Using a stylised structural model of electricity generation, Tony derives a (bimodal) production function for clean and dirty technologies with two elasticities: a high elasticity for low clean penetration and a low elasticity for high clean penetration. He finds elasticities start at over 10 and reduce to just above unity above a switch point of around 50 per cent clean electricity penetration, where curtailment of intermittent generation dominates. This switch point can be increased through storage or demand management and he estimates relative parameters. He investigates the potential implications for optimal policy using a growth model with environmental constraints and endogenous technology. He finds that a decreasing elasticity implies a greater role for a carbon tax over subsidies relative to an isoelastic function.

Tony Wiskich is a PhD scholar at CAMA in Crawford School of Public Policy at ANU. He has worked as an economist in the public and private sectors for the last decade.

The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.