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Europe beyond coal – An economic and climate impact assessment

Christoph Böhringer and Knut Einar Rosendahl ()

Journal of Environmental Economics and Management, 2022, vol. 113, issue C

Abstract: Several European countries have decided to phase out coal power generation. Emissions from electricity generation are already regulated by the EU Emissions Trading System (ETS), and in some countries like Germany the phaseout of coal will be accompanied with cancellation of emissions allowances. In this paper we examine the consequences of phasing out coal, for CO2 emissions, the electricity sector, and the broader economy. We show analytically how the welfare impacts for a phaseout region depend on i) whether and how allowances are canceled, ii) whether other countries join phaseout policies, and iii) terms-of-trade effects in the ETS market. Based on numerical simulations with a computable general equilibrium model for the European economy, we quantify the economic and environmental impacts of alternative phaseout scenarios, considering both unilateral and multilateral phaseouts. We find that terms-of-trade effects in the ETS market play an important role for the welfare implications across EU member states. For Germany, coal phaseout combined with unilateral cancellation of allowances is found to be welfare-improving if the German citizens value CO2 emissions reductions at 65 Euro per ton or more.

Keywords: Coal phaseout; Emissions trading; Electricity market (search for similar items in EconPapers)
JEL-codes: D61 F18 H23 Q54 (search for similar items in EconPapers)
Date: 2022
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Related works:
Working Paper: Europe beyond Coal - An Economic and Climate Impact Assessment (2020) Downloads
Working Paper: Europe Beyond Coal – An Economic and Climate Impact Assessment (2020) Downloads
Working Paper: Europe beyond Coal - An Economic and Climate Impact Assessment (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:113:y:2022:i:c:s0095069622000365

DOI: 10.1016/j.jeem.2022.102658

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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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