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A decarbonization strategy for the electricity sector: New-source subsidies

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  • Johnson, Kenneth C.

Abstract

An expedient phase-out of carbon emissions in the electricity sector could be facilitated by imposing carbon fees and applying the revenue exclusively to subsidize new, low-carbon generation sources. Since there would initially be no "new sources," fees would be substantially zero at the outset of the program. Nevertheless, the program would immediately create high price incentives for low-carbon capacity expansion. Fees would increase as new, low-carbon sources gain market share, but price competition from a growing, subsidized clean-energy industry would help maintain moderate retail electricity prices. Subsidies would automatically phase out as emitting sources become obsolete.

Suggested Citation

  • Johnson, Kenneth C., 2010. "A decarbonization strategy for the electricity sector: New-source subsidies," Energy Policy, Elsevier, vol. 38(5), pages 2499-2507, May.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:5:p:2499-2507
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    1. Sterner, Thomas & Hoglund Isaksson, Lena, 2006. "Refunded emission payments theory, distribution of costs, and Swedish experience of NOx abatement," Ecological Economics, Elsevier, vol. 57(1), pages 93-106, April.
    2. Johnson, Kenneth C., 2007. "Refunded emission taxes: A resolution to the cap-versus-tax dilemma for greenhouse gas regulation," Energy Policy, Elsevier, vol. 35(5), pages 3115-3118, May.
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    2. Zhang, Pan & Wang, Huan, 2022. "Do provincial energy policies and energy intensity targets help reduce CO2 emissions? Evidence from China," Energy, Elsevier, vol. 245(C).
    3. Ping Che & Yanyan Zhang & Jin Lang, 2019. "Emission-Intensity-Based Carbon Tax and Its Impact on Generation Self-Scheduling," Energies, MDPI, vol. 12(5), pages 1-17, February.
    4. Wei Wei & Yile Liang & Feng Liu & Shengwei Mei & Fang Tian, 2014. "Taxing Strategies for Carbon Emissions: A Bilevel Optimization Approach," Energies, MDPI, vol. 7(4), pages 1-18, April.
    5. Adelman, David E. & Spence, David B., 2018. "U.S. climate policy and the regional economics of electricity generation," Energy Policy, Elsevier, vol. 120(C), pages 268-275.
    6. Timmons, David & Konstantinidis, Charalampos & Shapiro, Andrew M. & Wilson, Alex, 2016. "Decarbonizing residential building energy: A cost-effective approach," Energy Policy, Elsevier, vol. 92(C), pages 382-392.

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    Keywords

    Cap and trade Carbon tax;

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