Analysis of a co2 tax on thermoelectric generators using cost-effectiveness indicators

Abstract

In 2017, Chile introduced a CO2 tax on emissions from fixed sources with a thermal power ≥ 50 MW. Therefore, this study uses cost-effectiveness indicators to assess whether investing in carbon capture and sequestration technology is an attractive option for each of the thermoelectric generators with the objective of reducing its CO2 emissions and tax burden. The results indicate that a tax of US$5/t CO2 is fully infective in reducing emissions because thermoelectric generators only reduce their emissions if taxes were set at approximately US$30/t CO2. Thus, it can be concluded that the current tax only serves for collecting rather than for reducing emissions.