Publications

    Green, Richard, and Iain Staffell. “Richard Green and Iain Staffell - The Contribution of Taxes, Subsidies and Regulations to British Electricity Decarbonisation,” Working Paper.Abstract

    Great Britain’s carbon emissions from electricity generation fell by two-thirds between 2012 and 2019, providing an important example for other nations. This rapid transition was driven by a complex interplay of policies and events: investment in renewable generation, closure of coal power stations, raising carbon prices and energy efficiency measures. Previous studies of the impact of these simultaneous individual measures miss their interactions with each other and with exogenous changes in fuel prices and the weather. Here we use Shapley values, a concept from cooperative game theory, to disentangle these and precisely attribute outcomes (CO2 saved, changes to electricity prices and fossil fuel consumption) to individual drivers. We find the effectiveness of each driver remained stable despite the transformation seen over the 7 years we study. The four main drivers each saved 19–29 MtCO2 per year in 2019, reinforcing the view that there is no ‘silver bullet’, and a multi-faceted approach to deep decarbonisation is essential.

    Hogan, William W., and Susan L. Pope. “Priorities for the Evolution of an Energy-Only Electricity Market Design in ERCOT.” In, 2017.Abstract

    Executive Summary:

    Electricity markets employ open access and non‐discrimination to foster competition, market entry, and innovation.    The physical characteristics of the electricity system require explicit consideration of key elements in electricity market design.  Pricing and settlement rules for the real‐time market must provide efficient incentives, both for short‐term operations and long‐run investment. The ERCOT energy‐only market design emphasizes the need to get the real‐time prices right.The recent innovation of the ERCOT Operating Reserve Demand Curve (ORDC) addressed the fundamental problem of inadequate region‐wide scarcity pricing that has plagued other organized markets, which have exhibited inadequate incentives both for reliable operations and efficient investment.  

    ERCOT employs an open wholesale electricity market as the basis for short‐term reliable electricity supply as well as for long‐term investments to maintain reliability in the future.  A review of energy price formation in ERCOT leads to two important conclusions: (i) while the ORDC is performing consistently within its design, scarcity price formation is being adversely influenced by factors not contemplated by the ORDC; (ii) other aspects of the ERCOT market design must be improved to better maintain private market response to energy prices as the driver of resource investment, maintenance expenditure and retirement decisions.   

    The paper identifies three general issues that have affected ERCOT energy prices in recent years, and recommends policy and price formation improvements consistent with efficient market design. These recommendations cannot reverse the impact of broader economic trends, such as low natural gas prices, or national policies, such as subsidies for investments in renewable resources.  However, the stress of these forces has exposed areas where there is a need for adjustments to pricing rules and policies within ERCOT.  

    Adly, Joseph. “Long-term Carbon Policy: The Great Swap.” In, 2016.Abstract

    Excerpt trom the Introduction:
    In the past two decades, the mounting risks posed by climate change have motivated businesses, cities, states, national governments, and the international community to pledge to take action to reduce their greenhouse gas emissions. Given the scale of the problem, the breadth of action must be effective and must set the foundation for increasing mitigation efforts over time. Thus, delivering on these pledges will require effective policies to drive the deployment of low-carbon technologies today and technological innovation in the future to ramp ambition up on par with the risks of climate change.

    Climate change is a problem no country can solve by itself. Since the mid-1990s, the United States has advocated for developed and developing countries to work together in combating climate change and, with the United States' leadership, the 2015 Paris Agreement delivered unprecedented commitments by virtually every country on the planet to reduce their greenhouse gas emissions. Now, the election of Donald J. Trump, an avowed global warming skeptic, has thrown America's commitment to global leadership in doubt. If the United States quits the fight against climate change, this risks unraveling the global coalition and could result in other countries following suit. This would be a tragic mistake with incalculable consequences for the entire planet. Moreover, some nations may retaliate against the United States by imposing tariffs on American-manufactured goods based on the greenhouse gas emissions associated with their production.

    and National Academies of Sciences, Engineering, Medicine. “The Power of Change: Innovation for Development and Deployment of Increasingly Clean Electric Power Technologies.” In, 2016.Abstract
    Electricity, supplied reliably and affordably, is foundational to the U.S. economy and is utterly indispensable to modern society. The National Academy of Engineering has called electrification the greatest engineering achievement of the 20th century (Constable and Somerville, 2003). Generating electricity also creates pollution, however, especially emissions of air pollutants. While the most severe and life-threatening pollution from electric power plants is largely a thing of the past in America, power plant emissions of particulates as well as oxides of nitrogen and sulfur (NOx and SOx) 1 still cause harms and contribute to increases in morbidity and mortality (Bell et al., 2008; Laden et al., 2006; Pope et al., 2009). Those harms include premature deaths, contributions to illnesses such as asthma, and increased hospitalizations, and electricity prices do not fully incorporate the costs of those harms (NRC, 2010b). Harms from greenhouse gas (GHG) emissions—to which the power sector is an important contributor, accounting for nearly 40 percent of all domestic emissions (EPA, 2016)— remain almost completely unpriced and thus above the level they would be if market prices reflected their full costs.
    Cullen, Joseph, and Erin Mansur. “Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach using the Shale Revolution.” In, 2016.Abstract
    This paper examines how carbon pricing would reduce emissions in the electricity sector. We show how both carbon prices and cheap natural gas reduce, in a nearly identical manner, the historic cost advantage of coal-fired power plants. The shale revolution has resulted in unprecedented variation in natural gas prices that we use to estimate the potential effect of a carbon price. Our estimates imply that a price of $20 ($70) per ton of carbon dioxide would reduce emissions by 5% (10%). Furthermore, carbon prices are much more effective at reducing emissions when natural gas prices are low. In contrast, modest carbon prices have negligible effects when gas prices are at levels seen prior to the shale revolution.

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