An Energy System Model to Study the Impact of Combining Renewable Electricity and Gas Policies

Abstract

Energy system models are needed to help policy makers design renewable energy policies that combine support for renewable electricity with support for renewable gas. In this paper, we advance a stylized model that includes demand for electricity, heating, and hydrogen in industry that is supplied by competing technologies. We first show that the status quo in most countries, which is a combination of carbon pricing with support for renewable electricity, only supports green gases indirectly and in a limited way. When we then add direct support for renewable gas to the model, we have two main findings. First, a Renewable Energy Sources - Gas (RES-G) target is more effective in supporting biomethane than in supporting green hydrogen. Second, there are strong interaction effects between a RES-E target and a RES-G target that can be both complementary and substitutive.