Emissions Trading and the Convergence of the Australian Electricity and Transport Markets

Bottom up partial equilibrium modelling of the energy sector has tended to focus on the electricity sector given its typically large share of total emissions, the deregulation of that market in many countries and the relatively well understood technology options. In contrast, this paper employs a model of the energy sector to investigate the proportion electricity and transport may contribute given the relative cost of abatement in those sectors, for specified emission targets. A related issue is the potential convergence of the two sectors through greater uptake of electrically powered transport.