Publications

    FERC, Operator‐Initiated Commitments in RTO and ISO Markets, 2014.Abstract

    EXCERPT FROM THE EXECUTIVE SUMMARY:

     

    This paper is part of an effort to evaluate matters affecting price formation in the energy and ancillary services markets operated by Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC or Commission). It focuses on operator-initiated commitments in the RTOs and ISOs and the challenges in internalizing all relevant physical and operational constraints in the day-ahead and real-time market processes. This paper defines an operator-initiated commitment as a commitment that is not associated with a resource clearing the day-ahead or real-time market on the basis of economics and that is not a self-schedule. Deeming an action to be “operator-initiated” is not intended to confer any judgment that the action is not appropriate or necessary to maintain reliability.

     

    Houde, Sebastien, and Joseph Aldy. “BELT AND SUSPENDERS AND MORE: THE INCREMENTAL IMPACT OF ENERGY EFFICIENCY SUBSIDIES IN THE PRESENCE OF EXISTING POLICY INSTRUMENTS .” NBER (2014).Abstract

    The effectiveness of investment subsidies depends on the existing array of regulatory and information mandates, especially in the energy efficiency space. Some consumers respond to information disclosure by purchasing energy-efficient durables (and thus may increase the inframarginal take-up of a subsequent subsidy), while other consumers may locate at the lower bound of a minimum efficiency standard (and a given subsidy may be insufficient to change their investment toward a more energy-efficient option). We investigate the incremental impact of energy efficiency rebates in the context of regulatory and information mandates by evaluating the State Energy Efficient Appliance Rebate Program (SEEARP) implemented through the 2009 American Recovery and Reinvestment Act. The design of the program - Federal funds allocated to states on a per capita basis with significant discretion in state program design and implementation - facilitates our empirical analysis. Using transaction-level data on appliance sales, we show that most program participants were inframarginal due to important short- term intertemporal substitutions where consumers delayed their purchases by a few weeks. We find evidence that some consumers accelerated the replacement of their old appliances by a few years, but overall the impact of the program on long-term energy demand is likely to be very small. Our estimated measures of cost-effectiveness are an order of magnitude higher than estimated for other energy efficiency programs in the literature. We also show that designing subsidies that reflect, in part, underlying attribute-based regulatory mandates can result in perverse effects, such as upgrading to larger, less energy-efficient models.

    Assessment, U.S. National Climate. “Climate Change Impacts in the United States .” In, 2014. Publisher's VersionAbstract

    Excerpt from the Introduction
    Climate change, once considered an issue for a distant future, has moved firmly into the present. Corn producers in Iowa, oyster growers in Washington State, and maple syrup producers in Vermont are all observing climate-related changes that are outside of recent experience. So, too, are coastal planners in Florida, water managers in the arid Southwest, city dwellers from Phoenix to New York, and Native Peoples on tribal lands from Louisiana to Alaska. This National Climate Assessment concludes that the evidence of human-induced climate change continues to strengthen and that impacts are increasing across the country.

    Americans are noticing changes all around them. Summers are longer and hotter, and extended periods of unusual heat last longer than any living American has ever experienced. Winters are generally shorter and warmer. Rain comes in heavier downpours. People are seeing changes in the length and severity of seasonal allergies, the plant varieties that thrive in their gardens, and the kinds of birds they see in any particular month in their neighborhoods.

    Agency, Environmental Protection. “Environmental Protection Agency. Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units.” In, 2014.Abstract

    EXCERPT FROM THE EXECUTIVE SUMMARY:

     

    This Regulatory Impact Analysis (RIA) discusses potential benefits, costs, and economic impacts of the proposed Emission Guidelines for Greenhouse Gas Emissions from Existing Stationary Sources: Electric Utility Generating Units (herein referred to EGU GHG Existing Source Guidelines). This RIA also discusses the potential benefits, costs and economic impacts of the proposed Standards of Performance for Greenhouse Gas Emissions from Reconstructed and Modified Stationary Sources (EGU GHG Reconstructed and Modified Source Standards).

