Distributional and Efficiency Impacts of Clean and Renewable Energy Standards for Electricity
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MITJPSPGC_Rpt225.pdf
Description
main article
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2.73 MB
Format
Adobe PDF
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ea579cdd95100031b95c11a399ddc231
Author(s)
Rausch, Sebastian
Mowers, Matthew
Date Issued
July 17, 2012
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
Report 225
Series/Report no.
Joint Program Report Series;225
Abstract
We examine the efficiency and distributional impacts of greenhouse gas policies directed toward the electricity
sector in a model that links a “top-down” general equilibrium representation of the U.S. economy
with a “bottom-up” electricity-sector dispatch and capacity expansion model. Our modeling framework
features a high spatial and temporal resolution of electricity supply and demand, including renewable
energy resources and generating technologies, while representing CO2 abatement options in non-electric
sectors as well as economy-wide interactions. We find that clean and renewable energy standards entail
substantial efficiency costs compared to an economy-wide carbon pricing policy such as a cap-and-trade
program or a carbon tax, and that these policies are regressive across the income distribution. The geographical
distribution of cost is characterized by high burdens for regions that depend on non-qualifying
generation fuels, primarily coal. Regions with abundant hydro power and wind resources, and a relatively
clean generation mix in the absence of policy, are among the least impacted. An important shortcoming
of energy standards vis-`a-vis a first-best carbon pricing policy is that no revenue is generated that can be
used to alter unintended distributional consequences.
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