Carbon Taxes Will Keep Developing Countries Down

on June 05, 2013 at 10:00 AM

Germany Debates Renewable Energy Investements

Air pollution increased rapidly along with industrial growth during the last century. Major pollutants include SO2, NOX, suspended particulate matter, and carbon. Recently, CO2 has been suspected of being a major greenhouse gas that may contribute to what some call the climate change phenomenon.

The relationship between CO2 and climate change remains unclear. Fossil-fuel burning thermal power plants contribute to atmospheric pollution, and as such, research is underway to determine feasible pollution mitigation strategies. Possibilities include installation of pollutant cleaning equipment, switching to low-emission fuels, replacing old fuel-burners and generator units, and emission dispatching.

The literature suggests the first three options are longer-term propositions. In fact, the feasibility of the first three options will be determined by power generation companies, and not national government-level regulation.

There are currently three short-term solutions, called load dispatch strategies: a) Economic load dispatch (ELD), where electricity demand is shared across thermal power plants in a way that minimizes their total fuel costs; b) Economic emission dispatch (EED), where electricity demand is shared across thermal power plants in a way that minimizes CO2 and/or other pollutants’ emissions; and c) Combined economic and emission dispatch (CEED), where electricity demand is shared across thermal power plants in a compromised solution that minimizes power plants’ total fuel costs and CO2 emissions. Obviously, EED is an environmentally-friendly strategy, as opposed to ELD, which prioritizes economic concerns.

The goal of this research was to determine a profitable load dispatch strategy for a country’s fleet of thermal power plants. Therefore, a new benchmark for load dispatch strategies was introduced based on the environmental Kuznets curve (EKC). The EKC illustrates the relationship between economic growth measured by gross domestic product per capita and pollution levels. The EKC implies that starting from low income (per capita) levels, pollutant emissions per capita tend to increase, but at a slower pace. After a certain income threshold, called the turning point, pollutant emissions start to decline as income continues to increase.

Several econometric studies in different countries or groups of countries verify – in practice – the EKC relationship between economic growth and pollutant emissions. This research sheds light on the relationship of pollutant emissions reduction achieved by EED and per capita income increases. Specifically, it considers CO2 as one of the pollutants and demonstrates how its reduction is achieved by EED and the increase in per capita income. Finally, the relationship between fuel costs and the short-term load dispatch strategies ELD and CEED are compared.

Various case studies in different countries were analysed, including power systems on the Greek island Crete, the Midwestern USA, Taiwan, etc.

The research clearly proved the environmentally-friendly EED strategy is only profitable when applied to rich, developed country economies. Specifically, the EED strategy is profitable for countries with income-per-capita greater than income-per-capita at threshold value (expressed by a new closed-formula, (24)). The threshold income-per-capita is closed to turning point in EKC.

Moreover, the research indicates developed country governments and intergovernmental organizations employing the EED strategy will effectively force developing countries to increasingly pay CO2 emission penalties (imposed carbon taxes).

I think this is a “trick” that further reduces threshold income-per-capita as expressed by closed-formula, (25). And as a result, these countries can never transition from “developing” to “developed” status! The final conclusion is: Do not force carbon taxes on developing countries.

This is an abstract of the peer-reviewed scientific paper: “On the Profitability of Load Dispatch in Power Systems,” which can be accessed in its entirety, here.

John G. Vlachogiannis received BSc in Electrical Engineering, 1990; PhD in Electrical and Computer Engineering, 1994 both from Aristotle University of Thessaloniki, Greece. He has been with Merchant Marine Academy of Aspropyrgos, various TEI in Greece, Technical University of Denmark, Varna Free University of Cyprus and now with School of Pedagogical and Technological Education (ASPETE) in Athens and Industrial and Energy Informatics (IEI) Laboratory in Lamia, Greece. His research interests include control strategies applied in planning and operation of modern power systems. He is a member of the Greek Computer Society (Member of IFIP, CEPIS) and member of Technical Chamber of Greece.

 

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