Border Tax Adjustments to Negate the Economic Impact of an Electricity Generation Tax

In the 2008 Budget Review, the South African government announced its intention to levy a 2c/kWh tax on the sale of electricity generated from non-renewable sources. This measure is intended to serve a dual purpose of helping to manage the current electricity supply shortages and to protect the environment (National Treasury 2008). An electricity generation tax is set to have an impact on the South African economy. However, several instruments have been proposed in the literature to protect the competitiveness and economy of a country when it imposes a green tax, one of these remedies being border tax adjustments.This paper evaluates the effectiveness for the South African case, of border tax adjustments (BTAs) in counteracting the negative impact of an electricity generation tax on competitiveness. The remedial effects of the BTAs are assessed in the light of their ability to maintain the environmental benefits of the electricity generation tax. Additionally, the the Global Trade Analysis Project (GTAP) model is used to evaluate the impact of an electricity generation tax on the South African, SACU and SADC economies and to explore the possibility of reducing the economic impact of the electricity generation tax through BTAs. The results show that an electricity generation tax will lead to a contraction in South African gross domestic product (GDP). Traditional BTAs are unable to address these negative impacts. We propose a reversedBTA approach where gains from trade are utilised to counteract the negative effects of an electricity generation tax, while retaining the environmental benefits associated with the electricity generation tax. This is achieved through a lowering of import tariffs, as this will reduce production costs and thereby restore the competitiveness of the South African economy. The reduction in import tariffs not only negates the negative GDP impact of the electricity generation tax, but the bulk of CO2 abatement from the electricity generation tax is retained.

What Advertisers Want: Measuring Institutions: Indicators of Political Rights, Property Rights and Political Instability in Malawi

In the 2008 Budget Review, the South African government announced its intention to levy a 2c/kWh tax on the sale of electricity generated from non-renewable sources. This measure is intended to serve a dual purpose of helping to manage the current electricity supply shortages and to protect the environment (National Treasury 2008). An electricity generation tax is set to have an impact on the South African economy. However, several instruments have been proposed in the literature to protect the competitiveness and economy of a country when it imposes a green tax, one of these remedies being border tax adjustments.This paper evaluates the effectiveness for the South African case, of border tax adjustments (BTAs) in counteracting the negative impact of an electricity generation tax on competitiveness. The remedial effects of the BTAs are assessed in the light of their ability to maintain the environmental benefits of the electricity generation tax. Additionally, the the Global Trade Analysis Project (GTAP) model is used to evaluate the impact of an electricity generation tax on the South African, SACU and SADC economies and to explore the possibility of reducing the economic impact of the electricity generation tax through BTAs. The results show that an electricity generation tax will lead to a contraction in South African gross domestic product (GDP). Traditional BTAs are unable to address these negative impacts. We propose a reversedBTA approach where gains from trade are utilised to counteract the negative effects of an electricity generation tax, while retaining the environmental benefits associated with the electricity generation tax. This is achieved through a lowering of import tariffs, as this will reduce production costs and thereby restore the competitiveness of the South African economy. The reduction in import tariffs not only negates the negative GDP impact of the electricity generation tax, but the bulk of CO2 abatement from the electricity generation tax is retained.

Investment planning in electricity production under CO2 price uncertainty

The scope of this work is to investigate the effect that various scenarios for emission allowance price evolution may have on the future electricity generation mix of Greece. The renewable energy generation targets are taken into consideration as a constraint of the system, and the learning rates of the various technologies are included in the calculations. The national electricity generation system is modelled for long-term analysis and an optimisation method is applied, to determine the optimal generating mix that minimises electricity generation cost, while satisfying the system constraints and incorporating the uncertainty of emission allowance prices. In addition, an investigation is made to identify if a point should be expected when renewable energy will be more cost-effective than conventional fuel electricity generation. The work is interesting for investment planning in the electricity market, as it may provide directions on which technologies are most probable to dominate the market in the future, and therefore are of interest to be included in the future power portfolios of related investors. (C) 2010 Elsevier B.V. All rights reserved

