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Federal Policies for Renewable Electricity: Impacts and Interactions

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  • Palmer, Karen

    ()
    (Resources for the Future)

  • Paul, Anthony

    ()
    (Resources for the Future)

  • Woerman, Matt

Abstract

Three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the United States are a cap-and-trade program (CTP) on emissions, a renewable portfolio standard (RPS) for electricity production, and tax credits for renewable electricity producers. Each of these policies would have different consequences, and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts. This paper utilizes the Haiku electricity market model to evaluate the economic and technology outcomes, climate benefits, and cost-effectiveness of three such policies and all possible combinations of the policies. A central finding is that the carbon dioxide (CO2) emissions reductions from CTP can be significantly greater than those from the other policies, even for similar levels of renewable electricity production, since of the three policies, CTP is the only one that distinguishes electricity generated by coal and natural gas. It follows that CTP is the most cost-effective among these approaches at reducing CO2 emissions. An alternative compliance payment mechanism in an RPS program could substantially affect renewables penetration, and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets, which varies across the country.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-10-53.

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Date of creation: 12 Jan 2011
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Handle: RePEc:rff:dpaper:dp-10-53

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Keywords: renewable portfolio standard; renewable energy credits; cap-and-trade; climate policy;

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  1. Wiser, Ryan & Bolinger, Mark, 2007. "Can deployment of renewable energy put downward pressure on natural gas prices?," Energy Policy, Elsevier, vol. 35(1), pages 295-306, January.
  2. Carolyn Fischer, 2010. "Renewable Portfolio Standards: When Do They Lower Energy Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 101-120.
  3. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less than the Sum of Its Parts?," Discussion Papers dp-10-19, Resources For the Future.
  4. Burtraw, Dallas & Palmer, Karen, 2005. "Cost-Effectiveness of Renewable Electricity Policies," Discussion Papers dp-05-01, Resources For the Future.
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Cited by:
  1. Amigues, Jean-Pierre & Chakravorty, Ujjayant & Lafforgue, Gilles & Moreaux, Michel, 2012. "Renewable Portfolio Standards and implicit tax-subsidy schemes: Structural differences induced by quantity and proportional mandates," TSE Working Papers 12-278, Toulouse School of Economics (TSE).
  2. Latta, Gregory S. & Baker, Justin S. & Beach, Robert H. & Rose, Steven K. & McCarl, Bruce A., 2013. "A Multi-Sector Intertemporal Optimization Approach to Assess the GHG Implications of U.S. Forest and Agricultural Biomass Electricity Expansion," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150293, Agricultural and Applied Economics Association.
  3. Harmsen, Robert & Graus, Wina, 2013. "How much CO2 emissions do we reduce by saving electricity? A focus on methods," Energy Policy, Elsevier, vol. 60(C), pages 803-812.
  4. Jenner, Steffen & Groba, Felix & Indvik, Joe, 2013. "Assessing the strength and effectiveness of renewable electricity feed-in tariffs in European Union countries," Energy Policy, Elsevier, vol. 52(C), pages 385-401.
  5. Burtraw, Dallas & Palmer, Karen L., 2013. "Mixing It Up: Power Sector Energy and Regional and Regulatory Climate Policies in the Presence of a Carbon Tax," Discussion Papers dp-13-09, Resources For the Future.

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