Abstract
This chapter examines the economic and environmental effects of the interaction between regulated early closure of coal-fired power plants and new energy taxation rules on such plants using a dynamic general equilibrium model of the Portuguese economy. Simulation results show that regulated early closures lead to meaningful emission reductions but induce significant detrimental macroeconomic and distributional effects. Upon application of the new energy taxation rules, no significant environmental gains or macroeconomic and distributional losses are observed beyond those already induced by the forced closures. The public sector also seems to benefit from additional tax revenues. If the coal-fired power plants operators react by unilaterally decommissioning their installations, however, the adverse macroeconomic and distributional effects will substantially deteriorate even though the environmental ones improve. Moreover, the adverse budgetary effects will be substantially larger. Overall, we find no synergies between the two policies and, in fact, the opposite is potentially true.
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Acknowledgements
The authors want to thank Ana Quelhas, Maria Pedroso Ferreira, and Ana Cristina Nunes for very useful discussions and suggestions. This is the second of two twin papers dealing with the regulated early closures of the two Portuguese coal-fired power plants. The other chapter focuses on the detailed effects of the regulated early closure and how they compare with alternative ways of achieving the same environmental effects (see Pereira and Pereira 2019a, b).
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Marvão Pereira, A., Pereira, R.M. (2021). Regulated Early Closures of Coal-Fired Power Plants and Tougher Energy Taxation on Electricity Production: Synergy or Rivalry?. In: Brites Pereira, L., Mata, M.E., Rocha de Sousa, M. (eds) Economic Globalization and Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-53265-9_17
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DOI: https://doi.org/10.1007/978-3-030-53265-9_17
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