• 93 views | 2 messages Discussion: LEAP
    Topic: Modelling Carbon Tax HelpSubscribe | Previous | Next
  • Humberto Lopez 7/18/2019

    Hello, I am trying to model carbon tax scenarios, I tried to input positive prices but there was no optimal solution found, I then selected negative taxes and the model does choose more renewable energies but the total investments and capacities are way higher than the no tax scenario. Could someone help me understand how to model and a see results for carbon taxes?

    All the best

    Humberto

  • Emily Ghosh 8/20/2019
      Best Response

    Hi Humberto,

    I apologize for the delayed response. I am unsure what you mean by positive and negative taxes. Are you entering carbon prices in the "Externality Cost" variable under the Effects branch found below Key Assumptions?

    As for your results, the Capacity Credit affects the amount of capacity that is added. More capacity is added for technologies with a lower capacity credit. Renewable plants tend to have a lower capacity credit as they are considered to be less "reliable". If you have specified the capacity credit for renewable technologies to be lower than fossil fuel plants, this is likely why you are seeing more capacity being added in the carbon tax scenario.

    The higher capacity is likely why you are seeing higher investment costs in the carbon tax scenario. The investment costs may also be higher if the capital and O&M costs specified for renewable technologies are higher than fossil fuel technologies.

    Note that while the investment costs might higher, you should find that the overall social costs will be lower in the carbon tax scenario.

    Hope this helps,
    Emily