Impacts of Climate change and Energy Policies on the electricity Sector

Abstract: The electricity sector is and will be affected both by climate change and by climate change mitigation policies, and ICEPS analyses the effects of mitigation policies on the electricity sector. Building on, extending and supporting other projec ts, ICEPS examines the impacts of mitigation policies with an emphasis on supply and demand in Norway, but incorporates the Nordic electricity market and its links to the EU. Mitigation policies will increase the cost of electricity due to the fossil inpu ts of electricity production in Europe. The cost increase depends on the stringency of the emission reductions sought and the policy instruments used, and Europe sets the scene for Norway in important ways. Policy instruments are important both in how the y distribute the burden across society and over time, and also in how they facilitate development of and transition to new technologies. The research employs economic models, including numerical ones, and highlights the role of expectations and political feasibility.