Investigating the Impact of Carbon Tax to Power Generation in Java-Bali System by Applying Optimization Technique
Java-Bali power system dominates the national installed capacity and will contribute to about 76% of the national CO2 emissions from the electricity sector in the future. Thus, minimizing CO2 emission from the Java-Bali system can help Indonesia to reduce the national CO2 emissions level. We apply optimization approach to investigate this problem by including carbon tax into the cost function. We analyzed data based on electricity generating system in 2008. In general the optimization showed that diesel and gas turbine is not needed in the power plant system. Further, the simulation showed that if Indonesia adopted carbon tax by US$56/ton CO2 - USD 86/tCO2; it will lead to three major changing. First, carbon tax will increase the cost of power plant or equivalently increase tax revenue to about 2.1% of GDP in a year. Second, combine cycle has important role to offset decreasing output in steam power plant. Finally, by implementing carbon tax, daily CO2 can decrease by 77,586 ton per day. By applying sensitivity analysis, we also found a structural break in marginal cost when carbon tax is higher than US$ 50/tCO2. There are some weaknesses from this study such as not use strong assumption for availability factor and generating costs. This study proposed that government needs to optimize utilization of combine cycle power plan to offset steam power and implement carbon tax above US$ 50/ ton CO2, to reduce CO2 emissions significantly.
Electric Sector Models
Analysis of investment decisions in the electric sector is a subject with a long history of scholarship, with a rich literature, and extensive applications in practice. Many complex mathematical models are used by electric utilities for planning purposes, some of which, such as the WASP model, have found application in a number of developing countries.1 But given the existence of a number of excellent literature reviews, such as that of Anderson (1972), we shall not attempt to provide any detailed review here. Rather, the emphasis will be on an elaboration of the fundamental concepts involved, and an exposition of modelling approaches that lend themselves to integration with other energy sectors, or to integration with energy system-wide and economy-wide models. Thus, while many of the finer points of reliability analysis, and transmission line planning, are not taken up in any great detail here, we pay a great deal of attention to the interaction between investment requirements in the electric sector to investment flows throughout the economy — a subject taken up in some detail in Chapter 10.2 In this chapter, then, we develop the fundamental concepts; the linearization of load duration curves, formulation of the investment decision as a mathematical programming problem, the complications arising from the addition of a spatial dimension, and some environmental considerations.
A carbon tax to reduce CO2 emissions in Europe
Abstract This paper examines the effects of introducing a tax on carbon dioxide emissions produced by combustion processes in OECD-European countries. A sectoral model of energy consumption is constructed to examine energy-saving and inter-fuel substitution effects induced by the introduction of various carbon taxes. The simulation period is 1989–1994. Our results provide a mild support to the environmental role of a carbon tax. Energy-saving or inter-fuel substitution processes, that result from the introduction of environmental taxation, stabilize emissions at the 1988 level only in the electricity generation sector, and only if high tax rates are assumed ($100/ton.C). By contrast, total emissions (all sectors and all fuels) keep growing, and the implementation of a tax of $100/ton.C can only reduce the emission growth rate. These results would recommend the introduction of several coordinated environmental instruments. The last part of the paper compares results concerning OECD-Europe with those obtained when examining a single country (Italy). The comparison does not seem to be in favour of a uniform carbon tax; it rather indicates that environmental policy should be designed taking into account the specific economic situation and technological choices of each single country. Country-specific coordinated environmental policies are to be recommended, where international coordination ought to concern environmental targets rather than instruments.