Net zero: Aurora calls for carbon tax and transparent flex markets


Consultancy Aurora has suggested a carbon tax and genuine, transparent flexibility markets will be required to deliver decarbonisation by 2050.

Its latest analysis suggests more than 100GW of new wind and solar generation will be required over the next 30 years, balanced by 30GW of short duration storage and at least 20GW of firm capacity as swings in residual demand become more extreme.

Whereas unabated gas-fired generation provides baseload and back-up today, it cannot do so in a net zero world. Aurora said other technologies, such as long-duration storage (flow, liquid air etc.) will therefore be required at scale, along with hydrogen storage and carbon capture and storage (CCS).

However, the economics of some of these solutions are severely challenged unless carbon is adequately priced, suggested the consultancy (former US energy secretary Steven Chu recently suggested a carbon price upward of $80 tonne may be required for CCS).

Market interventions by government and regulator are therefore required to deliver net zero, said Aurora:

  1. Price the externalities – a carbon tax or trading system is an efficient method to reduce carbon emissions.
  2. Define the system needs – increasing renewables and removing thermal generation will create system operability challenges. These need to be clearly defined and tackled through transparent markets. Decentralisation of the power system means that some of these needs are location-specific and can best be solved with local flexibility markets.
  3. Let the market decide – define the system needs and let the market provide the cheapest solutions. Pursue technology-agnostic policies and regulations based on system requirements, to drive competition and innovation.

Details here.

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