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Potential Impact of Emission Trading Schemes on the Australian National Electricity Market

Author

Listed:
  • Xun Zhou

    (School of ITEE, The University of Queensland)

  • Zhao Yang Dong

    (Department of Electrical Engineering, The Hong Kong Polytechnic University, Hong Kong)

  • Ariel Liebman

    (School of Economics, The University of Queensland)

  • Geoff James

    (CSIRO)

Abstract

Power industry worldwide has been identified as a major source of greenhouse gas emissions. Consequently, many countries have started the implementation of emission trading schemes aimed at reducing greenhouse gas emissions by power stations. The Australian government aims to implement an emission trading schemes from 2010/2011. This scheme will greatly change the market perspective of the Australian National Electricity Market (NEM). A thorough understanding of the potential impact of emission trading is essential for market participants as well as energy market policy makers. In this paper, a targeted study of the NEM is presented to illustrate the impact on generation companies of different design choices regarding the free allocation of permits aspect of the proposed emission trading scheme. A recommendation is proposed to best promote reduction of emissions while minimizing the adverse impact on the electricity system, particularly on the generation companies.

Suggested Citation

  • Xun Zhou & Zhao Yang Dong & Ariel Liebman & Geoff James, 2008. "Potential Impact of Emission Trading Schemes on the Australian National Electricity Market," Energy Economics and Management Group Working Papers 1-2008, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqeemg:1-2008
    DOI: 10.1109/PES.2008.4596567
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    Citations

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    Cited by:

    1. Imran, Kashif & Hassan, Tehzeebul & Aslam, Muhammad Farooq & Ngan, Hon-Wing & Ahmad, Intesar, 2009. "Simulation analysis of emissions trading impact on a non-utility power plant," Energy Policy, Elsevier, vol. 37(12), pages 5694-5703, December.
    2. Radzi, N.H. & Bansal, R.C. & Dong, Z.Y., 2015. "New Australian NEM transmission use of system charging methodologies for integrating renewable generation to existing grid," Renewable Energy, Elsevier, vol. 76(C), pages 72-81.
    3. Liu, Liwei & Sun, Xiaoru & Chen, Chuxiang & Zhao, Erdong, 2016. "How will auctioning impact on the carbon emission abatement cost of electric power generation sector in China?," Applied Energy, Elsevier, vol. 168(C), pages 594-609.

    More about this item

    Keywords

    Emissions trading; Sustainable Development; Market Simulation;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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