     

    ES.1 Background and Context of Proposed EGU GHG Existing Source Guidelines Greenhouse gas pollution threatens Americans' health and welfare by leading to longlasting changes in our climate that can have a range of severely negative effects on human health and the environment. Carbon Dioxide (CO2) is the primary greenhouse gas pollutant, accounting for nearly three-quarters of global greenhouse gas emissions and 84 percent of U.S. greenhouse gas emissions. Fossil fuel-fired electric generating units (EGUs) are, by far, the largest emitters of GHGs, primarily in the form of CO2, among stationary sources in the U.S. In this action, the EPA is proposing emission guidelines for states to use in developing plans to address greenhouse gas emissions from existing fossil fuel-fired EGUs. Specifically, the EPA is proposing state-specific rate-based goals for carbon dioxide emissions from the power sector, as well as emission guidelines for states to use in developing plans to attain the statespecific goals. This rule, as proposed, would set in motion actions to lower the carbon dioxide emissions associated with existing power generation sources in the United States.

    Stavins, Robert. “What are the Benefit and Costs of EPA's Proposed CO2 Regulation?” In, 2014. Publisher's VersionAbstract

    EXCERPT:

    On June 2nd, the Obama Administration’s Environmental Protection Agency (EPA) released its long-awaited proposed regulation to reduce carbon dioxide (CO2) emissions from existing sources in the electricity-generating sector.  The regulatory (rule) proposal calls for cutting CO2 emissions from the power sector by 30 percent below 2005 levels by 2030.  This is potentially significant, because electricity generation is responsible for about 38 percent of U.S. CO2emissions (about 32 percent of U.S. greenhouse gas (GHG) emissions).

     

    On June 18th, EPA published the proposed rule in the Federal Register, initiating a 120-day public comment period.  In my previous essay at this blog, I wrote about the fundamentals and the politics of this proposed rule (EPA’s Proposed Greenhouse Gas Regulation: Why are Conservatives Attacking its Market-Based Options?).  Today I take a look at the economics.

    Group, The Brattle. “Brattle Group Policy Brief: EPA's Proposed Clean Power Plan: Implications for States and the Electric Industry."” In, 2014.Abstract

    EXCERPT FROM THE INTORDUCTION:

    On June 2, 2014 the U.S. Environmental Protection Agency (EPA) announced its proposed performance standards for reducing carbon dioxide (CO2) emissions from existing power plants under the Clean Air Act Section 111(d).1 The proposed rule requires each state to reduce its CO2 emissions rate from existing fossil fuel plants to meet state-specific standards (in pounds per MWh) starting in 2020, with a final rate for 2030 and beyond.2 The EPA estimates that the rule will achieve a 30% reduction in CO2 emissions from the U.S. electric power sector in 2030 relative to 2005 levels. Once the rule is finalized in 2015, states will have until June 2016 to submit initial state implementation plans, to be finalized by June 2017 for stand-alone plans, and by June 2018 for multi-state plans.

    Agency, U.S. Environmental Protection. “Translation of the Clean Power Plan Emission Rate-Based CO2 Goals to Mass-Based Equivalents.” In, 2014.Abstract

    EXCERPT FROM THE INTRODUCTION

    This technical support document (TSD) describes two illustrative calculation-based approaches for translating the Clean Power Plan (CPP) emission rate-based goals to a mass-based equivalent. These approaches should be viewed as two potential ways in which implementing authorities may wish to translate the form of the goal to a mass-based equivalent. The first approach produces mass-based equivalents that apply to existing affected fossil fuel-fired sources only. In light of the fact that the CPP takes comment on the inclusion of new, fossil fuel- fired sources as a component of state plans, the second approach produces mass equivalents that are inclusive of emissions from existing affected and new fossil fuel-fired sources.

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