It is important to identify the risks of different policy approaches when it comes to incentivising investment in the power sector. The debate is often polarising, and leads to irreconcilable opinions on gas prices, the potential impact of shale gas extraction, technology costs and deployment rates, as well as levels of electrification in other sectors. This is the wrong debate and will lead to the wrong outcome if it is resolved by governments picking a single view of the future and optimising policy around this.This requires a new and more neutral approach to looking into the economics underpinning short term versus long term choices and the associated risks.
From this perspective, E3G commissioned Redpoint Energy/Baringa Partners to carry out an analysis based on their agent-based investment decision model. The objective of the analysis was to provide a more robust understanding of the costs of different decarbonisation pathways under a number of major uncertainties, such as level of CCS deployment and gas prices within the 2030 timeframe in major European countries, including UK, Germany and Poland.
In October 2012 E3G published a report on risk managing power sector decarbonisation in the UK, which can be found here. The case studies for Poland and Germany are attached. All E3G's work on risk managing power sector decarbonisation can be found in a showcase.