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Energy Journal Issue

The Energy Journal
Volume 35, Special Issue

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Introduction to EMF 24

Allen A. Fawcett, Leon E. Clarke, and John P. Weyant

DOI: 10.5547/01956574.35.SI1.1

Technology and U.S. Emissions Reductions Goals: Results of the EMF 24 Modeling Exercise

Leon E. Clarke, Allen A. Fawcett, John P. Weyant, James McFarland, Vaibhav Chaturvedi, and Yuyu Zhou

DOI: 10.5547/01956574.35.SI1.2View Abstract

This paper presents an overview of the study design and the results of the EMF 24 U.S. Technology Scenarios. The EMF 24 U.S. Technology Scenarios engaged nine top energy-environment-economy models to examine the implications of technological improvements and technological availability for reducing U.S. greenhouse gas emissions by 50% and 80% by 2050. The study confirms that mitigation at the 50% or 80% level will require a dramatic transformation of the energy system over the next 40 years. The study also corroborates the result of previous studies that there is a large variation among models in terms of which energy strategy is considered most cost-effective. Technology assumptions are found to have a large influence on carbon prices and economic costs of mitigation. Keywords: Technology, scenarios, climate change

Overview of EMF 24 Policy Scenarios

Allen A. Fawcett, Leon C. Clarke, Sebastian Rausch, and John P. Weyant

DOI: 10.5547/01956574.35.SI1.3View Abstract

The Energy Modeling Forum 24 study included a set of policy scenarios designed to compare economy wide market-based and sectoral regulatory approaches of potential U.S. climate policy. Models from seven teams participated in this part of the study assessing economy-wide cap-and-trade climate policy and sectoral policies in the transportation and electric sector in terms of potential greenhouse gas emissions reductions, economic cost, and energy systems implications. This paper presents an overview of the results from the U.S. policy scenarios, and provides insights into the comparison of results from the participating models. In particular, various metrics were used to compare the model results including allowance price, the efficient frontier, consumption loss, GDP loss, and equivalent variation. We find that the choice of economic metric is an important factor in the comparison of model results. Among the insights, we note that the carbon price should cautiously be considered when other non-cap sectoral policies affecting emissions are assumed in tandem. We also find that a transportation sector policy is consistently shown to be inefficient compared to an economy-wide capand-trade policy with a comparable level of emissions reductions. Keywords: Climate policy, Energy-economy modeling, Sectoral climate policies, Policy interaction

Interaction Effects of Market-Based and Command-and-Control Policies

Sugandha D. Tuladhar, Sebastian Mankowski, and Paul Bernstein

DOI: 10.5547/01956574.35.SI1.4View Abstract

Scientific evidence indicates that greenhouse gases emissions related to human activity are a significant contributor to global climate change. This paper investigates the impact of policy prescriptions and technologies for reducing U.S. greenhouse gas emissions. The analysis uses NERA's NewERA integrated model, which combines a top-down general equilibrium macro model of the U.S. economy with a detailed bottom-up model of the North American electricity sector. It examines the cost of cutting emissions by 0% to 80% of 2005 levels by 2050 under several scenarios, which consider different assumptions about policy choices ranging from purely market-based policy such as a cap-and-trade program to purely command-and-control policies and technology involving availability and efficacy of nuclear, Carbon Capture and Storage, renewables, and end-use efficiency technology. Our analysis shows a distinct efficiency advantage for market-based mechanisms and interaction of command-and-control mandates with market-based policies increase market distortions leading to higher welfare loss. We show that under such a mixed policy regime, carbon price is an unsuitable indicator of economic costs. Keywords: Climate change policy, Market-based, Command-and-control, CGE models, Top-down bottom-up models, Low carbon fuel standards, Clean energy standards, Fuel economy standards

Technology Assumptions and Climate Policy: The Interrelated Effects of U.S. Electricity and Transport Policy

