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


  • Carley, Sanya


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.

Suggested Citation

  • Carley, Sanya, 2011. "Decarbonization of the U.S. electricity sector: Are state energy policy portfolios the solution?," Energy Economics, Elsevier, vol. 33(5), pages 1004-1023, September.
  • Handle: RePEc:eee:eneeco:v:33:y:2011:i:5:p:1004-1023

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    References listed on IDEAS

    1. Palmer, Karen & Newell, Richard & Gillingham, Kenneth, 2004. "Retrospective Examination of Demand-side Energy-efficiency Policies," Discussion Papers dp-04-19, Resources For the Future.
    2. 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.
    3. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
    4. Carley, Sanya, 2009. "State renewable energy electricity policies: An empirical evaluation of effectiveness," Energy Policy, Elsevier, vol. 37(8), pages 3071-3081, August.
    5. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
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    8. 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.
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    10. James Bushnell & Carla Peterman & Catherine Wolfram, 2007. "Local Solutions to Global Problems: Policy Choice and Regulatory Jurisdiction," NBER Working Papers 13472, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ian Lange & Peter Maniloff, 2017. "Updating Allowance Allocations in Cap-and-Trade: Evidence from the NOx Budget Program," Working Papers 2017-01, Colorado School of Mines, Division of Economics and Business.
    2. repec:eee:appene:v:205:y:2017:i:c:p:57-68 is not listed on IDEAS
    3. Prasad, Monica & Munch, Steven, 2012. "State-level renewable electricity policies and reductions in carbon emissions," Energy Policy, Elsevier, vol. 45(C), pages 237-242.
    4. Chaturvedi, Vaibhav & Clarke, Leon & Edmonds, James & Calvin, Katherine & Kyle, Page, 2014. "Capital investment requirements for greenhouse gas emissions mitigation in power generation on near term to century time scales and global to regional spatial scales," Energy Economics, Elsevier, vol. 46(C), pages 267-278.
    5. Sueyoshi, Toshiyuki & Goto, Mika, 2014. "Photovoltaic power stations in Germany and the United States: A comparative study by data envelopment analysis," Energy Economics, Elsevier, vol. 42(C), pages 271-288.
    6. repec:eee:jeeman:v:87:y:2018:i:c:p:1-23 is not listed on IDEAS
    7. repec:gam:jsusta:v:9:y:2017:i:5:p:686-:d:96881 is not listed on IDEAS

    More about this item


    Electricity markets Energy policy Carbon dioxide Climate policy;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities


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