Brown Coal Exit
Friday, 18 March 2016 - 3:00pm to 4:00pm
Brown coal exit: a market mechanism for regulated closure of highly emissions intensive power stations
Update 18th March: Presentation Slides now available. See link below.
In this seminar Assoc. Prof. Jotzo will present his and Salim Mazouz' recent paper
on a market mechanism for a regulated exit of highly emissions intensive power stations from the electricity grid.
The starting point is that there is surplus capacity in coal fired power generation in Australia. In the absence of a carbon price signal, black coal generation capacity may leave the market instead of high emitting brown coal power stations.
What are the options for a mechanism of regulated power station closure using a market mechanism ?
Plants bid competitively over the payment they require for closure, the regulator chooses the most cost effective bid, and payment for closure is made by the remaining power stations in proportion to their carbon dioxide emissions. This could overcome adverse incentive effects for plants to stay in operation in anticipation of payment for closure and solve the political difficulties and problems of information asymmetry that plague government payments for closure and direct regulation for exit
Exploring the theoretical issues with empirical illustrations suggests that closure of a brown coal fired power station in Australia could yield emissions savings at costs that are lower than the social benefits. The analysis is applicable to other countries.
This proposal has found significant interest among industry and policy stakeholders.
Seminar Room, Lab 14
700 Swanston St
Crawford School, ANU
Frank Jotzo is Associate Professor at and Deputy Director of ANU Crawford School of Public Policy, Director of the Centre for Climate Economics and Policy, and an ANU Public Policy Fellow. His research focuses on policy relevant aspects of climate change, energy, and broader issues of environment, development and economic reform. He is a frequent contributor to Australian and international policy debates. Frank Jotzo is a Lead Author of Intergovernmental Panel on Climate Change 5th Assessment Report, and is Associate Editor of the journals Climate Policy and Australian Journal of Agricultural and Resource Economics. He has been involved in a number of policy research and advisory exercises, including as senior advisor to Australia’s Garnaut Climate Change Review, advisor to Indonesia‘s Minister of Finance and the World Bank. He currently leads a collaborative research program on market mechanisms for China’s climate and energy policy and is a member of advisory bodies on climate change to the governments of South Australia and the Australian Capital Territory. He teaches the courses Domestic Climate Change Policy and Economics and Research in Climate Change Economics and Policy, and co-convenes the Master of Climate Change degree.