This article examines the economic, budgetary, distributional and environmental impacts of the interaction between regulated early closure of coal-fired power plants and new energy taxation rules on fossil fuel-operated power plants using a multi-sector and multi-household dynamic general equilibrium model of the Portuguese economy. Simulation results show first that regulated early closures will lead to meaningful reductions in emissions. They will also induce significant detrimental macroeconomic and distributional effects. Second, when the new energy taxation rules are applied to the coal-operated power plants no significant environmental gains or macroeconomic or distributional losses are observed in addition to what already induced by the forced closures.
