Comparing cost-optimal to policy-driven scenarios for a decarbonised European energy system

The transition to a low-carbon economy in the EU requires a balance between collective ambition and national priorities. Comparing bottom-up trajectories of National Energy and Climate Plans (NECPs) with top-down EU-wide targets offers valuable insights into the “cost of non-coordination” and its implications for equitable effort-sharing among Member States. In this study, we derive the energy system transformations required at the EU Member State level to achieve the EU’s net-zero target and examine how these transitions differ between EU-level and state-level policies in the short term. Our scenarios are based on (a) the emissions reduction policies, including those outlined in the ‘Fit for 55’ package as well as the NECPs, following which emissions constraints are set at both the EU and Member State levels (policy-driven), and (b) cost-optimal model pathways achieving equivalent GHG emission mitigation as (a) at both levels but without any explicit policies modelled (target-driven). We use two well-established integrated assessment models, GCAM-Europe and TIAM-EU, and soft-link them with a detailed electricity system model (EXPANSE) to additionally derive future trajectories of electricity demand, final energy mix, electricity and storage capacities, investments in transmission and distribution infrastructure, and electricity prices. Finally, we assess how the European (and national) energy systems differ between the two scenarios as well as how effort-sharing varies among Member States when comparing the optimal pathways derived at the EU level to those developed for individual Member States.