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Correction published on 23 June 2015, see Energies 2015, 8(6), 6247-6248.

Open AccessArticle
Energies 2015, 8(4), 2674-2700; doi:10.3390/en8042674

The Impact of a Carbon Tax on the Chilean Electricity Generation Sector

1
Department of Electrical Engineering, Energy Center, Faculty of Physical and Mathematical Sciences, University of Chile, Santiago 8370451, Chile
2
Latin American Center for Economic and Social Policy, Pontifical Catholic University of Chile, Santiago 8331010, Chile
3
Institute of Economics, Pontifical Catholic University of Chile, Santiago 7820436, Chile
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Academic Editor: Antonella Battaglini
Received: 23 January 2015 / Revised: 22 March 2015 / Accepted: 26 March 2015 / Published: 3 April 2015
(This article belongs to the Special Issue Energy Policy and Climate Change)
View Full-Text   |   Download PDF [2669 KB, uploaded 7 April 2015]   |  

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. View Full-Text
Keywords: energy policy; climate change; carbon tax; macroeconomic models; Dynamic Stochastic General Equilibrium (DSGE); generation expansion planning; non-conventional renewable energy energy policy; climate change; carbon tax; macroeconomic models; Dynamic Stochastic General Equilibrium (DSGE); generation expansion planning; non-conventional renewable energy
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Benavides, C.; Gonzales, L.; Diaz, M.; Fuentes, R.; García, G.; Palma-Behnke, R.; Ravizza, C. The Impact of a Carbon Tax on the Chilean Electricity Generation Sector. Energies 2015, 8, 2674-2700.

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