This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

This dissertation consists of three independent essays in macroeconomics. The first essay studies the transition to a low carbon economy using an extension of the neoclassical growth model featuring endogenous energy efficiency, exhaustible energy and explicit climate-economy interaction. I derive the properties of the laissez faire equilibrium and compare them to the optimal allocations of a social planner who internalizes the climate change externality. Three main results emerge. First, the exhaustibility of energy generates strong market based incentives to improve energy efficiency and reduce CO2 emissions without any government intervention. Second, the market and optimal allocations are substantially different suggesting a role for the government. Third, high and persistent taxes are required to implement the optimal allocations as a competitive equilibrium with taxes. The second essay focuses on coal fired power plants (CFPP) - one of the largest sources of CO2 emissions globally - and their generation efficiency using a macroeconomic model with an embedded CFPP sector. A key feature of the model is the endogenous choice of production technologies which differ in their energy efficiency. After establishing four empirical facts about the CFPP sector, I analyze the long run quantitative effects of energy taxes. Using the calibrated model, I find that sector-specific coal taxes have large effects on generation efficiency by inducing the use of more efficient technologies. Moreover, such taxes achieve large CO2 emissions reductions with relatively small effects on consumption and output. The final essay studies the procyclicality of fiscal policy in developing countries, which is a well-documented empirical observation seemingly at odds with Neoclassical and Keynesian policy prescriptions. I examine this issue by solving the optimal fiscal policy problem of a small open economy government when the interest rates on external debt are endogenous. Given an incomplete asset market, endogeneity is achieved by removing the government's ability to commit to repaying its external obligations. When calibrated to Argentina, the model generates procyclical government spending and countercyclical labor income tax rates. Simultaneously, the model's implications for key business cycle moments align well with the data.

This dissertation consists of three independent essays in macroeconomics. The first essay studies the transition to a low carbon economy using an extension of the neoclassical growth model featuring endogenous energy efficiency, exhaustible energy and explicit climate-economy interaction. I derive the properties of the laissez faire equilibrium and compare them to the optimal allocations of a social planner who internalizes the climate change externality. Three main results emerge. First, the exhaustibility of energy generates strong market based incentives to improve energy efficiency and reduce CO2 emissions without any government intervention. Second, the market and optimal allocations are substantially different suggesting a role for the government. Third, high and persistent taxes are required to implement the optimal allocations as a competitive equilibrium with taxes. The second essay focuses on coal fired power plants (CFPP) - one of the largest sources of CO2 emissions globally - and their generation efficiency using a macroeconomic model with an embedded CFPP sector. A key feature of the model is the endogenous choice of production technologies which differ in their energy efficiency. After establishing four empirical facts about the CFPP sector, I analyze the long run quantitative effects of energy taxes. Using the calibrated model, I find that sector-specific coal taxes have large effects on generation efficiency by inducing the use of more efficient technologies. Moreover, such taxes achieve large CO2 emissions reductions with relatively small effects on consumption and output. The final essay studies the procyclicality of fiscal policy in developing countries, which is a well-documented empirical observation seemingly at odds with Neoclassical and Keynesian policy prescriptions. I examine this issue by solving the optimal fiscal policy problem of a small open economy government when the interest rates on external debt are endogenous. Given an incomplete asset market, endogeneity is achieved by removing the government's ability to commit to repaying its external obligations. When calibrated to Argentina, the model generates procyclical government spending and countercyclical labor income tax rates. Simultaneously, the model's implications for key business cycle moments align well with the data.

