Decarbonization Tradeoffs: A Dynamic General Equilibrium Modeling Analysis for the Chilean Power Sector

Shahriyar Nasirov, Raúl O’Ryan and Héctor Osorio
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Shahriyar Nasirov: Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile
Raúl O’Ryan: Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile
Héctor Osorio: Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile
Authors registered in the RePEc Author Service: Raul O'Ryan GAllardo ()

Sustainability, 2020, vol. 12, issue 19, 1-19

Abstract: Medium size developing countries like Chile that commit to decarbonization goals need to carefully assess the trade-offs associated to their intensity and timing, since most of the technologies required will be absorbed, not produced, by these countries. A rapid expansion of renewables in the Chilean energy matrix, mostly thanks to exceptional solar and wind resources, combined with a rapid decrease in the cost of renewable energy technologies, intensified current policy debates to reduce the role of coal, which is the largest source of CO 2 emissions in the generation mix. Recently, the main generation companies in Chile made a voluntary commitment to not invest in new coal projects that do not include carbon capture and storage systems. In addition, the Chilean government announced its plans to phase out coal plants completely by 2040. In this context, the aim of this research is to study the economy-wide and emission reduction impacts of different decarbonization paths in the Chilean power sector. For this purpose, we consider dynamic simulations using a new energy-oriented version of the Computable General Equilibrium Model (CGE)- General Equilibrium Model for the Chilean Economy (ECOGEM)-Chile which is soft linked to the bottom-up engineering energy model. The results show the major impacts under both the business as usual (BAU) scenario and the coal phase-out scenario. Additionally, the study discusses to what extent the ambitious decarbonization goals of the Chilean government are coherent with the current technological limitations.

Keywords: dynamic CGE models; decarbonization; Chile; power sector (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:19:p:8248-:d:424558

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