Mark Jaccard and Suzanne Goldberg

DOI: 10.5547/01956574.35.SI1.5View Abstract

Although economists prefer a unique, economy-wide carbon price, climate policies are likely to continue to combine technology-and sector-specific regulations with, at best, some degree of carbon pricing. A hybrid energy-economy model that combines technological details with partial macro-economic feedbacks offers a means of estimating the likely effects of this kind of policy mix, especially under different scenarios of technological innovation. We applied such a model, called CIMS-US, in a model comparison project directed by the Energy Modeling Forum at Stanford University (EMF 24) and present here the interrelated effects of policies focused separately on electricity and transportation. We find that technological innovation encouraged by transportation regulation can inadvertently increase emissions from electricity generation and ethanol production to the extent that abatement from the regulation itself is effectively neutralized. When, however, regulation of electricity generation is combined with transportation policy or there is economy-wide carbon pricing, substantial abatement occurs. Keywords: Climate policy, U.S., Electricity, Transport, Technological change

Greenhouse Gas Mitigation Options in the U.S. Electric Sector: A ReEDS Analysis

Patrick Sullivan, Caroline Uriarte, and Walter Short

DOI: 10.5547/01956574.35.SI1.6View Abstract

We apply a U.S. electric-sector capacity-expansion and dispatch model to assess possible implications - changes in generation mix, system cost, CO2 emissions, distribution of renewable energy deployment - of a set of potential greenhouse gas mitigation policy options over a range of technology projections. The model used, ReEDS, provides unique spatial and temporal detail to ensure electric-system constraints of reliable load provision are maintained throughout the system's transformation. Keywords: Electricity capacity expansion, Greenhouse gas mitigation policy, Renewable energy technologies

Investigating Technology Options for Climate Policies: Differentiated Roles in ADAGE

Martin T. Ross, Patrick T. Sullivan, Allen A. Fawcett, and Brooks M. Depro

DOI: 10.5547/01956574.35.SI1.7View Abstract

This paper examines a range of technological and regulatory approaches to reducing greenhouse gas (GHG) emissions. Availability of new technologies will control how the economy and energy infrastructure respond to any future climate policies. How such policies interact with other types of environmental regulations will also influence the best options for meeting emissions goals. To investigate these effects, the ADAGE model is used to examine policy impacts for several climate and technology scenarios, focusing on key factors such as emissions, technology deployment, energy prices and macroeconomic indicators. In general, the simulations indicate that reductions in GHG emissions can be accomplished with limited economic adjustments, although the impacts depend on both the regulatory approaches used and the future availability of new low-carbon technologies. Keywords: Climate change, Computable general equilibrium, Electricity, Capand-trade, Renewable energy standards, Clean energy standards, Greenhouse gas emissions

A Clean Energy Standard Analysis with the US-REGEN Model

Geoffrey J. Blanford, James H. Merrick, and David Young

DOI: 10.5547/01956574.35.SI1.8View Abstract

A clean energy standard (CES) is a potential policy alternative to reduce carbon emissions in the electric sector. We analyze this policy under a range of technological assumptions, expanding on the Energy Modeling Forum (EMF) 24 study scenarios, using a new modeling tool, US-REGEN. We describe three innovative features of the model: treatment of spatial and temporal variability of renewable resources, cost-of-service electric sector pricing, and explicit representation of energy end-use specific capital. We find that varying technology assumptions results in vastly different futures, with large contrasts in the distribution and scale of inter-regional financial flows, and in the generation mix. We explore regional differences in how the costs of CES credits are passed through with cost-of-service vs. competitive pricing. Finally, we compare the CES to an economy-wide emissions cap. We find that although the two policies result in a similar generation mix, price and electricity end-use results differ. Keywords: Clean energy standard, Market-based environmental policy, Greenhouse gas mitigation, Energy modelling, Electricity modeling

Assessing the Interactions among U.S. Climate Policy, Biomass Energy, and Agricultural Trade

Marshall A. Wise, Haewon C. McJeon, Katherine V. Calvin, Leon E. Clarke, and Page Kyle

