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The Carbon Contract For Differences, A Suitable Tool For The Decarbonation Of Hydrogen?
[Le contrat carbone pour différences, un outil adapté pour la décarbonation de l’hydrogène ?]

Author

Listed:
  • Corinne Chaton

    (EDF R&D SEQUOIA - EDF R&D - EDF R&D - EDF - EDF, FiME Lab - Laboratoire de Finance des Marchés d'Energie - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CREST - EDF R&D - EDF R&D - EDF - EDF)

  • Coline Metta-Versmessen

    (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

The EU-ETS carbon market is not sufficient to rapidly decarbonize sectors where low-carbon technologies are too expensive compared to existing technologies. To address this, our study characterizes a carbon contract for differences (CCfD). This is an instrument that guarantees producers using low-carbon technology a sufficient carbon price to ensure the competitivity of their technology compared to emitting ones. We propose a methodology for policymakers to design CCfD according to their region and sectoral application. We focus on a CCfD for the development of hydrogen by electrolysis as an alternative to steam methane reforming. Due to the dual impact of carbon pricing, we argue that this CCfD is a complex contract and should be defined for areas with a homogeneous electricity mix.

Suggested Citation

  • Corinne Chaton & Coline Metta-Versmessen, 2023. "The Carbon Contract For Differences, A Suitable Tool For The Decarbonation Of Hydrogen? [Le contrat carbone pour différences, un outil adapté pour la décarbonation de l’hydrogène ?]," Post-Print hal-04550831, HAL.
    • Handle: RePEc:hal:journl:hal-04550831
    DOI: 10.3917/reco.745.0705
    as

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