Development of combustion installations under the EU ETS : overview and country-level analysis of electricity generation between 2005 and 2019

The generation of electricity and heat is the largest single activity covered by the EU Emissions Trading System (EU ETS). Due to the interconnectedness, the difference in the emission intensity of the different fuels and their configuration in a competitive marginal cost pricing market, power plants had a large potential for a cleaner dispatch of generation units initiated by the pricing signal of the EU ETS. The dynamic development of an integrated and liberalized European electricity market, a heterogeneous endowment in generation fleets in terms of generation technology and primary fuel and business model, the fast but varied uptake of renewable energies have all co-developed in an environment of fluctuating primary fuel prices and an emerging, but for most of the time very modest, CO2 price in the EU ETS. This report tries to shed light on this co-evolution. It provides an in-depth analysis of the electricity sector since the EU ETS was introduced in 2005. It allows key drivers behind the development in capacities, generation levels and emissions to be identified. It thereby provides key information from past developments which form the basis for future projections and the design of tailored policy instruments. The report provides information on the European level as well as for 10 selected European countries: the Czech Republic, Estonia, France, Germany, Italy, the Netherlands, Poland, Romania, Spain and the United Kingdom.