Relative role of electricity and gas in a carbon-neutral future: insights from an energy system optimization model

Abstract

An effective decision regarding the future energy mix must be based on multi-sectorial optimization that considers the key energy supply, carrier, conversion and storage options in an endogenous way, with high temporal resolution where positive and negative emissions are both internalized. The existing literature fails to meet all these conditions, leaving several open questions. To address the relative role of electricity and non-fossil gas in a cost-effective decarbonized energy system, we develop an integrated model including optimization of dispatch and investment for the whole energy sector, meeting all the necessary conditions. We apply this model to the French energy system for a wide range of social cost of carbon scenarios in 2050.
Unlike most energy scenarios, which are nearly fully electrified, we find that renewable gas provides at least 22% of the energy supply in a carbon neutral energy system, where this carbon-neutrality can be achieved with a social cost of carbon of €200/tCO2. In such an energy system, renewables become the main component of the primary energy supply (up to 80%). A fully electrified heat sector and a highly gas-dependent transport sector fueled with renewable gas help to achieve carbon-neutrality at lowest cost.

Keywords: Energy systems modelling; large-scale renewable integration; sector-coupling; social cost of carbon; renewable gas; nuclear energy; variable renewables; negative emissions.

JEL Classification: C61; H23; O21; Q21; Q41; Q47; Q48