Impact of carbon tax on electricity prices and behaviour

Jin Boon Wong and Qin Zhang

Finance Research Letters, 2022, vol. 44, issue C

Abstract: Internationally, there is increasing emphasis on climate change, this study contributes by examining the impact of carbon tax on wholesale electricity pricing and market behaviour. Empirical results using a natural experiment from Australia's carbon pricing mechanism (CPM) indicate that wholesale electricity costs increase between 22.1% to 68.0% across connected regions after controlling for relevant factors. The significant difference in price impacts can be attributed to the distinct fuel mix for electricity generation across states and the capacity to import renewable hydroelectricity. Market behavioural shift from coal to other energy sources during the CPM regime is reversed after the abolition of carbon tax.

Keywords: Carbon tax; Carbon emission policy; Climate change; Market behaviour; Electricity prices; Carbon pricing (search for similar items in EconPapers)
JEL-codes: G10 G40 Q41 Q48 Q58 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612321001793
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001793

DOI: 10.1016/j.frl.2021.102098

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().