Facebook LinkedIn Youtube Twitter
Article Details

IAEE Members and subscribers to Economics of Energy & Environmental Policy : Please log in to access the full text article.

Cost-effectiveness and Economic Incidence of a Clean Energy Standard

Free Article

A Clean Energy Standard (CES) is a flexible, market-based policy instrument that could be adopted to reduce greenhouse gas emissions from the U.S. electricity system over time. This paper uses several well-known energy system and electricity models to analyze a CES that reflects broad principles outlined in President Obama's January 2011 State of the Union Address and in the Administration's subsequent Blueprint for a Secure Energy Future. 1 In particular, it examines three different design options for a CES that would each lead to approximately 80% clean electricity by 2035. These different design options provide broadly similar economic incentives for clean energy deployment and yield similar overall welfare impacts, but they exhibit different distributional outcomes. The most inclusive CES crediting approach favors producers over consumers in competitive electricity markets as well as regions with larger initial endowments of clean energy. On the other hand, the most restrictive crediting approach favors consumers over producers and reduces preferences for regions with larger initial endowments of clean energy. While specific technology outcomes vary across the four models used in this study, key insights about cost-effectiveness and economic incidence are largely robust to the underlying modeling platform. These insights may be important considerations in future CES policy design efforts.
Download PDF Download Ebook
JEL Codes:O31: Innovation and Invention: Processes and Incentives, Q42: Alternative Energy Sources, D43: Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection

Keywords: Clean energy standard, Market-based environmental policy, Greenhouse gas mitigation, Energy modeling, Electricity modeling

DOI: 10.5547/2160-5890.1.3.5

Reference information is available for this article. Join IAEE or purchase the article to view reference data.

Published in Volume 1, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.