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Modelling the Impacts of Carbon Tax on theAustralian National Electricit Market

Jing Qiu, Ramesh Bansal, Mithulananthan Nadarajah

School of Information Technology and ElectricalEngineering, The University of Queensland,

t uc a ampus, , ustra a,

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Structure

Introduction

Carbon policies

Simulation methods for a carbon tax in eneration costs

Results and discussions: the impacts of a carbon tax via

three defined indicators

Conclusions of major findings

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Introduction Putting monetary value on each tonne of carbon-equivalent emission is

called carbon pricing policy [1]. Carbon pricing policy mainly includes carbon tax and carbon emission

ermits tradin .

Behind the pass of the carbon tax law, several economic modellings are

done to review the broad impacts of carbon pricing policy on national.

This paper is an updated study with amending: 1) AUD $23; 2) short-

run; 3) coal compensation; 4) macro market study.

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Carbon policies1. Examples:

1) Emission Trading Scheme in New Zealand (NZ ETS) , since2008, NZ $ 12.50 per tonne, all sectors and all greenhouse gases, free

allocation 2 .

2) European Union Emission Trading Scheme (EU ETS), since

2005, large pollutants with a net heat supply in excess of 20 MW, .

3) South Africa, a carbon tax is introduced for new motor vehicles since

September 2010.

car on ax s ev e on coa o pro uce an mpor e n oIndia, since July 2010

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Selected Generation companies and their capacities

Company Region covered Coal (MW)Gas

(MW)

Renewable energy, including

hydro and wind power

(MW)

AGL QLD,SA,VIC 0 2180 509

Babcock&Brown NSW,QLD,SA,VIC 920 1096 0

TAS 0 440 0

CS* QLD 3060 400 0

Delta NSW 4250 0 0

Energy Brix VIC 200 0 0

Eraring NSW,VIC 2640 0 360

Ergon QLD 0 55 0

Hydro Tas TAS 0 0 2274

Infratil SA 0 40 0

IPM SA,VIC 2600 360 50

Loy Yang A VIC 2000 0 0

NSW 4640 55 0

Millmeran QLD 850 0 0

NSW Generic NSW 0 1700 0

Origin QLD,SA 0 725 0

Pelican Point SA 0 480 0

SA Wind SA 0 0 600

SA Generic SA 0 1250 0

SECV VIC 160 0 0

Sithe Power NSW 0 180 0

Snowy Hydro VIC, SNOWY 0 620 3950

Stanwell* QLD 3080 30 150

Tarong* QLD 1845 0 500

TRU VIC 1480 440 0

Vic Generic VIC 0 1090 0

Total for types of plants - 27725 11141 8393

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* In July 2011, CS Energy, Tarong Energy Corporation and Stanwell Corporation were restructured and merged into two companies -CS Energy and Stanwell Corporation.

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Simulation methods for a carbon tax ingenerat on costs

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*

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* emission factors are considered 1.1 and 0.55 for coal and gas respectively (tonne/MWh)

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The impacts of a carbon tax via three defined

1) Price 7080

10

20

30

40

50

$/MW

h

100MW

h)

0

NSW QLD SA TAS VIC

BAU Scenario 1 with fully purchased Scenario 2 with free allocation

50

60

70

80

icityprice($

10

20

3040

averageelec

t

9

0

Weeks

A

nnual

BAU Scenario 3 With 25% free allocat ion

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The impacts of a carbon tax via three defined

n ca ors2) Technology mix

2000

30004000

5000

GWh

50

100

150

200

TWh

0

NSW QLD SA TAS VIC Total

Gas BAU Scenario 1 with fully purchased

0

NSW QLD SA TAS VIC Total

Coal BAU Scenario 1 with fully purchased

20

25

Coal Gas

cenar o w t ree a ocat on

0

5

1015

TWh

Renewable

energy

10

Renewable energy BAU Scenario 1 wit h fully purchased

Scenario 3 with 25% free allocation

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The impacts of a carbon tax via three defined

n cators3) Emission reduction

Indicators\Scenari

osBAU Fully purchased

25% Free

allocation

Average annualelectricity price

($/MWh)

52 68 60

Power generation

by coal (GWh)148,889 133,568 143,877

Power generation

by gas (GWh)1,785 3,424 2,768

Power generation

by renewableenergy (GWh) 26,479 28,654 28,325

Emission0 22,586,324 7,328,847

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Conclusions

1 Ex ected rises of electricit rices es eciall

in off-peak periods; 2 Gas roliferation in eneration merit order,

which is the main reason for emission reduction

of a carbon tax; 3) Free allocation of emission permits is an

adverse policy in cap-and-trade stage;

car on tax as m te unct on ostimulating renewable energy development.

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References

[1] M. Nicholson, T. Biegler, and B. W. Brook, "How carbon pricing changes the relative

competitiveness of low-carbon baseload generating technologies,"Energy, vol. 36, no. 1, pp. 305-

313, 2011.

[2] T. Adams and J. A. Turner, "An investigation into the effects of an emissions trading scheme onforest management and land use in New Zealand," Forest Policy and Economics, no. 1, pp. 1-

13, 2011.

[3] A. Bernard and M. Vielle, "Assessment of European Union transition scenarios with a special focus

on the issue of carbon leakage,"Energy Economics, vol. 31, Supplement 2, no. 8, pp. S274-

S284, 2009.

[4] R. Betz and A. D. Owen, "The implications of Australias carbon pollution reduction scheme for its

National Electricity Market,"Energy Policy, vol. 38, no. 9, pp. 4966-4977, 2010.

[5] Australian Energy Market Operator (AEMO). [Online]. Available:

http://www.aemo.com.au/data/market_data.html.

[6] National Greenhouse Gas Inventory (NGGI). [Online]. Available:

http://www.greenhouse.gov.au/inventory/.

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