Studies in Policy Choices and Interactions
Edited by Larry Kreiser, Mikael S. Andersen, Birgitte E. Olsen, Stefan Speck, Janet E. Milne and Hope Ashiabor
Chapter 3: Subsidies to fossil energy consumption in Italy: assessment and interaction with the electricity market
This chapter provides an evaluation of some of the environmentally harmful subsidies in the Italian tax and energy bills system (at least 6 billion €/y in total) and assesses how a carbon tax on fuels would interact with the wholesale electricity market. Such interaction allows then to evaluate how a carbon tax will impact revenues of electricity generation from renewable sources, which currently receive in Italy subsidies for over 10 billion €/y. This allows us to argue to what extent a carbon tax would make a reduction of such green subsidies possible with no harm to profits or competitiveness of green power generators.
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