Electricity Market Deregulation and CO2 Emissions Reduction: Dancing at Different Tune across Canada and U.S. Border

Jean-Thomas Bernard (), Frederic Clavet and Jean-Cleophas Ondo

Cahiers de recherche from GREEN

Abstract: Canada has ratified the Kyoto Protocol while the United States, its main trading partner, have not. A major concern of Canadian industrial producers is the negative impact on competitiveness of progorams designed to reduce greenhouse gas emissions (GHG). To alleviate this concern, the Government of Canada is proposing an approach that puts a ceiling on the price of emission permits paid by industrial users and that allocate emission permits on the base of output. We analyze how such a scheme would affect electricity production and trade among three Canadian provinces (Ontario, Québec and New Brunswick) and two U.S. regions (New England and New York), which are linked by large interconnections and which exchange electricity on other wholesale markets. We find that the Canadian government approach has almost no effect on electricity production and trade flows; so it is very effective at protecting the competitive position of electricity producers. However it does little to reduce GHG emissions. If we were to unbundle emission permits allocation and production an let the Canadian electricity producers face the permit price ceiling of $15 per tonne of CO2 equivalent, then the effect on electricity production in Canada depends on whether the U.S. regions persue an aggressive or lenient policy with respect to GHG emissions. The overall impact on GHG emissions in the five regions is rather small.

Keywords: Greenhouse gas emissions; Kyoto Protocol; Electric utilities (search for similar items in EconPapers)
JEL-codes: L94 Q48 (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-com
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.green.ecn.ulaval.ca/CahiersGREEN2003/03-09.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: Electricity Market Deregulation and CO2 Emissions Reduction: Dancing at Different Tunes Across Canada and U.S. Border (2003)
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:lvl:lagrcr:0309

Access Statistics for this paper

More papers in Cahiers de recherche from GREEN Contact information at EDIRC.
Bibliographic data for series maintained by Manuel Paradis ().