before the electricity supply is fully decarbonized is inefficient and ineffective compared to prioritizing their allocation to power generation, whether through renewables or carbon capture utilization and storage. Therefore, policies should focus first on decarbonizing the electricity supply. Only once this has largely been achieved, a deep penetration of pollution-free sources into contestable end uses (both “less difficult to abate and “hard to abate”) should be promoted. Following this sequence leads to lower abatement costs and reduced carbon accumulation, minimizing the cost of avoided carbon accumulation in the atmosphere. Otherwise, indiscriminate acceleration risks slowing down the overall energy transition and undermining climate objectives (including limiting global warming). Regarding the specific decarbonization pathways, direct electrification emerges as the preferable carrier, whereas hydrogen is justified as feedstock for e-fuels supply, including imports from Middle East and North Africa countries.