Potential Impact of Emission Trading Schemes on the Australian National Electricity Market

Xun Zhou, Zhao Dong, Ariel Liebman and Geoff James
Additional contact information
Xun Zhou: School of ITEE, The University of Queensland
Zhao Dong: Department of Electrical Engineering, The Hong Kong Polytechnic University, Hong Kong
Geoff James: CSIRO

No 1-2008, Energy Economics and Management Group Working Papers from School of Economics, University of Queensland, Australia

Abstract: Power industry worldwide has been identified as a major source of greenhouse gas emissions. Consequently, many countries have started the implementation of emission trading schemes aimed at reducing greenhouse gas emissions by power stations. The Australian government aims to implement an emission trading schemes from 2010/2011. This scheme will greatly change the market perspective of the Australian National Electricity Market (NEM). A thorough understanding of the potential impact of emission trading is essential for market participants as well as energy market policy makers. In this paper, a targeted study of the NEM is presented to illustrate the impact on generation companies of different design choices regarding the free allocation of permits aspect of the proposed emission trading scheme. A recommendation is proposed to best promote reduction of emissions while minimizing the adverse impact on the electricity system, particularly on the generation companies.

Keywords: Emissions trading; Sustainable Development; Market Simulation (search for similar items in EconPapers)
JEL-codes: Q40 (search for similar items in EconPapers)
Date: 2008-07
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:qld:uqeemg:1-2008

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