Work

Carbon pricing and power sector decarbonization: Evidence from the UK

Year: 2021

Type: article

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.

Source: Journal of Environmental Economics and Management

DOI: 10.1016/j.jeem.2021.102580

Author: Marion Leroutier

Institutions: Stockholm School of Economics, CIRED, Université Paris 1 Panthéon-Sorbonne, Paris School of Economics

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $2,850