?url_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Adc&rft.relation=https%3A%2F%2Fpublications.ut-capitole.fr%2Fid%2Feprint%2F47424%2F&rft.title=Climate+policy+with+electricity+trade&rft.creator=Ambec%2C+Stefan&rft.creator=Yang%2C+Yuting&rft.subject=B-+ECONOMIE+ET+FINANCE&rft.description=Trade+reduces+the+effectiveness+of+climate+policies+such+as+carbon+pricing+when+domestic+products+are+replaced+by+more+carbon-intensive+imports.+We+investigate+the+impact+of+unilateral+carbon+pricing+on+electricity+generation+in+a+country+open+to+trade+through+interconnection+lines.+We+characterize+the+energy+mix+with+intermittent+renewable+sources+of+energy+(wind+or+solar+power).+Electricity+trade+limits+the+penetration+of+renewables+due+to+trade-induced+competition.+A+carbon+border+adjustment+mechanism+(CBAM)+removes+this+limit+by+increasing+the+cost+of+imported+power%2C+or+by+deterring+imports.+The+CBAM+must+be+complemented+by+a+subsidy+on+renewables+to+increase+renewable+generation+above+domestic+consumption.+The+interconnection+line+is+then+used+to+export+power+rather+than+importing+it+when+renewables+are+producing.+We+also+examine+network+pricing+and+investment+into+interconnection+capacity.+A+higher+carbon+price+increases+interconnection+investment+which+further+reduces+the+effectiveness+of+carbon+pricing.+In+contrast%2C+when+renewable+electricity+is+exported%2C+a+higher+subsidy+on+renewables+reduces+further+carbon+emissions+by+expanding+interconnection+capacity.&rft.publisher=TSE+Working+Paper&rft.date=2023-10&rft.type=Monograph&rft.type=NonPeerReviewed&rft.format=text&rft.language=en&rft.identifier=https%3A%2F%2Fpublications.ut-capitole.fr%2Fid%2Feprint%2F47424%2F1%2Fwp_tse_1422.pdf&rft.identifier=++Ambec%2C+Stefan+%3Chttps%3A%2F%2Fwww.idref.fr%2F131161431%3E+and+Yang%2C+Yuting+%3Chttps%3A%2F%2Fwww.idref.fr%2F249472252%3E++(2023)+Climate+policy+with+electricity+trade.++TSE+Working+Paper%2C+n.+23-1422%2C+Toulouse+++++&rft.relation=http%3A%2F%2Ftse-fr.eu%2Fpub%2F128018&rft.language=en