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Cost-effectiveness and Economic Incidence of a Clean Energy Standard

Author

Listed:
  • Bryan K. Mignone
  • Thomas Alfstad
  • Aaron Bergman
  • Kenneth Dubin
  • Richard Duke
  • Paul Friley
  • Andrew Martinez
  • Matthew Mowers
  • Karen Palmer
  • Anthony Paul
  • Sharon Showalter
  • Daniel Steinberg
  • Matt Woerman
  • Frances Wood

Abstract

A Clean Energy Standard (CES) is a flexible, market-based policy instrument that could be adopted to reduce greenhouse gas emissions from the U.S. electricity system over time. This paper uses several well-known energy system and electricity models to analyze a CES that reflects broad principles outlined in President Obama's January 2011 State of the Union Address and in the Administration's subsequent Blueprint for a Secure Energy Future. 1 In particular, it examines three different design options for a CES that would each lead to approximately 80% clean electricity by 2035. These different design options provide broadly similar economic incentives for clean energy deployment and yield similar overall welfare impacts, but they exhibit different distributional outcomes. The most inclusive CES crediting approach favors producers over consumers in competitive electricity markets as well as regions with larger initial endowments of clean energy. On the other hand, the most restrictive crediting approach favors consumers over producers and reduces preferences for regions with larger initial endowments of clean energy. While specific technology outcomes vary across the four models used in this study, key insights about cost-effectiveness and economic incidence are largely robust to the underlying modeling platform. These insights may be important considerations in future CES policy design efforts.

Suggested Citation

  • Bryan K. Mignone & Thomas Alfstad & Aaron Bergman & Kenneth Dubin & Richard Duke & Paul Friley & Andrew Martinez & Matthew Mowers & Karen Palmer & Anthony Paul & Sharon Showalter & Daniel Steinberg & , 2012. "Cost-effectiveness and Economic Incidence of a Clean Energy Standard," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 3).
  • Handle: RePEc:aen:eeepjl:1_3_a05
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    References listed on IDEAS

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    1. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
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    Citations

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    Cited by:

    1. Palmer, Karen & Paul, Anthony, 2015. "A Primer on Comprehensive Policy Options for States to Comply with the Clean Power Plan," Discussion Papers dp-15-15, Resources For the Future.
    2. Paul, Anthony & Palmer, Karen & Woerman, Matt, 2013. "Modeling a clean energy standard for electricity: Policy design implications for emissions, supply, prices, and regions," Energy Economics, Elsevier, vol. 36(C), pages 108-124.
    3. Wiser, Ryan & Millstein, Dev & Mai, Trieu & Macknick, Jordan & Carpenter, Alberta & Cohen, Stuart & Cole, Wesley & Frew, Bethany & Heath, Garvin, 2016. "The environmental and public health benefits of achieving high penetrations of solar energy in the United States," Energy, Elsevier, vol. 113(C), pages 472-486.
    4. Bielen, David A., 2018. "Do differentiated performance standards help coal? CO2 policy in the U.S. electricity sector," Resource and Energy Economics, Elsevier, vol. 53(C), pages 79-100.
    5. Mai, Trieu & Cole, Wesley & Gates, Nathaniel & Greer, Daniel, 2021. "The prospective impacts of 2019 state energy policies on the U.S. electricity system," Energy Policy, Elsevier, vol. 149(C).
    6. Lantz, Eric & Mai, Trieu & Wiser, Ryan H. & Krishnan, Venkat, 2016. "Long-term implications of sustained wind power growth in the United States: Direct electric system impacts and costs," Applied Energy, Elsevier, vol. 179(C), pages 832-846.
    7. Anthony Paul & Karen Palmer & Matthew Woerman, 2015. "Incentives, Margins, And Cost Effectiveness In Comprehensive Climate Policy For The Power Sector," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-27, November.
    8. Paul, Anthony & Palmer, Karen & Woerman, Matt, 2014. "Designing by Degrees: Flexibility and Cost-Effectiveness in Climate PolicyAbstract: Substantially reducing carbon dioxide (CO2) emissions from electricity production will require a transformation of t," Discussion Papers dp-14-05, Resources For the Future.
    9. Geoffrey J. Blanford, James H. Merrick, and David Young, 2014. "A Clean Energy Standard Analysis with the US-REGEN Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    10. Paul, Anthony & Palmer, Karen & Woerman, Matt, 2014. "Analysis of the Bingaman clean energy standard proposal," Resource and Energy Economics, Elsevier, vol. 36(1), pages 113-129.

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