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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.

Suggested Citation

  • Palmer, Karen & Paul, Anthony & Woerman, Matt, 2011. "Federal Policies for Renewable Electricity: Impacts and Interactions," Discussion Papers dp-10-53, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-10-53
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    References listed on IDEAS

    as
    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. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?," International Review of Environmental and Resource Economics, now publishers, vol. 4(1), pages 51-92, June.
    3. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
    4. 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.
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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," LERNA Working Papers 12.02.359, LERNA, University of Toulouse.
    2. Xin-gang, Zhao & Tian-tian, Feng & Lu, Cui & Xia, Feng, 2014. "The barriers and institutional arrangements of the implementation of renewable portfolio standard: A perspective of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 371-380.
    3. Shahriar Shah Heydari & Niels Vestergaard, 2015. "Alternate solutions in mixing energy tax/subsidy and emission control policies," Working Papers 119/15, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    4. Hitaj, Claudia, 2015. "Location matters: The impact of renewable power on transmission congestion and emissions," Energy Policy, Elsevier, vol. 86(C), pages 1-16.
    5. Tang, Amy & Chiara, Nicola & Taylor, John E., 2012. "Financing renewable energy infrastructure: Formulation, pricing and impact of a carbon revenue bond," Energy Policy, Elsevier, vol. 45(C), pages 691-703.
    6. repec:eee:appene:v:197:y:2017:i:c:p:29-39 is not listed on IDEAS
    7. 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).
    8. 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.
    9. 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.
    10. Novacheck, Joshua & Johnson, Jeremiah X., 2017. "Diversifying wind power in real power systems," Renewable Energy, Elsevier, vol. 106(C), pages 177-185.
    11. Brown, Marilyn A. & Gumerman, Etan & Sun, Xiaojing & Sercy, Kenneth & Kim, Gyungwon, 2012. "Myths and facts about electricity in the U.S. South," Energy Policy, Elsevier, vol. 40(C), pages 231-241.
    12. Gottschamer, L. & Zhang, Q., 2016. "Interactions of factors impacting implementation and sustainability of renewable energy sourced electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 164-174.
    13. 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," Journal of Forest Economics, Elsevier, pages 361-383.
    14. repec:eee:rensus:v:74:y:2017:i:c:p:824-834 is not listed on IDEAS
    15. Rausch, Sebastian & Mowers, Matthew, 2014. "Distributional and efficiency impacts of clean and renewable energy standards for electricity," Resource and Energy Economics, Elsevier, vol. 36(2), pages 556-585.
    16. Novacheck, Joshua & Johnson, Jeremiah X., 2015. "The environmental and cost implications of solar energy preferences in Renewable Portfolio Standards," Energy Policy, Elsevier, vol. 86(C), pages 250-261.
    17. 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.
    18. repec:spr:envpol:v:19:y:2017:i:3:d:10.1007_s10018-017-0183-8 is not listed on IDEAS
    19. Karoline S. Rogge & Elisabeth Dütschke, 2017. "Exploring Perceptions of the Credibility of Policy Mixes: The Case of German Manufacturers of Renewable Power Generation Technologies," SPRU Working Paper Series 2017-23, SPRU - Science and Technology Policy Research, University of Sussex.
    20. 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.
    21. Warwick J. McKibbin & Adele Morris & Peter J. Wilcoxen, 2015. "Controlling carbon emissions from U.S. power plants: how a tradable performance standard compares to a carbon tax," CAMA Working Papers 2015-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    22. Nori Tarui, 2017. "Electric utility regulation under enhanced renewable energy integration and distributed generation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(3), pages 503-518, July.
    23. repec:spr:envpol:v:19:y:2017:i:3:d:10.1007_s10018-017-0184-7 is not listed on IDEAS
    24. Spyridaki, N.-A. & Flamos, A., 2014. "A paper trail of evaluation approaches to energy and climate policy interactions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 1090-1107.
    25. Pablo Río, 2014. "On evaluating success in complex policy mixes: the case of renewable energy support schemes," Policy Sciences, Springer;Society of Policy Sciences, vol. 47(3), pages 267-287, September.

    More about this item

    Keywords

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

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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