Cross-Country Electricity Trade, Renewable Energy and European Transmission Infrastructure Policy

CER-ETH Center of Economic Research at ETH Zurich, Working Paper No. 16/229

46 Pages Posted: 13 Jan 2016

See all articles by Jan Abrell

Jan Abrell

ETH Zürich - Centre for Energy Policy and Economics (CEPE)

Sebastian Rausch

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich; Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change

Date Written: January 11, 2016

Abstract

This paper develops a multi-country multi-sector general equilibrium model, integrating high-frequency electricity dispatch and trade decisions, to study the effects of electricity transmission infrastructure (TI) expansion and renewable energy (RE) penetration in Europe for gains from trade and carbon dioxide emissions in the power sector. TI can benefit or degrade environmental outcomes, depending on RE penetration: it complements emissions abatement by mitigating dispatch problems associated with volatile and spatially dispersed RE but also promotes higher average generation from low cost coal if RE production is too low. Against the backdrop of European decarbonization and planned TI expansion, we find that emissions increase for current and targeted year-2020 levels of RE production and decrease for year-2030 targets. Enhanced TI yields sizeable gains from trade that depend positively on RE penetration, without creating large adverse impacts on regional equity.

Keywords: F18, Q28, Q43, Q48, C68

Suggested Citation

Abrell, Jan and Rausch, Sebastian, Cross-Country Electricity Trade, Renewable Energy and European Transmission Infrastructure Policy (January 11, 2016). CER-ETH Center of Economic Research at ETH Zurich, Working Paper No. 16/229, Available at SSRN: https://ssrn.com/abstract=2713900 or http://dx.doi.org/10.2139/ssrn.2713900

Jan Abrell

ETH Zürich - Centre for Energy Policy and Economics (CEPE) ( email )

8092 Zurich
Switzerland

Sebastian Rausch (Contact Author)

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change ( email )

77 Massachusetts Ave, Bldg E40-474
Cambridge, MA 02139
United States

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