The Impact of a Carbon Tax on the Chilean Electricity Generation Sector
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2015Metadata
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Benavides Farías, Carlos
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The Impact of a Carbon Tax on the Chilean Electricity Generation Sector
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Abstract
This paper aims to analyse the economy-wide implications of a carbon tax
applied on the Chilean electricity generation sector. In order to analyse the macroeconomic
impacts, both an energy sectorial model and a Dynamic Stochastic General Equilibrium
model have been used. During the year 2014 a carbon tax of 5 US$/tCO2e was approved in
Chile. This tax and its increases (10, 20, 30, 40 and 50 US$/tCO2e) are evaluated in this
article. The results show that the effectiveness of this policy depends on some variables
which are not controlled by policy makers, for example, non-conventional renewable
energy investment cost projections, natural gas prices, and the feasibility of exploiting
hydroelectric resources. For a carbon tax of 20 US$/tCO2e, the average annual emission
reduction would be between 1.1 and 9.1 million tCO2e. However, the price of the
electricity would increase between 8.3 and 9.6 US$/MWh. This price shock would
decrease the annual GDP growth rate by a maximum amount of 0.13%. This article
compares this energy policy with others such as the introduction of non-conventional
renewable energy sources and a sectorial cap. The results show that the same global greenhouse gas (GHG) emission reduction can be obtained with these policies, but the
impact on the electricity price and GDP are lower than that of the carbon tax.
Patrocinador
Climate and Development Knowledge Network (CDKN),
Mitigation Action Plans and Scenarios (MAPS) Programme and CONICYT/FONDAP/15110019
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URI: https://repositorio.uchile.cl/handle/2250/132481
DOI: 10.3390/en8042674
ISSN: 1996-1073
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Energies 2015, 8, 2674-2700
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