Economic impacts of achieving a net-zero emissions target in the power sector

With increasing concerns about climate change, calls for the adoption of net-zero carbon emissions targets are rising. Achieving this target necessitates a radical decarbonisation of the electricity system, including the shutdown of currently operating high-carbon energy infrastructure. In the light of this background, we develop a novel system dynamics energy-economy model to explore the long-term macroeconomic effects, and changes in the power system costs of different low-carbon electricity transition scenarios. Using the UK as a case study, our simulations demonstrate that there is no win-win policy solution. We argue that while the early retirement of a certain amount of brown energy infrastructure is required for the UK to achieve its emissions target, the amount should be determined with care in order to manage the electricity system costs and prices. By using an implicit carbon price, we find that certain trajectories lead to lower power system costs while achieving the net-zero target.

Automated summary

With increasing concerns about climate change, calls for the adoption of net-zero carbon emissions targets are rising. Through simulation studies, it was found that retiring a certain amount of high-carbon energy infrastructure is crucial for the UK to achieve emission reductions, but the quantity should be carefully determined to manage electricity system costs and prices.