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This is the accepted version of the article:
Estibalitz Ruiz Irusta and Ivan Pavić, “Effect of the European Union Emission Trading System on Promoting Industrial Electrification,” in 2024 IEEE PES Innovative Smart Grid Technologies Europe (ISGT Europe).
DOI: https://doi.org/10.1109/ISGTEUROPE62998.2024.10863304
The final published version is available on IEEE Xplore:
https://ieeexplore.ieee.org/document/10863304
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Abstract :
[en] The European Union designed the Emission Trading System (EU-ETS) aiming to achieve climate neutrality by 2050. Theoretically, this mechanism should incentivize consumers to emit less CO2 and invest in green technologies. While there is evidence that it helped reduce CO2 emissions, it is unclear whether it helped promote green investments. This paper answers such a question based on a large European industry. We demonstrate that historical EU-ETS prices have not been incentive enough for this industry to transition from gas to electricity to produce steam. Our calculations show that companies would have to pay at least 30,57% more for operational costs when using only electricity for heat generation compared to natural gas, even with the addition of EU-ETS prices. We argue that using both conventional and green technologies might be the way to proceed since such a hybrid solution can reduce energy costs by up to 1,68% and CO2 emissions by 16,23%. These savings could pay back the electric boiler's investment until the gas boiler's lifetime is terminated. Nevertheless, even with the addition of the EU-ETS cost, the operational cost of the electric boiler in 2030 is expected to be higher than gas unless electricity spot prices are controlled.
Funding text :
The authors gratefully acknowledge the financial support of Creos Luxembourg S.A. under the research project FlexBeAn; the Luxembourg National Research Fund (FNR) with grant reference 17742284, and PayPal, PEARL grant reference 13342933/Gilbert Fridgen.
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