DOI: 10.5547/01956574.35.SI1.9View Abstract

Energy from biomass is potentially an important contributor to U.S. climate change mitigation efforts. However, large-scale implementation of bioenergy competes with other uses of land, including agriculture and forest production and terrestrial carbon storage in non-commercial lands. And with trade, bioenergy could mean greater reliance on imported energy. Based on EMF-24 policy specifications, this paper explores these dimensions of bioenergy's role in U.S. climate policy and the relationship to alternative measures for ameliorating the trade and land use consequences. It shows how widespread use of biomass in the U.S. could lead to imports; and it highlights that the relative stringency of domestic and international carbon mitigation policy will heavily influence the amount of imports. It demonstrates that limiting biomass imports could alter the balance of trade in other agricultural products. Finally, it shows that increasing efforts to protect both U.S. and international forests could also affect the balance of trade in other agricultural products. Keywords: Biomass, Bioenergy, Land use, Climate mitigation, Agricultural trade

U.S. CO2 Mitigation in a Global Context: Welfare, Trade and Land Use

Ronald D. Sands, Katja Schumacher, and Hannah Forster

DOI: 10.5547/01956574.35.SI1.10View Abstract

We describe carbon dioxide mitigation scenarios specified by the Energy Modeling Forum study (EMF-24) "U.S. Technology Transitions under Alternative Climate Policies," using a global computable general equilibrium model that simulates world energy and agricultural systems through 2050. One set of scenarios covers variation across five major technology groups: end-use technology, carbon dioxide capture and storage, nuclear electricity generation, wind and solar power, and bioenergy. Other scenarios cover variation across policies. Policies such as a renewable portfolio standard for electricity generation or a clean electricity standard have the potential for significant emissions reductions, but at a greater cost than a cap-and-trade scenario with the same reduction in emissions. Cap-andtrade scenarios resulted in carbon dioxide leakage rates of 11 to 20 percent depending on the stringency of the targets. Oil-exporting regions without a mitigation policy may still have significant welfare losses when other world regions reduce emissions. Keywords: Carbon dioxide, Climate policy, Carbon leakage, Land use, Bioenergy

Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals

Sebastian Rausch and Valerie J. Karplus

DOI: 10.5547/01956574.35.SI1.11View Abstract

Regulatory measures have proven the favored approach to climate change mitigation in the U.S., while market-based policies have gained little traction. Using a model that resolves the U.S. economy by region, income category, and sector-specific technology deployment opportunities, this paper studies the magnitude and distribution of economic impacts under regulatory versus market-based approaches. We quantify heterogeneity in the national response to regulatory policies, including a fuel economy standard and a clean or renewable electricity standard, and compare these to a cap-and-trade system targeting carbon dioxide or all greenhouse gases. We find that the regulatory policies substantially exceed the cost of a cap-and-trade system at the national level. We further show that the regulatory policies yield large cost disparities across regions and income groups, which are exaggerated by the difficulty of implementing revenue recycling provisions under regulatory policy designs. Keywords: Energy modeling, Climate policy, Regulatory policies, Electricity, Transportation, General Equilibrium Modeling

Impacts of Technology Uncertainty on Energy Use, Emission and Abatement Cost in USA: Simulation results from Environment Canada's Integrated Assessment Model

Yunfa Zhu and Madanmohan Ghosh

DOI: 10.5547/01956574.35.SI1.12View Abstract

To what extent could various technological advancements in the coming decades potentially help greenhouse gas mitigation in the U.S.? What could the potential contribution of end-use technology and other key clean electric energy technologies such as CCS, Nuclear power, wind & solar, and biomass be? This paper presents simulation results from an Integrated Assessment Model that suggest that, in the absence of policy measures, even under the most optimistic state of technology development and deployment scenarios, the U.S. energy system would still be dominated by fossil fuels and GHG emissions would increase significantly between 2010 and 2050. A pessimistic scenario in end-use technology would result in increased electric and non-electric energy use and GHG emissions compared to the advanced technology scenario, while a pessimistic scenario in any one of the four clean technologies examined would result in reduced electric and non-electric energy use and a small increase in GHG emissions. However, if all technologies are in pessimistic status, GHG emissions would increase significantly as more fossil fuels would be used in the energy system. Technology alone cannot achieve the abatement levels required. A market-based policy targeting the reduction of U.S. GHG emissions to 50% below 2005 levels by 2050 would result in dramatic decrease in coal-fired generation. With abatement policies in place, favorable technology scenarios reduce abatement costs and facilitate the energy system transition from fossil fuels to clean energy. Keywords: Energy use, Clean technology, GHG abatement, Abatement cost