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Environmentally Damaging Electricity Trade

Pineau, Pierre-Olivier and De Villemeur, Étienne (2009) Environmentally Damaging Electricity Trade. TSE Working Paper, n. 09-118

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Official URL: http://tse-fr.eu/pub/21971

Abstract

Electricity trade across regions is often considered welfare enhancing. We show in this paper that this could be reconsidered if environmental externalities are taken into account. We consider two cases where trade is beneficial, before accounting for environmental damages: first, when two regions with the same technology display some demand heterogeneity; second when one region endowed with hydropower arbitrages with its "thermal" neighbor. Our results show that under reasonable demand and supply elasticities, trade comes with an additional environmental cost. This calls for integrating environmental externalities into market reforms when redesigning the electricity sector. Two North American applications illustrate our results: trade between Pennsylvania and New York, and trade between hydro-rich Quebec and New York.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2009
Uncontrolled Keywords: Electricity trade, hydropower, greenhouse gas emissions
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 18 Jan 2012 06:01
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:21971
URI: http://publications.ut-capitole.fr/id/eprint/3281

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