Combinatorial Mitigation Actions: A Case Study on European Union’s Electricity Sector

Abstract

Appropriate Greenhouse Gas (GHGs) mitigation action has become a promising concern because of its feasibility and sustainability. This article reviews mitigation approaches taken by European Union's electricity sector to promote appropriate reduction in large developing country. From an applicable and integrated aspect, it examines Emission Trading Scheme (EU ETS), carbon tax, Clean Development Mechanism, Joint Implementation, green electricity market, carbon capture and sequestration, and energy efficiency. Then the successful experiences and lessons on this case are identified. The former include: allow diverse approaches coexistence, establish ancillary service system, and make carbon market serve for electricity market. The latter contain that price fluctuates inappropriately, obligation is distorted, no banking for allowances operated in the first period, and part of abatement approaches conflict mutually. Based on these results, this article proposes a framework of combinatorial mitigation actions which is characterized as integral, collaborative and appropriate reduction. It is composed of: i) construct intensity-based carbon market; ii) make diverse approaches collaborative; iii) build synergy between mitigation approaches and electricity market; iv) enhance carbon management and auditing system; and v) reform aging power plants with low carbon technologies. Although numerous challenges lie ahead, this framework has the potential to reduce GHGs from electricity industry extensively and sustainably.

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“…Although GHG emission intensity is key to carbon market exchange; however, mitigation burden also acts as an important role in policy choice. To present an intuitive version on the degree of mitigation burden at plant-specific level, in accordance with literature [36,37], we assume that mitigation cost is thoroughly transferred to final customers. The incremental electricity price is given by…”

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“…Power system keeps balance between loads and generations. The primary goal of power industry is to supply electricity to meet the demand for national economy development [22]. Elmaghraby [23] and Song et al [24] also hold that a successful wholesale market design has a feature of all loads being dispatched.…”

“…Eq. 26 means that generator's supply function may overcome speculation through physical withholding or economic withholding [17,22] hence holds the intrinsic requirement of economic dispatch, in this way brings about indirect CO 2 saving effect. Similar to carbon market auction, all individual supply functions reach a Nash equilibrium in wholesale market.…”

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“…(i) All load demands are satisfied. The primary goal of power industry is to supply electric energy to meet the requirement of national economy development [4,9]. Elmaghraby [32] and Song et al [33] also suggest that a critical component to a successful market design in power industry is the way in which load demand is satisfied.…”

“…In this aspect, power industry not only needs regulated electricity market, but also needs regulated carbon market. More concretely, it requires the two markets to be regulated coordinately and work harmonized [9][10].…”