Potential of CO2 (carbon dioxide) taxes as a policy measure towards low-carbon Portuguese electricity sector by 2050

The European Union proposed the introduction of taxes on emitted CO2 as an effective policy measure for the reduction of CO2 emissions in its electricity sector. Applying the TIMES (The Integrated MARKAL-EFOM System) modeling tool, this paper examines the cost effectiveness of different evolutions of CO2 taxes under the Emissions Trading System in Europe by 2050 in order to analyze the possible roles and limits of different mitigation technologies within the Portuguese electricity supply system. The results were analyzed based on the final year CO2 emissions of the electricity system when compared to 1990 levels. The results show that when CO2 prices stay below 50 [SIC]/tonne by 2050 there is no reduction in emitted CO2 emissions when compared to the levels of 1990. For CO2 prices reaching between 50 and 100 [SIC]/tonne there is a clear reduction in CO2 with the increase in the price, from 7% with 50 [SIC]/tonne to 79% with 100 [SIC]/tonne. For prices above 100 [SIC]/tonne the increased taxation has only a slight impact on the reduction of CO2 emissions, as even with a 300 [SIC]/tonne price the CO2 reductions achieved are only of 87%. (C) 2014 Elsevier Ltd. All rights reserved.