In this paper we explore the development of two specific carbon capture technologies, namely Carbon Capture, Transport, and Storage (CCTS) and Direct Air Capture (DAC) with respect to the role attributed to them by long-term climate scenarios. We ask whether the critical assessment in earlier literature of the gap between ambitious targets in top-down energy and climate models and the modest level of real-world implementation still persists. We provide a survey of the full set of projects on CCTS in the energy and industry sectors, as well as of all DAC projects world-wide. For CCTS, we find that although several demonstration projects have been implemented over the past 15 years, the scale of deployment remains low. In the power sector, only a few large-scale projects remain operational as of 2025; others have been delayed or cancelled. Industrial CCTS shows broader engagement, yet most projects remain below the 1 MtCO2 /year threshold. The deployment of DAC, too, has remained at very low levels: While integrated assessment models (e.g., EMF-38 and AR6 scenarios) project deployment of several gigatons per year by 2050, the actual installed DAC capacity in June 2025 remains below 0.05 MtCO2 /year. The paper concludes that while carbon capture remains a compelling field for innovation, the gap between scenario optimism and real-world progress has not closed. This is not the “fault” of the models, but these findings suggest that optimal technology deployment strategies might be more complex to implement than these models suggest.
Volume 15
Demand-Side Flexibility under Alternative Electricity Market Designs: Insights from a Multi-Level Modelling Framework
The transformation of the European electricity system from centralized fossil-based generation to a decentralized renewable-based system poses challenges for the current market design with uniform national price zones. This design lacks spatially differentiated investment signals and market incentives for grid-supportive flexibility behavior. This study examines various market design options—such as bidding zone reconfigurations, capacity payments, and dynamic tariffs—and analyzes their combined effects on investment decisions, dispatch and ex-post congestion management. A multi-level electricity market model is applied to the German power system for the year 2030, incorporating market-driven investments and system operation. Results indicate that a uniform price zone leads to suboptimal investment signals and inefficient deployment of flexibility options. Capacity payments can ensure overall installed capacity levels but fail to provide regional incentives. In contrast, zonal pricing reflects structural congestion and aligns investment incentives with grid information, substantially improving flexibility deployment and reducing congestion. Overall, regional price differentiation emerges as the key driver of efficient investment and system operation, while capacity payments and dynamic tariffs only unfold additional value when combined with such locational signals.
The Role of Finance and Income in Energy Diversification: A Club Convergence Analysis of Asia-Pacific
The Asia-Pacific region is the world’s largest energy consumer, yet energy diversification across countries remains significantly uneven despite rising demand and renewable progress. This study examines whether energy diversification is converging in the region and how financial development and economic wealth influence this process. Using data from 40 countries between 1997 and 2021, we found that countries with initially low diversification have improved faster, and regional disparities have narrowed. However, the distribution of diversification levels reveals two distinct peaks, suggesting the presence of convergence clubs. The log-t test confirms this by rejecting full convergence and identifying two clubs: Club 1 (14 countries) with low and slightly declining diversification, and Club 2 (22 countries) with high and increasing diversification. Regional-level regression results show financial development as the strongest driver of energy diversification, followed by per capita income. At the club level, financial development consistently supports diversification, but income has mixed effects negatively associated with diversification in Club 1 and weakly positive in Club 2. These findings underscore the need for club-specific strategies, with policymakers tailoring interventions to their country’s club membership, energy diversification level, and development stage.
Long-run Price Transmission of Alternative Fuels
Alternative fuels have become increasingly important in the U.S. fuel market in the last few decades. While most previous literature has focused on oil, gasoline, and biofuel prices, the studies on the topic of multiple alternative fuel prices across regions were limited. Using the fuel price data from seven U.S. districts, our study investigates the horizontal price transmission between gasoline and alternative fuels, as well as the vertical price transmission between marginal costs and alternative fuels. Our analysis reveals a deeply integrated U.S. fuel market. Specifically, a 1% rise in gasoline prices corresponds to a 0.811% increase in ethanol prices and a 1.053% increase in biodiesel prices. This positive connection is further confirmed when analyzing price returns, indicating that alternative fuel prices move in tandem with their substitutes. Additionally, the examination of vertical price transmission reveals that higher marginal cost of propane is associated with rising propane prices.
Spatial interdependencies and the role of PESTLE framework in shaping OECD energy transition pathways
The present study explores spatial spillover effects of PESTLE (Political, economic, social, technological, legal, and environmental) factors on energy transition (ET) across 31 OECD economies from 1996 to 2021. The inverse distance weight matrix (IDWM) is used for advance spatial econometrics analysis. Global Moran’s I and Local Moran’s tests confirm the presence of spatial autocorrelation. The empirical findings of a Spatial Durbin Model reveal that government policies (GP), financial inclusion (FI), human development (HD) and green technological innovations (GTI) create a positive spillover effect and accelerate the pace of energy transition (ET) in home and neighbouring economies. In contrast, ecological footprint (EF) and inflation produce a negative spillover effect and a decline in ET. The study’s insights, aligned with international accords and Sustainable Development Goals (SDGs) 7 and 13, offer vital directions to decision-makers to strengthen the energy transition process and the challenges to a sustainable growth.
