International trade in renewable energy with cooperation mechanisms: A CGE analysis

In the current European Union RES commitment to have 20% of energy use from renewable sources by 2020, countries have established their individual RES-E targets. Previous operational studies were developed, and one analysis proposes a Portuguese-Dutch (PRT-NLD) connection. In this article, we develop a general equilibrium model for the PRT-NLD linkage of RES-E, with two types of cooperation: (1) renewable electricity produced in PRT must be used in NLD, and, (2), the electricity must only leave PRT. Considering an increase of 10% of NLD target, in RES-E in PRT, we find a positive effect on GDP appears on PRT (0.70%), and a negative effect on NLD (-0.31%), due to employment role. Comparing (1) and (2), the effects in the EU are relatively small. We are inclined to consider, at this point, that there is an overall advantage not to require a physical transmission of PRT electricity to NLD.