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Decarbonization of the U.S. electricity sector: Are state energy policy portfolios the solution?

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  • Sanya, Carley
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    Abstract

    State governments have taken the lead on U.S. energy and climate policy. It is not yet clear, however, whether state energy policy portfolios can generate results in a similar magnitude or manner to their presumed carbon mitigation potential. This article seeks to address this lack of policy evidence and contribute empirical insights on the carbon mitigation effects of state energy portfolios within the U.S. electricity sector. Using a dynamic, long-term electricity dispatch model with U.S. power plant, utility, and transmission and distribution data between 2010 and 2030, this analysis builds a series of state-level policy portfolio scenarios and performs a comparative scenario analysis. Results reveal that state policy portfolios have modest to minimal carbon mitigation effects in the long run if surrounding states do not adopt similar portfolios as well. The difference in decarbonization potential between isolated state policies and larger, more coordinated policy efforts is due in large part to carbon leakage, which is the export of carbon intensive fossil fuel-based electricity across state lines. Results also confirm that a carbon price of $50/metric ton CO2e can generate substantial carbon savings. Although both policy options—an energy policy portfolio or a carbon price—are effective at reducing carbon emissions in the present analysis, neither is as effective alone as when the two strategies are combined.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28256.

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    Date of creation: Jan 2010
    Date of revision: 18 Jun 2010
    Handle: RePEc:pra:mprapa:28256

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    Keywords: Electricity markets; Energy policy; Carbon dioxide; Climate policy;

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    1. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
    2. Rubin, Edward S. & Chen, Chao & Rao, Anand B., 2007. "Cost and performance of fossil fuel power plants with CO2 capture and storage," Energy Policy, Elsevier, vol. 35(9), pages 4444-4454, September.
    3. Carley, Sanya, 2009. "State renewable energy electricity policies: An empirical evaluation of effectiveness," Energy Policy, Elsevier, vol. 37(8), pages 3071-3081, August.
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    8. Hadley, S. W. & Short, W., 2001. "Electricity sector analysis in the clean energy futures study," Energy Policy, Elsevier, vol. 29(14), pages 1285-1298, November.
    9. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
    10. Kydes, Andy S., 2007. "Impacts of a renewable portfolio generation standard on US energy markets," Energy Policy, Elsevier, vol. 35(2), pages 809-814, February.
    11. Brown, Marilyn A. & Levine, Mark D. & Short, Walter & Koomey, Jonathan G., 2001. "Scenarios for a clean energy future," Energy Policy, Elsevier, vol. 29(14), pages 1179-1196, November.
    12. Gumerman, Etan & Koomey, Jonathan G. & Brown, Marilyn A., 2001. "Strategies for cost-effective carbon reductions: a sensitivity analysis of alternative scenarios," Energy Policy, Elsevier, vol. 29(14), pages 1313-1323, November.
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