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State Efforts to Cap the Commons: Regulating Sources or Consumers?

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  • Burtraw, Dallas

    (Resources for the Future)

Abstract

California’s Global Warming Solutions Act (Assembly Bill 32) requires the state to reduce aggregate greenhouse gas emissions to 1990 levels by 2020. One of the challenges California faces is how the state should regulate the electricity sector. About 80 percent of the state’s electricity consumption is generated in the state, but about 52 percent of the greenhouse gas emissions associated with electricity consumption comes from outside the state. The question addressed in this paper is where to locate the point of compliance in the electricity sector—that is, where in the supply chain linking fuel suppliers to generators to the transmission system to retail load-serving entities should the obligation for measurement and compliance be placed. The conclusion offered is that one particular approach to regulating the electricity sector—the “first-seller approach”—would be best for California. The alternative “load-based approach” has a running head start in the policy process but would undermine an economywide marketbased emissions trading program.

Suggested Citation

  • Burtraw, Dallas, 2007. "State Efforts to Cap the Commons: Regulating Sources or Consumers?," RFF Working Paper Series dp-07-49, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-07-49
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-07-49.pdf
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    References listed on IDEAS

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    1. Burtraw, Dallas, 2000. "Innovation Under the Tradable Sulfur Dioxide Emission Permits Program in the U.S. Electricity Sector," RFF Working Paper Series dp-00-38, Resources for the Future.
    2. Farrell, Alexander E. & Sperling, Dan, 2007. "A Low-Carbon Fuel Standard for California, Part 2: Policy Analysis," Institute of Transportation Studies, Working Paper Series qt8ng2h3x7, Institute of Transportation Studies, UC Davis.
    3. Pizer, William A. & Burtraw, Dallas & Harrington, Winston & Newell, Richard G. & Sanchirico, James N., 2005. "Modeling Economywide versus Sectoral Climate Policies Using Combined Aggregate-Sectoral Models," Discussion Papers 10502, Resources for the Future.
    4. Jos Sijm & Karsten Neuhoff & Yihsu Chen, 2006. "CO 2 cost pass-through and windfall profits in the power sector," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 49-72, January.
    5. Dallas Burtraw, 1996. "The So2 Emissions Trading Program: Cost Savings Without Allowance Trades," Contemporary Economic Policy, Western Economic Association International, vol. 14(2), pages 79-94, April.
    6. Farrell, Alexander & Sperling, Daniel, 2007. "A Low-Carbon Fuel Standard for California, Part 2: Policy Analysis," Institute of Transportation Studies, Working Paper Series qt8xv635dc, Institute of Transportation Studies, UC Davis.
    7. Burtraw, Dallas & Kahn, Danny & Palmer, Karen, 2006. "CO2 Allowance Allocation in the Regional Greenhouse Gas Initiative and the Effect on Electricity Investors," The Electricity Journal, Elsevier, vol. 19(2), pages 79-90, March.
    8. Carolyn Fischer, 2003. "Combining rate-based and cap-and-trade emissions policies," Climate Policy, Taylor & Francis Journals, vol. 3(sup2), pages 89-103, December.
    9. William Pizer & Dallas Burtraw & Winston Harrington & Richard Newell & James Sanchirico, 2006. "Modeling Economy-wide vs Sectoral Climate Policies Using Combined Aggregate-Sectoral Models," The Energy Journal, , vol. 27(3), pages 135-168, July.
    10. Burtraw, Dallas & Palmer, Karen L. & Kahn, Danny, 2005. "Allocation of CO2 Emissions Allowances in the Regional Greenhouse Gas Cap-and-Trade Program," Discussion Papers 10650, Resources for the Future.
    11. Sperling, Daniel & Farrell, Alexander, 2007. "A Low-Carbon Fuel Standard for California, Part 2: Policy Analysis," Institute of Transportation Studies, Working Paper Series qt5hv693r2, Institute of Transportation Studies, UC Davis.
    12. Bushnell, James & Wolfram, Catherine, 2008. "Electricity Markets," Staff General Research Papers Archive 31547, Iowa State University, Department of Economics.
    13. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," RFF Working Paper Series dp-01-30-, Resources for the Future.
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    Cited by:

    1. Yihsu Chen & Andrew Liu, 2013. "Emissions trading, point-of-regulation and facility siting choices in the electric markets," Journal of Regulatory Economics, Springer, vol. 44(3), pages 251-286, December.

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    More about this item

    Keywords

    electricity; climate; state level; CO2; cap and trade; market-based approaches; load-based; first seller; point of regulation; California; Western Climate Initiative;
    All these keywords.

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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