This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

Success or failure of climate policies in limiting warming to beneath particular thresholds depends on several physical, economic and social uncertainties. Whilst scenario analysis can be informative as to the types of policies that are required to achieve these goals, the complexity of scenario analysis often masks the underlying fundamental choices. This dissertation introduces the concept of the ‘decarbonization identity' to simply and systematically describe the mutually exclusive and collectively exhaustive range of choices available in future climate policy decisions. The simple identity states that the remaining carbon budget [B] for a given level of warming can be partitioned into four areas: the already committed 'baked-in' emissions from existing capital stock [E]; new commitments arising from investments in additional capital stock yet to be made [N]; less the stranding of existing or future capital stock [S]; and the additional atmospheric space created by negative emissions technologies (NETs) [A]. This dissertation finds that currently operating electricity generators [E] would already emit more CO2 (~300 GtCO₂) then is compatible with currently available generation-only carbon budgets [B] for a temperature rise of 1.5-2°C (~240 GtCO₂). In addition, the current pipeline of planned fossil fuel power plants would add almost the same amount [N] of emission commitments (~270 GtCO₂) to this capital stock again. Finally, these carbon budgets are inherently uncertain and depend on future, yet to be achieved, reductions of short-lived climate pollutant (SLCP) emissions. Should those reductions not be achieved today's remaining carbon budgets could be up to 37% smaller. Policymakers have now five choices to achieve the Paris climate goals: (1) protect and enhance carbon budgets by early and decisive action on SLCPs; (2) retrofit existing power generators with carbon capture and storage (3) ensure that no new polluting capital stock is added; (4) strand a considerable amount of global electricity generation capacity; and (5) create additional atmospheric space by scaling up NETs. Over the coming years and decades, the challenge will be to identify the most efficient balance of these options.

Whether it is based on current emissions data or future projections of further growth, the building sector currently represent the largest and singular most important contributor to greenhouse gas (GHG) emissions globally. This notion is also supported by the Intergovernmental Panel on Climate Change based on projection scenarios for 2030 that emissions from buildings will be responsible for about one-third of total global emissions. As such, improving the energy efficiency of buildings has become a top priority worldwide. A significant majority of buildings that exist now will still exist in 2030 and beyond; therefore the greatest energy savings and carbon footprint reductions can be made through retrofit of existing buildings. A wide range of retrofit options are readily available, but methods to identify optimal solutions for a particular abatement project still constitute a major technical challenge. Investments in building energy retrofit technologies usually involve decision-making processes targeted at reducing operational energy consumption and maintenance bills. For this reason, retrofit decisions by building stakeholders are typically driven by financial considerations. However, recent trends towards environmentally conscious and resource-efficient design and retrofit have focused on the environmental merits of these options, emphasising a lifecycle approach to emissions reduction. Retrofit options available for energy savings have different performance characteristics and building stakeholders are required to establish an optimal solution, where competing objectives such as financial costs, energy consumption and environmental performance are taken into account. These key performance parameters cannot be easily quantified and compared by building stakeholders since they lack the resources to perform an effective decision analysis. In part, this is due to the inadequacy of existing methods to assess and compare performance indicators. Current methods to quantify these parameters are considered in isolation when making decisions about energy conservation in buildings. To effectively manage the reduction of lifecycle environmental impacts, it is necessary to link financial cost with both operational and embodied emissions. This thesis presents a novel deterministic decision support system (DSS) for the evaluation of economically and environmentally optimal retrofit of non-domestic buildings. The DSS integrates the key variables of economic and net environmental benefits to produce optimal decisions. These variables are used within an optimisation scheme that consists of integrated modules for data input, sensitivity analysis and takes into account the use of a set of retrofit options that satisfies a range of criteria (environmental, demand, cost and resource constraints); hierarchical course of action; and the evaluations of ‘best’ case scenario based on marginal abatement cost methods and Pareto optimisation. The steps involved in the system development are presented and its usefulness is evaluated using case study applications. The results of the applications are analysed and presented, verifying the feasibility of the DSS, whilst encouraging further improvements and extensions. The usefulness of the DSS as a tool for policy formulation and developments that can trigger innovations in retrofit product development processes and sustainable business models are also discussed. The methodology developed provides stakeholders with an efficient and reliable decision process that is informed by both environmental and financial considerations. Overall, the development of the DSS which takes a whole-life CO2 emission accounting framework and an economic assessment view-point, successfully demonstrates how value is delivered across different parts of the techno-economic system, especially as it pertains to financial gains, embodied and operational emissions reduction potential.