Sectoral and macroeconomic impacts of the large combustion plants in Poland: A general equilibrium analysis

This paper analyses the final incidence of direct costs of implementation of the EU Directive on SO2 and NOx emission limits for large combustion plants in Poland. First, we simulate a model from a power-sector perspective, where compliance with the Directive appears to be associated only with direct costs. Second, a more realistic, market-wide perspective is modeled, where abatement costs borne by the power sector become the revenues of the sectors supplying abatement technologies and services. Simulations indicate that if environmental benefits of implementation are unaccounted for, the Directive would seem to cause a deadweight loss in the economy. The overall impact, however, is likely to be less negative than what the interest groups claim.