European or national-level emission reduction policy? Effectiveness and energy system implications

The EU policy landscape contains several large emission reduction strategies with tools to help us decarbonize. The scale of the transition necessitates an understanding of how different implementation levels of different emission policies impact national energy systems and decarbonization targets. We utilize the open-source, sector-coupled energy system optimization model Balmorel to analyze detailed European pathways and the impact of three decarbonization scenarios. We consider (1) a European-level carbon budget, (2) a carbon budget broken down to national levels, and (3) a carbon tax policy. The novelty of this paper lies in how these policies affect the European decarbonization pathway in the short term and long term and how they can affect interactions between countries and national emission- and renewable targets. We demonstrate that the final production mix in 2050 remains near-identical across scenarios, with some variation in biomass sequestration, but differences occur between countries in intermediary years. A European budget causes mismatches between the considered budget and modeled emissions in several countries with more fossil capacity, which can be mitigated by both the country-level budget and a carbon tax. Still, country-level budgets lead to emission displacement, and a carbon tax is significantly more investment-intensive.