An estimate of the costs of reducing carbon emissions

In this project, Ea Energy Analyses aided DØRS (the secretariat for the Danish Economic Councils) in investigating how the government’s 70% goal can be reached in the most cost-effective way. As economic tools, the effect of a tax on CO₂, subsidies for renewable energy, and consumption taxes were analysed.

In the future energy supply, electricity and heat will be closely connected. This is partially due to the fact that a rising amount of the district heating supply will be covered by electricity for heating through heat pumps and geothermal plants, and partially due to the operation of the CHP plants, where both electricity and heat are produced.

Related to the investigation, DØRS started work on expanding the REFORM model, which is a general, static equilibrium model developed by the DREAM modelling team. Ea Energy Analyses helped assess how costs of reducing carbon emissions can be included in the REFORM model. This included a discussion of how modelling results for the electricity and heat sectors can be transferred in a meaningful way from the technical model Balmorel, where electricity and district heating are modelled in an integrated system, to the REFORM model, where the electricity and heat supply is divided.

The project ran from November 2019 to August 2020.