This paper reviews the cost of various interventions that reduce greenhouse gas emissions. As much as possible we focus on actual abatement costs (dollars per ton of carbon dioxide avoided), as measured by 50 economic studies of programs over the past decade, supplemented by our own calculations. We distinguish between static costs, which occur over the lifetime of the project, and dynamic costs, which incorporate spillovers. Interventions or policies that are expensive in a static sense can be inexpensive in a dynamic sense if they induce innovation and learning-by-doing.
Last updated on 11/08/2018Like many other states, Oregon has begun to pursue climate policies to attempt to fill the gap created by the lack of effective climate policy at the Federal level. After adopting a variety of policies to address climate change and other environmental impacts from energy use, Oregon is now contemplating the adoption of a greenhouse gas (GHG) cap-and-trade system. However, interactions between policies can have important consequences for environmental and economic outcomes. Thus, as Oregon considers taking this step, reconsidering the efficacy of its other current climate policies may better position the state to achieve long-run emission reductions at sustainable economic costs.
We raise for debate and discussion what in our opinion is a growing mis-control and mis-protection of U.S. energy research. We outline the origin of this mis-control and mis-protection, and propose two guiding principles to mitigate them and instead nurture research: (1) focus on people, not projects; and (2) culturally insulate research from development, but not science from technology.
Energy research is critical to continuing advances in human productivity and welfare. In this Commentary, we raise for debate and discussion what in our view is a growing mis-control and mis-protection of U.S. energy research. This flawed approach originates in natural human tendencies exacerbated by an historical misunderstanding of research and development, science and technology, and the relationships between them. We outline the origin of the mis-control and mis-protection, and propose two guiding principles to mitigate them and instead nurture research: (i) focus on people, not projects; and (ii) culturally insulate research from development, but not science from technology. Our hope is to introduce these principles into the discourse now, so they can help guide policy changes in U.S. energy research and development that are currently being driven by powerful geopolitical winds.
nurturing_transformative_us_energy_research_two_guiding_principles.pdfThe utility business model and power generation industry are built upon a century-old legal regime. Federal and state laws are premised on power flowing from large-scale infrastructure to captive consumers paying regulated rates to a monopoly utility. Today, electric power and money can flow in the opposite directions. Services supplied through utility-owned distribution grids, including storage, energy production, and demand response, upend long-standing industry assumptions about infrastructure investments, consumer behavior, and rate setting. In doing so, distributed energy resource (DERs) threaten incumbent businesses and challenge entrenched regulatory regimes. Regulation of the electric industry is pervasive and will determine where DERs are deployed, the services they may provide, the prices they are paid, and who is allowed to own them. A threshold issue in addressing the future of DER regulation is the roles that federal and state regulators will play in making these decisions. This paper pieces together, from numerous FERC orders and federal court decisions, how the Federal Energy Regulatory Commission’s (FERC) jurisdiction over interstate wholesale energy sales and transmission service applies to DERs. It finds that FERC has disclaimed authority over DER sales that offset a ratepayer’s retail consumption but federal law applies to other sales. FERC’s current approach to these other energy transfers splits authority with state regulators based on various factors, including technology and location on the grid. This fragmented regulatory regime could doom DERs to segmented markets, preventing the creation of a coherent framework for DER development. This paper suggests that FERC should simplify the overlapping web of state and federal regulation by disclaiming jurisdiction over DER energy sales. Doing so would allow states to regulate sales by all types of DERs to local buyers, such as a utility or aggregator. States would then have clear authority to develop comprehensive DER development models. It would also free FERC from the potentially onerous task of directly regulating millions of small-scale resources, while allowing FERC to invite aggregations of DERs to sell directly into regional wholesale markets.
More than 660 million Indians live in areas that exceed the Indian National Ambient Air Quality Standard (NAAQS) for fine particulate (PM2.5) pollution. Our research suggests that if India were to meet its own standards, life expectancy would increase by more than one year on average. Moreover, if India were to meet the WHO’s air quality standard, its people would live about four years longer on average. The economic costs of pollution, through its impact on health care expenditures and workforce productivity, will be significant. Ascribing a monetary value to all of the damages created by pollution is difficult, but an estimate from the Organisation for Economic Co-operation and Development (OECD) suggests that ambient air pollution alone may cost India more than 0.5 trillion dollars per year (OECD 2014).
Electric vehicles (EVs) have advanced significantly this decade, owing in part to decreasing battery costs. Yet EVs remain more costly than gasoline fueled vehicles over their useful life. This paper analyzes the additional advances that will be needed, if electric vehicles are to significantly penetrate the passenger vehicle fleet.
Download paperBailing out uneconomic power plants will do nothing to improve cyber security for the US energy sector or the subsidized plants themselves.
In Aesop’s fable, a swift hare races with a deliberate tortoise. In the end, the tortoise wins by taking a slow and steady approach. We argue that, given the economic constraints on US deployment of nuclear power, a ‘tortoise strategy’ is more prudent for US government nuclear R&D efforts.
The decline in the dollar’s exchange rate seems to have gathered momentum, in part because the person who has his signature on US currency, Treasury Secretary Steve Mnuchin, seems unperturbed by its weakness. If it continues, will energy costs spiral upward?
On December 19, 2017, the government of China announced that it is commencing development of a nationwide CO2 trading system, that when launched will become the world’s largest carbon trading system, annually covering about 3.5 billion tons of CO2 emissions in China’s electric power sector. That approaches twice the size of what is currently the … Continue reading "What Should We Make of China’s Announcement of a National CO2 Trading System?"
This paper introduces an approach for separately quantifying the contributions from renewables in decomposition analysis. So far, decomposition analyses of the drivers of national CO2 emissions have typically considered the combined energy mix as an explanatory factor without an explicit consideration or separation of renewables. As the cost of renewables continues to decrease, it becomes increasingly relevant to track their role in CO2 emission trends. Index decomposition analysis, in particular, provides a simple approach for doing so using publicly available data. We look to the U.S. as a case study, highlighting differences with the more detailed but also more complex structural decomposition analysis. Between 2007 and 2013, U.S. CO2 emissions decreased by around 10%—a decline not seen since the oil crisis of 1979. Prior analyses have identified the shale gas boom and the economic recession as the main explanatory factors. However, by decomposing the fuel mix effect, we conclude that renewables played an equally important role as natural gas in reducing CO2 emissions between 2007 and 2013: renewables decreased total emissions by 2.3–3.3%, roughly matching the 2.5–3.6% contribution from the shift to natural gas, compared with 0.6–1.5% for
nuclear energy.