Decarbonizing the Chilean Electric Power System: A Prospective Analysis of Alternative Carbon Emissions Policies

Frédéric Babonneau, Javiera Barrera and Javiera Toledo
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Frédéric Babonneau: ORDECSYS, Chêne-Bougeries, Switzerland and Escuela de Negocios, Universidad Adolfo Ibáñez, 7941169 Santiago, Chile
Javiera Barrera: Faculty of Engineering and Science, Universidad Adolfo Ibáñez, 7941169 Santiago, Chile
Javiera Toledo: Master Program in Industrial Engineering and Operations Research, Universidad Adolfo Ibáñez, 7941169 Santiago, Chile

Energies, 2021, vol. 14, issue 16, 1-16

Abstract: In this paper, we investigate potential pathways for achieving deep reductions in CO 2 emissions by 2050 in the Chilean electric power system. We simulate the evolution of the power system using a long-term planning model for policy analysis that identifies investments and operation strategies to meet demand and CO 2 emissions reductions at the lowest possible cost. The model considers a simplified representation of the main transmission network and representative days to simulate operations considering the variability of demand and renewable resources at different geographical locations. We perform a scenario analysis assuming different ambitious renewable energy and emission reduction targets by 2050. As observed in other studies, we show that the incremental cost of reducing CO 2 emissions without carbon capture or offset alternatives increases significantly as the system approaches zero emissions. Indeed, the carbon tax is multiplied by a factor of 4 to eliminate the last Mt of CO 2 emissions, i.e., from 2000 to almost 8500 USD/tCO 2 in 2050. This result highlights the importance of implementing technology-neutral mechanisms that help investors identify the most cost-efficient actions to reduce CO 2 emissions. Our analysis shows that Carbon Capture and Storage could permit to divide by more than two the total system cost of a 100% renewable scenario. Furthermore, it also illustrates the importance of implementing economy-wide carbon emissions policies that ensure that the incremental costs to reduce CO 2 emissions are roughly similar across different sectors of the economy.

Keywords: ETEM model; 100% renewable; net zero emission; carbon tax; carbon capture and storage (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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