PNNL

Abstract

In this paper we investigate CO2 emissions scenarios for Colombia and the effects of implementing carbon taxes and abatement targets on the energy system. By comparing baseline and policy scenario results from two integrated assessment partial equilibrium models-TIAM-ECN and GCAM; and two general equilibrium models-Phoenix and MEG4C, we provide an indication of the future developments and dynamics in the Colombian energy system. Currently, the carbon intensity of the energy system in Colombia is low compared to other countries in Latin America. However, this trend may change given the projected rapid growth of the economy and the potential increase in the use of carbon-based technologies for energy. Climate policy in Colombia is under preparation and has yet to consider economic instruments such as taxes and abatement targets. This paper shows that both taxes and targets can achieve significant CO2 reductions in Colombia. Though abatement may be achieved through different pathways, both taxes and targets have the effect of allowing cleaner energy sources to enter the market, and also reducing final energy demand through energy efficiency improvements and reduced energy production. Electricity plays an important role in achieving CO2 emissions reductions in Colombia, through the increase of hydropower, the introduction of wind technologies, and the deployment of biomass, coal and gas with CO2 capture and storage (CCS). Uncertainty on the prevailing mitigation pathway reinforces the importance of climate policy to guide sectors towards the desired state. It also requires the analysis of economy-wide implications such as potential losses in GDP and consumption. Further analysis of the implications of carbon taxes and targets in Colombia require broader assessment of the legal, institutional, social and environmental barriers, work that is beyond the scope of this paper.