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State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes

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  • Levin, Todd
  • Thomas, Valerie M.
  • Lee, Audrey J.

Abstract

We have developed a state-scale version of the MARKAL energy optimization model, commonly used to model energy policy at the US national scale and internationally. We apply the model to address state-scale impacts of a renewable electricity standard (RES) and a carbon tax in one southeastern state, Georgia. Biomass is the lowest cost option for large-scale renewable generation in Georgia; we find that electricity can be generated from biomass co-firing at existing coal plants for a marginal cost above baseline of 0.2-2.2Â cents/kWh and from dedicated biomass facilities for 3.0-5.5Â cents/kWh above baseline. We evaluate the cost and amount of renewable electricity that would be produced in-state and the amount of out-of-state renewable electricity credits (RECs) that would be purchased as a function of the REC price. We find that in Georgia, a constant carbon tax to 2030 primarily promotes a shift from coal to natural gas and does not result in substantial renewable electricity generation. We also find that the option to offset a RES with renewable electricity credits would push renewable investment out-of-state. The tradeoff for keeping renewable investment in-state by not offering RECs is an approximately 1% additional increase in the levelized cost of electricity.

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  • Levin, Todd & Thomas, Valerie M. & Lee, Audrey J., 2011. "State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes," Energy Policy, Elsevier, vol. 39(2), pages 950-960, February.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:950-960
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    3. Zhang, Kun & Wang, Qian & Liang, Qiao-Mei & Chen, Hao, 2016. "A bibliometric analysis of research on carbon tax from 1989 to 2014," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 297-310.
    4. Freyre, Alisa & Klinke, Sandra & Patel, Martin K., 2020. "Carbon tax and energy programs for buildings: Rivals or allies?," Energy Policy, Elsevier, vol. 139(C).
    5. Lin-Ju Chen & Lei Zhu & Ying Fan & Sheng-Hua Cai, 2013. "Long-Term Impacts of Carbon Tax and Feed-in Tariff Policies on China's Generating Portfolio and Carbon Emissions: A Multi-Agent-Based Analysis," Energy & Environment, , vol. 24(7-8), pages 1271-1293, December.
    6. Abolhosseini, Shahrouz & Heshmati, Almas, 2014. "The main support mechanisms to finance renewable energy development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 876-885.
    7. Mondal, Md. Alam Hossain & Kennedy, Scott & Mezher, Toufic, 2014. "Long-term optimization of United Arab Emirates energy future: Policy implications," Applied Energy, Elsevier, vol. 114(C), pages 466-474.
    8. Lu, Liwei & Preckel, Paul V. & Gotham, Douglas & Liu, Andrew L., 2016. "An assessment of alternative carbon mitigation policies for achieving the emissions reduction of the Clean Power Plan: Case study for the state of Indiana," Energy Policy, Elsevier, vol. 96(C), pages 661-672.
    9. Elodie Le Cadre & Frederic Lantz & Pierre-André Jouvet, 2011. "The bioenergies development: the role of biofuels and the C02 price," Working Papers hal-02505389, HAL.
    10. Guerra, Omar J. & Tejada, Diego A. & Reklaitis, Gintaras V., 2016. "An optimization framework for the integrated planning of generation and transmission expansion in interconnected power systems," Applied Energy, Elsevier, vol. 170(C), pages 1-21.
    11. Shree Shakya & S. Kumar & Ram Shrestha, 2012. "Co-benefits of a carbon tax in Nepal," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(1), pages 77-101, January.
    12. Lee, Hwarang & Eom, Jiyong & Cho, Cheolhung & Koo, Yoonmo, 2019. "A bottom-up model of industrial energy system with positive mathematical programming," Energy, Elsevier, vol. 173(C), pages 679-690.

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