Economic, environmental, and social assessment of the replacement of coal-fired thermoelectric plants for solar and wind energy in Chile

Abstract

In 2019, a plan for the early shutdown of coal-fired power plants in Chile was announced, which will contribute to cleaner production in the energy sector and electricity-intensive industries. For the above, this research simulates the phase-out of coal-fired thermoelectric generation by solar and wind energy with an intersectoral model. Previous literature using a traditional input‒output model can evaluate only the effects of increased renewable energy investment. In contrast, this study is novel because it uses a mixed input‒output model that also allows the production of the thermoelectric, solar, and wind sectors to be exogenously modified. The results show that net national production rises by USD 977 million since the drop in thermoelectric energy is more than compensated by the investment and production in renewable energies. However, employment is reduced by 24 thousand jobs. In addition, replacing coal-fired thermoelectric plants would reduce CO2 emissions at the national level by 37%. The magnitude of the emissions reduction under this climate policy is much higher than the reduction yielded by carbon taxes, environmental taxes on multiple pollutants, and renewable energy subsidies previously evaluated in Chile by other studies. Thus, it is concluded that this policy is more compatible with carbon neutrality. Finally, in the cities where coal-fired thermoelectric plants are located, the social health benefits from lower premature mortality are valued at USD 27 million.