Social Acceptability and Transport: An Energy System–Optimisation- Based Analysis of the European Case
Social acceptance of low-carbon transport technologies is a crucial but frequently underrepresented dimension in energy system optimization models (ESOMs), despite its potential relevance for the design of effective decarbonization policies. This study examines the role of social acceptability in the transition of the European Union transport sector toward climate neutrality by integrating behavioral factors into the open-source ESOM TEMOA-Europe. In particular, social acceptability is represented through technology-specific hurdle rates, used as proxies for perceived risk and financing barriers, alongside assumptions on declining investment costs for low-carbon vehicle technologies. Four scenarios are developed and compared: (i) a Base scenario, (ii) a scenario with reduced hurdle rates for battery electric and fuel-cell vehicles, (iii) a CostSC scenario with lower investment costs for green truck technologies, and a Net0 scenario (iv) imposing a binding net-zero emissions constraint by 2050. The analysis evaluates these scenarios based on technology uptake, system costs, CO2 emissions, and critical raw material requirements. Results show that, in the passenger car sector, lower perceived risk can substantially accelerate electrification and achieve emissions reductions comparable to those obtained under stringent regulatory constraints, in some cases at lower overall system cost. By contrast, the freight sector appears considerably less responsive to such demand-side measures, indicating the need for stronger regulatory intervention. The findings also highlight that deep transport decarbonization implies a substantial increase in demand for critical raw materials, reinforcing the importance of complementary recycling and supply-chain policies.
Energy poverty: a transient or chronic condition?
Energy poverty remains a pressing challenge in the European Union, with Spain exhibiting one of the highest incidence rates. Despite an ambitious national strategy, over 20% of Spanish households continues to report difficulties maintaining adequate indoor temperatures. This study examines energy poverty dynamics in Spain using longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC) covering the period 2004–2023. We distinguish between transient and chronic energy poverty, revealing that 2.6–3.6% of households experience persistent deprivation. Vulnerability is higher among single-person and female-headed households, while education and employment significantly reduce chronic risk. By focusing on household trajectories, this study contributes to a deeper understanding of structural and temporal dimensions of energy poverty, supporting more effective policy design. Spain’s case highlights the limitations of current measures and the need for strategies addressing long-term vulnerability within a just energy transition framework.
Analysis of Natural Gas and Electricity Load Profiles for the Decarbonisation Strategy of a Commercial Area
The aim of the analysis is to create a database that maps the company-specific energy demand of a commercial area in hourly resolution. The focus is on determining the electricity and heat demand profile of companies in a commercial area using a combination of synthetic and real load profiles. These are necessary to map the heterogeneous energy requirements of industrial and commercial companies in a commercial area as realistically as possible. Due to the limited availability of real consumption data, 323 synthetic electricity and 125 gas load profiles from various studies were used. The comparison shows that synthetic profiles can only reflect the actual requirements of individual companies to a limited extent. However, as the temporal resolution becomes more aggregated and the number of companies increases, the synthetic data approximates the real consumption profile of the entire commercial area. The analysis carried out forms the basis for implementing an energy system model that examines the economic and technical synergies of local energy communities as part of decarbonisation strategies in commercial areas.
Assessing the Economic Impact of Photovoltaic Generation on Electricity Prices and Consumer Economic Benefits under Feed-in Tariff System: Evidence from Japan
In this study, the impact of photovoltaic generation on electricity prices and net consumer benefits is evaluated by accounting for the cost of a feed-in tariff system. A structural model is utilized to estimate electricity prices in a counterfactual scenario in which photovoltaics are not generated, and the results are compared with actual prices to evaluate the consumer economic benefits of photovoltaic adoption. To quantitatively estimate the consumer economic benefit, an empirical analysis is performed by using the data on electricity prices, electricity demand, and photovoltaic generation in Japan. The results indicate positive consumer economic benefits owing to the adoption of photovoltaics in recent years, particularly during the summer, which confirms the theoretical prediction that the net economic benefits from photovoltaics increase with increasing electricity demand and difference between photovoltaic generation and the demand. These results offer practical insight for implementing policies that balance renewable energy expansion with economic feasibility. By applying the insights on consumer economic benefits, policymakers could more accurately adjust the feed-in tariff to balance the cost of photovoltaic installation with the consumer burden.
What Underlies the Poor Financial Performance of Electric Utilities in Sub-Saharan Africa?
This study investigates factors responsible for the poor performance of 67 electric utilities in 47 countries in Sub-Saharan Africa (SSA) region using descriptive data available from the World Bank, International Energy Agency, United States Energy Information Administration and national sources. Both cost-and revenue-side factors are found responsible for the poor financial performance of electric utilities in the region. More than two-thirds of vertically integrated utilities (VIUs) and electricity distributional utilities (EDUs) are unable to cover their operational and debt service costs by their revenues. Higher fuel costs (particularly oil), lower capacity factors, lower capital and labor productivity, high transmission and distribution (T & D) losses and leakage in electricity bill collections are found mainly responsible for the poor financial performance. On the other hand, consumers face higher electricity tariffs than in many countries around the world despite their much lower per capita income. The study also investigates how much the reduction of the T&D losses and elimination of the leakages in bill collection improve the financial performance of utilities and finds that out of 25 utilities currently operating in loss, 11 will have higher revenue than their operating costs due to T&D loss reduction and elimination of bill collection leakage. The findings indicate that policymakers in the SSA region should focus on a portfolio of policies, including switching away from expensive generation to emerging cheaper options, improving factor productivities, efficient institutions/governance, reduction of T&D losses, improvement of bill collection and tariff reforms. Policy priority, however, could vary across countries depending on the roles of various factors contributing to the poor financial performance.