Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK

Marion Leroutier

No 2019.12, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: The electricity and heat generation sector represents about 40 % of global greenhouse gas (GHG) emissions in 2016. Policy-makers have implemented a variety of instruments to decarbonise their power sector. This paper examines the UK Carbon Price Floor (CPF), a novel carbon pricing instrument implemented in the United Kingdom in 2013. After describing the potential mechanisms behind the recent UK power sector decarbonisation, I apply the synthetic control method on country-level data to estimate the impact of the CPF on per capita emissions. I discuss the importance of potential confounders and the amount of net electricity imports imputable to the policy. Depending on the specification, the abatement associated with the introduction of the CPF range from 106 to 185 millions tons of equivalent CO2 over the 2013-2017 period. This implies a reduction of between 41% and 49% of total power sector emissions by 2017. Several placebo tests suggest that these estimates capture a causal impact. This paper shows that a carbon levy on high-emitting inputs used for electricity generation can lead to successful decarbonisation.

Keywords: carbon tax; electricity generation; synthetic control method (search for similar items in EconPapers)
JEL-codes: D22 H23 Q41 Q48 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2019-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://faere.fr/pub/WorkingPapers/Leroutier_FAERE_WP2019.12.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Carbon pricing and power sector decarbonization: Evidence from the UK (2022)
Working Paper: Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK (2021)
Working Paper: Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK (2021)
Working Paper: Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fae:wpaper:2019.12

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