Human development owes a great debt to cheap plentiful energy. Historically, abundant and energy dense materials such as coal, oil and more recently natural gas, have played an important role in powering our economies. To this day, any study analysing the short-term costs and benefits of energy system expansion, will continue to favour fossil fuels. At the same time, there is increasing concern about the levels of human made greenhouse gasses such as CO₂ (the major by product of burning fossil fuels) and their forecasted effects on the global climate. This thesis investigates the consequences of using political intervention to internalize the cost of future negative effects of anthropogenic CO₂ emissions. More specifically, this thesis investigates the effects of regulatory and market based instruments for curbing CO₂ emissions from electric power systems in terms of both cost and efficacy.

model is developed to approximate the yearly changes in generation capacity and electricity supply mixture of a power system subject to the constraints of carbon abatement policies. The model proposes a novel approach for incorporating investment in non-dispatchable, intermittent wind generation capacity as a decision variable in the planning process. The model also investigates the effects of the stochastic nature of input parameters through the use of Monte Carlo simulation. To explore many features of this model, the Ontario power system is chosen for a case study because of its diverse portfolio of both generation technologies and political objectives. Five policies are simulated and compared with a ‘business-as-usual’ base case in which no carbon abatement policy is imposed. No single policy can meet all of the political objectives being investigated;​ however, some policies are clear winners in terms of specific objectives. Due to the broad scope of this work, the study finds many conclusions, such as:​