An Agent-Based Model of CO2 Policies and Electricity Generation

Abstract

The electricity infrastructure is essential to the functioning of society. In this chapter we describe the way in which we have modelled this socio-technical system in order to analyse CO2 policy instruments, comparing the results of “no intervention” with those of implementing taxation and emissions trading to reduce CO2 emissions in the production of electric power. Because power plants currently in operation have only a small emissions reduction potential, a reduction of 20 % by 2020 or 50 % by 2050 would require all new units to be designed and constructed to have near-zero CO2 emissions. In the model, power production companies own, operate and invest in power plants. They sell electricity and buy fuels and emission rights in simulated markets. When demand grows or assets age beyond their technical lifespan, they must decide on investments and select their technology of preference.