Co-designing policy mixes and energy systems for decarbonisation: Expanding the role of energy system models
EMBARGOED UNTIL 2026-12-08
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Date
2025
Publication Type
Doctoral Thesis
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yes
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EMBARGOED UNTIL 2026-12-08
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Abstract
Climate change represents one of the greatest challenges of our time, driven primarily by CO₂ emissions from global energy production and use. Our continued reliance on fossil fuels locks in carbon-intensive infrastructures and practices, making transformation difficult despite the availability of mature low-carbon technologies across sectors. Policies are key to overcoming this lock-in, as they can address structural, economic, and institutional barriers, guide investments, and accelerate the deployment of more sustainable alternatives.
However, designing effective policies remains a complex task. Single instruments are rarely sufficient, so governments rely on policy mixes that can complement each other and enhance overall effectiveness. These mixes must be designed with careful consideration of how instruments interact with each other and with the evolving energy system. Most research on designing policy mixes relies on qualitative ex-post studies, which are valuable for contextual insights but less suited to systematically testing many options or charting the co-evolution of policies and energy systems. This calls for quantitative approaches able to explore alternatives and assess interactions over time, such as energy system models (ESMs).
Bottom-up ESMs, with their detailed techno-economic representation, are theoretically well-suited to inform ex-ante policy design and assess system-wide impacts. Yet their application to this task remains limited: most studies rely on scenario-based approaches that treat policies as fixed inputs, offering little support for exploring alternative mixes or assessing instrument interactions. Addressing this gap requires methods that integrate policy and system design within a single framework, enabling the analysis of their coevolution with a long-term perspective. This thesis takes up this challenge by asking: How can energy system models be used to support the ex-ante co-design of policy mixes and energy systems for cost-efficient decarbonisation?
To address this question, the thesis comprises four studies. Study I reviews a representative sample of recent studies using bottom-up ESMs for diverse policy-relevant analyses, examining how they represent policy instruments, construct scenarios, choose performance indicators, and address sector coupling. It identifies dominant practices such as the focus on CO₂ pricing and the reliance on scenario analysis, and highlights underexplored aspects including policy interactions and cost distribution, underscoring the need for more integrated approaches. Study II presents the thesis’ core methodological contribution: MANGOpol, a bi-level optimisation framework for the co-design of energy systems and policy mixes for
decarbonisation. This simultaneous optimisation of technology investments and operations, and the selection and sequencing of a broad range of policy instruments ensures that policy and system design are developed together, reflecting their interdependent nature. Studies III and IV apply this framework to co-design policy mixes and energy systems in two real-world cases of high relevance for decarbonisation: the Swiss residential building sector and the German electricity system. In the building sector case, MANGOpol compares uniform and tailored policy mixes for a heterogeneous building stock, assessing how differences in building type and age affect technology adoption and the choice of policy instruments. In the case of the German electricity system, MANGOpol is extended to identify both optimal and near-optimal solutions in order to reveal multiple cost-efficient decarbonisation pathways with varying technology choices, policy designs, and cost distributions.
Overall, the contributions and findings of this thesis demonstrate that integrating policy and system design is essential for effective decarbonisation. For policymakers, they show that coordinated policy mixes combining complementary instruments can deliver deeper decarbonisation at lower cost than single-instrument strategies. They also highlight that early and well-sequenced interventions reduce overall costs, that tailoring policy design to sectoral heterogeneity can enable a more strategic use of instruments, and that different combinations of policies and technologies can achieve comparable performance. For modellers, the thesis demonstrates how embedding policy design into bottom-up ESMs enables systematic exploration of alternative policy mixes, assessment of their interactions with system change, and identification of robust solutions beyond predefined scenarios. In doing so, it expands the role of bottom-up ESMs from passive assessment tools to active decision-support framework for the co-design of cost-efficient decarbonisation pathways that can directly inform policymaking.
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published
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Contributors
Examiner: Hoffmann, Volker H.
Examiner : Trutnevyte , Evelina
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Publisher
ETH Zurich
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Subject
Energy modelling; Energy policy; Bi-level optimisation; Policy mixes
Organisational unit
03695 - Hoffmann, Volker / Hoffmann, Volker
Notes
Funding
212722 - Co-designing optimal policy mixes and energy systems for decarbonization (SNF)
847585 - RESPONSE - to society and policy needs through plant, food and energy sciences (EC)
847585 - RESPONSE - to society and policy needs through plant, food and energy sciences (EC)