The impact of an ETS on the Australian energy sector: An integrated CGE and electricity modelling approach

Abstract

This paper utilises a new computable general equilibrium (CGE) model which integrates an electricity supply model to gauge the effects of a national emissions trading scheme (ETS) on the Australian energy sector and the broader economy. The modelling results show that an ETS can reduce emissions effectively and with a relatively small impact on the overall economy. But the impact of the ETS on individual sectors varies. Wind electricity generation is projected to benefit greatly. Brown coal electricity and gas electricity are expected to be adversely affected substantially. Somewhat surprisingly, the impact on black coal electricity is negative but relatively small.