Modelling Carbon Tax in the UK Electricity Market using an Agent-Based Model

Kell, AJM; Forshaw, M; McGough, AS

doi:10.1145/3307772.3330175

Modelling Carbon Tax in the UK Electricity Market using an Agent-Based Model

Lookup NU author(s): Alex Kell, Dr Matthew Forshaw ORCiD, Dr Stephen McGough

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This is the authors' accepted manuscript of a conference proceedings (inc. abstract) that has been published in its final definitive form by ACM, 2019.

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Abstract

Impacts on natural and human systems have already been observed due to anthropogenic greenhouse gas emissions [17]. To reduce these emissions, a transition to a low-carbon economy is required. Carbon taxes can be used as a tool for pricing in the negative externalities of pollution and enabling a more rapid transition to a low-carbon economy.This paper proposes the use of agent-based models to simulate an electricity market. We have used the United Kingdom as an exemplar, however any country can be used through parametrisation. We vary carbon tax to observe the effects on investment up until 2050. We find that a carbon tax of £70 ($90) per tonne of CO2 is sufficient in driving investment to an almost 100% renewable energy supply. A less aggressive option, however, of setting a carbon tax at £20 ($26) would lead to a 50% low-carbon, 50% traditional generation energy mix.