Climate, wind energy, and CO2 emissions from energy production in Denmark

Federico Carlini, Bent Jesper Christensen*, Nabanita Datta Gupta, Paolo Santucci de Magistris

*Corresponding author for this work

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

Abstract

The dynamic relation between CO2 emissions and wind energy in Denmark is analyzed using a fractional cointegration approach, extended to accommodate covariates. The impact of climate and forces of demand on the potential of wind power production for emissions abatement is investigated. Emissions decline as temperature increases. Wind power production increases with precipitation and North Atlantic oscillations. Aggregate output matters for emissions in a manner consistent with an environmental Kuznets curve (EKC). Accounting for a seasonal trend, our main estimate of marginal CO2 emissions avoided (MEA) per MWh of wind energy produced is 0.16 tonnes, based on impulse responses. This estimate of the abatement potential of wind power is lower than values reported in the literature, but statistically significant, and robust to including climate and EKC variables. MEA is reduced by about one third by treating electricity prices as endogenous, and by one quarter by including emissions from combustion of biomass. However, formal exogeneity tests indicate that the main MEA estimate is not inflated due to left-out general equilibrium effects. Without covariates, estimated MEA is 0.07, and insignificant.

Original languageEnglish
Article number106821
JournalEnergy Economics
Volume125
Number of pages25
ISSN0140-9883
DOIs
Publication statusPublished - Sept 2023

Keywords

  • Climate
  • CO emissions
  • Demand
  • Fractional cointegration

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