Analysing the Impact of a Renewable Hydrogen Quota on the European Electricity and Natural Gas Markets

David Schlund () and Max Schönfisch
Additional contact information
David Schlund: Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)
Max Schönfisch: Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

No 2021-3, EWI Working Papers from Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

Abstract: We perform a model-based analysis of the impact of a renewable hydrogen quota on EU gas and electricity markets. By comparing a scenario in which a renewable hydrogen quota with tradable certificates is imposed on final gas consumption in the sectors of the economy outside the EU ETS with a reference scenario without a quota, we assess price, quantity and welfare effects. Our model simulations show that the hydrogen quota leads to a significant expansion in renewable energy sources (RES) capacity to produce renewable hydrogen and synthetic methane with Power-to-Gas (PtG) technologies. On the electricity market, the price increases substantially, rising by up to 12%—mostly due to increasing emission allowance prices—leading to a higher surplus for power producers. The quota’s primary beneficiaries in the power sector are renewable energy producers. On the gas market, the quota leads to a small decrease in prices (by a maximum of -3%) and gas producer surpluses. Quota obliged gas consumers, mainly households, commercial and small industrial consumers, carry the largest part of the burden associated with the obligation. Overall, the quota leads to the redistribution of welfare from these consumers to RES and PtG producers and a significant decline in total welfare.

Keywords: Hydrogen; power-to-gas; quota obligation; renewable energy support (search for similar items in EconPapers)
JEL-codes: C61 Q41 Q42 Q48 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2021-03-11
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.ewi.uni-koeln.de/cms/wp-content/upload ... lund_Schoenfisch.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:ewikln:2021_003

Access Statistics for this paper

More papers in EWI Working Papers from Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI) Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Williams ().