EURO 2024 Copenhagen
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2206. Bet on horses, not unicorns – The impact of technology optimism on the decarbonization of the European energy system

Invited abstract in session WA-9: Decarbonized energy systems & markets, stream Energy Markets.

Wednesday, 8:30-10:00
Room: 10 (building: 116)

Authors (first author is the speaker)

1. Jacob Mannhardt
ETH Zurich
2. Giovanni Sansavini
ETH

Abstract

The European and global energy systems need a drastic shift toward low-carbon technologies to achieve deep decarbonization across all sectors. Technological innovation is crucial for facilitating an economically and ecologically viable transition. However, a widespread concern exists that overly optimistic anticipation of emerging low-carbon technologies, i.e., “unicorn technologies”, may delay effective emission reductions today. In this study, we quantify the impact of technology optimism emerging from various forecasting errors, e.g., infinitely fast capacity expansion, on the feasibility and cost of the European energy transition. To this end, we describe the decision-making process as a myopic planner who plans their investment and operation based on a foresight horizon with an overly optimistic technology forecast. Using the linear cost-minimization framework ZEN-garden, we optimize the transition of the sector-coupled European energy system, including the electricity, residential heating, transport, and industry sectors. We investigate the dependency of the energy transition on such “unicorn technologies” and quantify the change in the investment strategy when the decision-maker plans with erroneous forecasts. We find that the overly optimistic forecast leads to a delayed investment in mature low-carbon technologies and, therefore, increased emissions in early years because the decision-maker wrongfully assumes to be able to remove or abate them in the future.

Keywords

Status: accepted

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