On the way to low-emission European buildings: Investigating the role of non-ETS CO2 pricing in the residential and tertiary sectors

The review of the Paris Agreement in December 2020 necessitates that the EU member states reduce their GHG emissions to 55% of 1990 levels by 2030 and become climate-neutral by 2050. According to European Commission's Impact Assessment on Europe's 2030 climate ambition, CO2 pricing in building sectors can be an effective instrument for the decarbonisation, but it has certain limitations. Here, we make an analysis of where the EU building sectors are heading from the planned perspective and we conduct a CO2 price sensitivity analysis with the energy demand simulation model FORECASTTM. Five different CO2 price pathways are simulated; starting from an average of 14e/tCO2eq in 2020 and going up to between 77e/tCO2eq and 350e/tCO2eq in 2050. The projections show that EU buildings could achieve 85% direct emission reduction in 2050 at the current pace of the measures. However, CO2 pricing alone, even if it is very high, does not carry the overall sector emissions to the target levels of the Paris Agreement. The decarbonisation of the EU building stock would require the implementation of more ambitious accompanying measures that overcome barriers not addressed by the CO2 price. Looking ahead, the analysis should be extended to include carbon-neutral PtX fuels in the decarbonisation of building heating and the effect of CO2 pricing in the electricity and district heating supply should be considered.