Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK

Marion Leroutier

No 2021-3, Misum Working Paper Series from Stockholm School of Economics, Mistra Center for Sustainable Markets (Misum)

Abstract: Decreasing greenhouse gas emissions from electricity generation is crucial to tackle climate change. Empirically, however, little is known about the effectiveness of existing economic instruments in the power sector. This paper examines the impact of the UK Carbon Price Support (CPS), a carbon tax implemented in the UK power sector in 2013. Relative to a synthetic control unit built from other European countries, I find that emissions from the UK power sector declined by 20 to 26 percent per year on average between 2013 and 2017. The tax operated via three mechanisms: a decrease in emissions at the intensive margin; the closure of some high-emission plants at the extensive margin; and a higher probability of closure for plants already at risk due to European air quality regulations.

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: 34 pages
Date: 2021-10-26
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: View citations in EconPapers (2)

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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 (2019)
Working Paper: Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK (2019)
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