Optimum carbon tax rate for emission targets of electricity generation system by life cycle techno-economic-environmental optimization model

Abstract

Reduction of greenhouse gas emissions from the electricity sector is of special interest for decarbonization of energy systems. Optimum carbon tax as a powerful policy tool is here studied by integrated techno-economic-environmental life cycle analysis in a unit commitment problem. The present model is formulated as a bi-level optimization problem to reach the optimum carbon tax rates for different emission targets. The total life cycle CO₂ emissions are estimated to be 20333.90 tons/hr in a real case study of Iran's electricity sector for the peak demand hour. The carbon tax rate for a 2 % and a 3 % emissions reduction is equal to 15.87 and 24.65 $/ton, respectively. In the business-as-usual scenario, higher carbon taxes will be required each year to meet the same emission target. However, developing the electricity sector with cleaner technologies and strategic plans may decrease the carbon tax rate. The extent of this reduction depends on the type of development program implemented in the green revolution scenario. Therefore, policy makers play a direct role in ensuring the sustainable development of the electricity sector. The present model provides a robust framework to analyze the real carbon tax rates for the whole life cycle of electricity generation dispatch.