Climate, wind energy, and CO2 emissions from energy production in Denmark

Federico Carlini, Bent Jesper Christensen, Nabanita Datta Gupta and Paolo Santucci de Magistris

Energy Economics, 2023, vol. 125, issue C

Abstract: The dynamic relation between CO2 emissions and wind energy in Denmark is analyzed using a fractional cointegration approach, extended to accommodate covariates. The impact of climate and forces of demand on the potential of wind power production for emissions abatement is investigated. Emissions decline as temperature increases. Wind power production increases with precipitation and North Atlantic oscillations. Aggregate output matters for emissions in a manner consistent with an environmental Kuznets curve (EKC). Accounting for a seasonal trend, our main estimate of marginal CO2 emissions avoided (MEA) per MWh of wind energy produced is 0.16 tonnes, based on impulse responses. This estimate of the abatement potential of wind power is lower than values reported in the literature, but statistically significant, and robust to including climate and EKC variables. MEA is reduced by about one third by treating electricity prices as endogenous, and by one quarter by including emissions from combustion of biomass. However, formal exogeneity tests indicate that the main MEA estimate is not inflated due to left-out general equilibrium effects. Without covariates, estimated MEA is 0.07, and insignificant.

Keywords: Climate; Demand; Fractional cointegration; CO2 emissions (search for similar items in EconPapers)
JEL-codes: C50 Q20 Q54 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003195

DOI: 10.1016/j.eneco.2023.106821

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