Frontier evaluates climate policy options for the Dutch power sector

The Ministry of Economic Affairs of the Netherlands has published two Frontier (Europe) reports (report, appendum) on scenarios for coal-fired power plants. The Netherlands has committed itself to reaching a low-carbon energy system that is reliable, affordable and safe by 2050. As part of its wider energy strategy, two of seven remaining coal-fired power stations will be closed by mid-2017. In November 2015, the Dutch Parliament accepted a motion to phase out coal-fired generation and has asked the government to develop a plan to achieve additional emission abatement in the power sector.

Frontier was asked by the Ministry to model several policy scenarios addressing the potential phase-out of coal-fired power generation and other measures to reduce carbon emissions, such as the introduction of a price floor on carbon certificates in Central Western Europe.

Frontier’s analysis found that:

• A phase-out of all remaining coal-fired power stations would yield the most significant reduction of carbon emissions in the Netherlands, but comes at the highest cost and most of the additional abatement achieved in the Dutch power sector would be offset by higher emissions in neighbouring countries such as Germany.
• From a European perspective, the introduction of a Carbon Price Floor (as currently discussed in France) results in high emission savings, but also increases costs to final consumers and emissions in countries not subject to the Carbon Price Floor.
• Additional carbon abatement measures at coal-fired plants, such as co-firing of biomass and Carbon Capture and Storage (CCS), come with the lowest cost and least impact on the power market. However, these give a smaller reduction of total emissions in the Netherlands, which again is partially offset by higher emissions abroad.

Frontier regularly advises public and private sector clients on question regarding the market design in power markets.

For more information, please contact Miriam Rau at m.rau@frontier-economics.com or call +49 (0) 221 337 130.

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