Since the Industrial Revolution, we have been relying on fossil fuel sources, and exploiting every reserve found, impacting the environment in a negative way. International agreements, such as the Kyoto Protocol or the Paris Accord, focus on greenhouse gases mitigation and climate change reduction. This study aims to find the most cost-effective energy portfolios for France and Germany, while simultaneously considering the Paris Accord greenhouse gas emissions targets and individual countries’ production capacities. In order to do so, a least cost optimization model is used to attempt to capture the energy supply and demand portfolios for the two countries, including possible exchanges with the world. Additionally, the model stimulates energy supply and demands of different sectors including transportation, industry, agriculture and residential. The model explicitly considers production of energy type, consumption of energy type by sector, imports and exports by energy type, and runs until 2050.The model also includes a supply, demand and GHG constraint. The simulated model helps us determine a cost-effective energy portfolio that also meets national greenhouse gas emission target over time. The analysis generates estimates of implicit prices of carbon under various technology, economic and regulatory scenarios.
Results/Conclusions
The two study countries, France and Germany, will have very different least-cost energy portfolios following the Paris Accord. In fact, Germany had already set up the 2010 Energiewende program and had been focusing on renewable energies and moving away from nuclear. However, while the country still heavily relies on coal, especially lignite, our model calls for Germany to step away from fossil fuels, and focus on renewables, and eventually import electricity from other nations if the cost of production is higher than the cost of import. In the case of France, even though there are talks for a nuclear phase out, this energy sector will continue to be dominant for a few more years after which renewable energy sources will start to grow eventually. France also would import energy from its neighbors when production costs are too high. In terms of sectors of consumption, we expect all sectors except transportation to transition smoothly from conventional to renewable sources, since transportation is so reliant on oil and there are no alternatives that could fully fuel the demand. With the future increase in the costs of energy production in all sectors and both countries, the implicit prices of carbon are likely to increase over time as well.