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Decarbonization Tradeoffs: A Dynamic General Equilibrium Modeling Analysis for the Chilean Power Sector

Author

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  • Shahriyar Nasirov

    (Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile)

  • Raúl O’Ryan

    (Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile)

  • Héctor Osorio

    (Facultad de Ingeniería y Ciencias, Universidad Adolfo Ibáñez, Avenida Diagonal Las Torres 2640, 7941169 Peñalolén, Santiago, Chile)

Abstract

Medium size developing countries like Chile that commit to decarbonization goals need to carefully assess the trade-offs associated to their intensity and timing, since most of the technologies required will be absorbed, not produced, by these countries. A rapid expansion of renewables in the Chilean energy matrix, mostly thanks to exceptional solar and wind resources, combined with a rapid decrease in the cost of renewable energy technologies, intensified current policy debates to reduce the role of coal, which is the largest source of CO 2 emissions in the generation mix. Recently, the main generation companies in Chile made a voluntary commitment to not invest in new coal projects that do not include carbon capture and storage systems. In addition, the Chilean government announced its plans to phase out coal plants completely by 2040. In this context, the aim of this research is to study the economy-wide and emission reduction impacts of different decarbonization paths in the Chilean power sector. For this purpose, we consider dynamic simulations using a new energy-oriented version of the Computable General Equilibrium Model (CGE)- General Equilibrium Model for the Chilean Economy (ECOGEM)-Chile which is soft linked to the bottom-up engineering energy model. The results show the major impacts under both the business as usual (BAU) scenario and the coal phase-out scenario. Additionally, the study discusses to what extent the ambitious decarbonization goals of the Chilean government are coherent with the current technological limitations.

Suggested Citation

  • Shahriyar Nasirov & Raúl O’Ryan & Héctor Osorio, 2020. "Decarbonization Tradeoffs: A Dynamic General Equilibrium Modeling Analysis for the Chilean Power Sector," Sustainability, MDPI, vol. 12(19), pages 1-19, October.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:19:p:8248-:d:424558
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    1. Nasirov, Shahriyar & Girard, Aymeric & Peña, Cristobal & Salazar, Felipe & Simon, François, 2021. "Expansion of renewable energy in Chile: Analysis of the effects on employment," Energy, Elsevier, vol. 226(C).
    2. Diamantis Koutsandreas & Evangelos Spiliotis & Haris Doukas & John Psarras, 2021. "What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece," Energies, MDPI, vol. 14(8), pages 1-19, April.
    3. Grzegorz Lew & Beata Sadowska & Katarzyna Chudy-Laskowska & Grzegorz Zimon & Magdalena Wójcik-Jurkiewicz, 2021. "Influence of Photovoltaic Development on Decarbonization of Power Generation—Example of Poland," Energies, MDPI, vol. 14(22), pages 1-20, November.
    4. Branimir Tramošljika & Paolo Blecich & Igor Bonefačić & Vladimir Glažar, 2021. "Advanced Ultra-Supercritical Coal-Fired Power Plant with Post-Combustion Carbon Capture: Analysis of Electricity Penalty and CO 2 Emission Reduction," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    5. Weijiang Liu & Tingting Liu & Yangyang Li & Min Liu, 2021. "Recycling Carbon Tax under Different Energy Efficiency Improvements: A CGE Analysis of China," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    6. Qudrat-Ullah, Hassan, 2022. "A review and analysis of renewable energy policies and CO2 emissions of Pakistan," Energy, Elsevier, vol. 238(PB).

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