EconPapers    
Economics at your fingertips  
 

Climate policy and power producers: the distribution of pain and gain

Baran Doda and Samuel Fankhauser

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Climate policies do not affect all power producers equally. In this paper, we evaluate the supply-side distributional consequences of emissions reduction policies using a simple and novel partial equilibrium model where production takes place in technology-specific sites. In a quantitative application hydro, wind and solar firms generate power combining capital and sites which differ in productivity. In contrast, the productivity levels of coal, gas and nuclear technologies are constant across sites. We parameterise the model to analyse the effects of stylised tax and subsidy schemes. Carbon pricing outperforms all other instruments and, crucially, leads to more equitable outcomes on the supply side. Technology-specific and uniform subsidies to carbon-free producers result in a greater welfare cost and their supply- side distributional impacts depend on how they are financed. Power consumption taxes have exceptionally high welfare costs and should not be the instrument of choice to reduce emissions or to finance subsidies aiming to reduce emissions.

Keywords: carbon pricing; renewable subsidies; supply-side distributional implications; climate policy; ES/R009708/1) (search for similar items in EconPapers)
JEL-codes: Q41 Q48 H23 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2020-03-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in Energy Policy, 1, March, 2020, 138. ISSN: 0301-4215

Downloads: (external link)
http://eprints.lse.ac.uk/102960/ Open access version. (application/pdf)

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:ehl:lserod:102960

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().

 
Page updated 2021-01-17
Handle: RePEc:ehl:lserod:102960