Bioenergy for Electricity Generation

Energy from biological materials addresses a number of key energy and environmental issues, including climate change, energy security, and replacement of carbon-intensive energy sources. This thesis assesses the feasibility of using three types of biological material for U.S. electricity generation: wood chips, biofuels, and organic waste. To evaluate economic feasibility, this paper examines system design, feedstock availability, and other advantages and disadvantages of alternative biological feedstocks. It also discusses three cost-benefit studies evaluating wood chips, biofuels, and waste-to-energy. This thesis recommends that the U.S. electricity sector consider investing in additional use of wood chips and organic waste and continue developing research for next-generation biofuel. Wood chips can cost less than heating oil. Municipal solid waste as a fuel could manage and reduce carbon. Although next-generation biofuels are more expensive in terms of capital and operating costs than conventional biofuel and fossil fuels, their use could mitigate food security and environmental concerns. All three technologies are used globally, proving technical feasibility. The availability of wood and waste in the U.S. offers another incentive for feedstock. Additional funding and research remain challenges for next-generation biofuel. Future research in bioenergy could include cost-benefit and carbon emission analyses that incorporate additional production pathways, comparisons to current renewable feedstocks, and recommended sites for the three technologies this paper addresses.Polymathic Scholar

Insufficient Incentives for Investment in Electricity Generation

In theory, competitive electricity markets can provide incentives for efficient investment in generating capacity. We show that if consumers and investors are risk averse, investment is efficient only if investors in generating capacity can sign long-term contracts with consumers. Otherwise the uncovered price risk increases financing costs, reduces equilibrium investment levels, distorts technology choice towards less capital-intensive generation and reduces consumer utility. We observe insufficient levels of long-term contracts in existing markets, possibly because retail companies are not credible counter-parties if their final customer can switch easily. With consumer franchise, retailers can sign long-term contracts, but this solution comes at the expense of the idea of retail competition. Alternative capacity mechanisms to stimulate investment are discussed

Lunar ISRU Energy Storage and Electricity Generation

The survival of the astronauts and their equipment is the priority for any long-term exploration mission to the Moon. The provision of energy during the long lunar nights is a critical part of these missions. Several approaches have recently been considered to store and provide energy on the Moon by means of ISRU (In-Situ Resource Utilisation). We present a review of the energy requirements for a long mission scenario, and a trade-off analysis of the potentially suitable technologies for an ISRU-based system able to store heat and generate electricity. The most promising combinations of technologies are presented.Peer ReviewedPostprint (published version

The impact of an electricity generation tax on the South African economy

In the 2008 budget of the Minister of Finance, the South African Government proposed to impose a 2 cents/kilowatt-hour (c/kWh) tax on the sale of electricity generated from non-renewable sources; this tax is to be collected at source by the producers/generators of electricity. The intention of this measure is to serve a dual purpose of protecting the environment and helping to manage the current electricity supply shortages by reducing demand. The objective here is to evaluate the impact of such an electricity generation tax on the South African, SACU and SADC economies. The paper firstly considers the theoretical foundations of an electricity generation tax supported by international experiences in this regard. This section also contrasts the suitability of a permit with a tax system to achieve CO2 emission reduction. We subsequently apply the Global Trade Analysis Project (GTAP) model to evaluate the impact of an electricity generation tax on the South African, SACU and SADC economies. We simulate the proposed tax as a 10 percent increase in the output price of electricity. We assume a closure rule that allows unskilled labour to migrate and a limited skilled workforce. As expected, the electricity generation tax will reduce demand. Due to the decrease in domestic demand, export volume increases and import volume decreases, this is despite a weaker terms of trade. We also found that unemployment for unskilled labour increases and wages of skilled workers are expected to decrease. A unilateral electricity generation tax will benefit other SACU and SADC countries through an improvement in relative competitiveness, as shown by the improvement of the terms of trade for these regions. If, however, the benefits of pollution abatement are internalised, then electricity generation tax is expected to yield a positive effect on the South African economy.

Measures to promote renewable energy for electricity generation in Algeria

Algeria has enormous renewable energy potential. However, fossil fuels remain the main electricity generation source, and the country is the third largest CO2 emitter in Africa. Algeria is also particularly vulnerable to climate change. Therefore, a set of actions related to energy, forests, industry and waste sectors have been programmed, over the period 2015–2030, and the government action program has given priority to promote renewable energy. In this sense, Algeria is committed to significantly promote investment in renewable energy, during the period 2020–2030. Thus by 2030, renewable electricity production capacity will achieve 22,000 MW, representing 27% of total electricity generation. This paper analyzes the electricity generation measures implemented in Algeria to reach the required energy mix, the legislative framework, financial aid, the feed-in tariff system, the tax incentives, and the tender and auctions undertaken. The analyses reveal that, although the electricity price premium policy has not been revoked, the newly enacted tender scheme is designed to become the standard procedure for launching renewable energy projects in Algeria in the coming years