Impacts of Low-Carbon Targets and Hydrogen Production Alternatives on Energy Supply System Transition: An Infrastructure-Based Optimization Approach and a Case Study of China

Low-carbon transition pathways oriented from different transition targets would result in a huge variation of energy system deployment and transition costs. Hydrogen is widely considered as an imperative energy carrier to reach carbon neutral targets. However, hydrogen production, either from non-fossil power or fossil fuels with carbon capture, is closely linked with an energy supply system and has great impacts on its structure. Identifying an economically affordable transition pathway is attractive, and energy infrastructure is critical due to massive investment and long life-span. In this paper, a multi-regional, multi-period, and infrastructure-based model is proposed to quantify energy supply system transition costs with different low-carbon targets and hydrogen production alternatives, and China is taken as a case study. Results show that, fulfilling 2-degree and 1.5-degree temperature increase targets would result in 84% and 151% increases in system transition costs, 114% and 246% increases in infrastructure investment, and 211% and 339% increases in stranded investment, compared to fulfilling stated policy targets. Producing hydrogen from coal would be economical when carbon capture and sequestration cost is lower than 437 yuan per tonne, and reduce infrastructure investment and stranded coal investment by 16% and 35% respectively, than producing hydrogen from renewable power.