CO2 Content of Electricity Losses

Worldwide, countries are implementing policies to develop greener energy markets. In Europe, the ¨2030 Energy and Climate Package¨ asks for further reductions of GHG, renewable sources integration, and energy efficiency targets. These objectives may counterbalance each other modifying the electricity flows, and hence, affecting the electricity losses. Precisely, the extra amount of energy necessary to cover losses is the departure point from which we analyze the impact of losses on CO2 emissions. With this purpose we use Spanish market and system data with hourly frequency from 2011 to 2013. Our results show that electricity losses significantly explain CO2 emissions, with higher CO2 emissions when covering losses that those on the average system. Additionally, we find that the market closing technologies used to cover losses have positive and significant impacts on CO2 emissions: when polluting technologies (coal or combined cycle) close the market, the impact of losses on CO2 emissions is greater in comparison with the rest of technologies (CHP, renewables or hydropower). From these results we make some policy recommendations to reduce the impact of losses on CO2 emissions.