Simulating the Interaction of a Renewable Portfolio Standard with Electricity and Carbon Markets

Thurber, Mark C.; Davis, Trevor L.; Wolak, Frank A.

doi:10.1016/j.tej.2015.04.007

Cited by 17 publications

(7 citation statements)

References 1 publication

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“…With cap-and-trade the addition of specific sector targets, technical standards (Thurber et al, 2015;Beckenbach et al, 2018) or a forced phase-out of an energy source, such as coal (Osorio et al, 2020), will certainly result in negative synergy. Theoretical studies indicate this (Roberts and Spence, 1976;Smith, 2012, 2014).…”

Section: Carbon Pricing Combined With Performance or Technical Standardsmentioning

confidence: 99%

Designing an effective climate-policy mix: accounting for instrument synergy

et al. 2021

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We assess evidence from theoretical-modelling, empirical and experimental studies on how interactions between instruments of climate policy affect overall emissions reduction. Such interactions take the form of negative, zero or positive synergistic effects. The considered instruments comprise performance and technical standards, carbon pricing, adoption subsidies, innovation support, and information provision.Based on the findings, we formulate climate-policy packages that avoid negative and employ positive synergies, and compare their strengths and weaknesses on other criteria. We note that the international context of climate policy has been neglected in assessments of policy mixes, and argue that transparency and harmonization of national policies may be key to a politically feasible path to meet global emission targets. This suggests limiting the complexity of climate-policy packages. Key policy insights:-Combining technical standards or targets, such as renewable-energy quota, or adoption subsidies with a carbon market can produce negative synergy, up to the point of adding no emissions reduction beyond the cap. For maximum emissions reduction, renewable energy policy should be combined with carbon taxation and target expensive reduction options not triggered by the tax.-Evidence regarding synergy of information provision with pricing is mixed, indicating a tendency for complementary roles (zero synergy). Positive synergy is documented only for cases where information provision improves effectiveness of price instruments, e.g. by stimulating social imitation of low-carbon choices.-We conclude that the most promising packages are combining innovation support and information provision with either a carbon tax and adoption subsidy, or with a carbon market.We further argue that the latter could have stronger potential to harmonize international policy, which would allow to strengthen mitigation policy over time.

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Section: Carbon Pricing Combined With Performance or Technical Standardsmentioning

confidence: 99%

Designing an effective climate-policy mix: accounting for instrument synergy

et al. 2021

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“…The experiment described in this paper uses the web-based Energy Market Game (EMG) previously described in Thurber and Wolak (2013); Thurber et al (2015); Davis (2019).…”

Section: Description Of the Energy Market Gamementioning

confidence: 99%

An Experimental Comparison of Carbon Pricing Under Uncertainty in Electricity Markets

2020

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“…Econometric models and CGE can reflect the impact of macro variables on the carbon market, but it is difficult to dynamically simulate the carbon market risk, usually applied to empirical analysis and long-term planning [8,9]. Experimental economics can accurately simulate the dynamic trajectory of the actual carbon market, but due to the difficulty of occupying a large number of participants for a long time, there are limitations in the scale of repeatability of the experiment [10,11]. The multi-agent model is a viable solution to analyze the impact of disturbances or control measures at the micro level, as well as assess the operation performance of the carbon market at the macro level [12,13].…”

Section: Introductionmentioning

confidence: 99%

Sensitivity Analysis of Key Factors Influencing Carbon Prices under the EU ETS

Jiang¹,

Yue²

2021

Pol. J. Environ. Stud.

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The carbon market has become a major mechanism for global carbon emission reduction. However, the actual operation of the carbon market does not meet the expectation due to the drastic fluctuation of carbon prices. It is of great importance for regulators to fully understand the dynamic operation of the carbon market. This paper employs the carbon market dynamic assessment model to analyze key factors including emission reduction targets and power loads, which influence carbon prices under the European Union Emissions Trading System (EU ETS). The feasibility of the model is verified by simulating the carbon price crisis of the second stage of EU ETS. The simulation results specify that the total emissions are more susceptible to changes of power loads than emission reduction targets, which explains why the European Commission could do little to stabilize the carbon market when facing the disturbances of the global financial crisis and the European crisis. In addition, the threshold carbon price has a great important influence on emission reductions, which is of great importance for regulators to improve the market efficiency. Furthermore, according to the transfer rate from carbon prices to electricity prices, governmental subsidies could be needed to ensure the stability of the power grid.

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Simulating the Interaction of a Renewable Portfolio Standard with Electricity and Carbon Markets

Cited by 17 publications

References 1 publication

Designing an effective climate-policy mix: accounting for instrument synergy

Designing an effective climate-policy mix: accounting for instrument synergy

An Experimental Comparison of Carbon Pricing Under Uncertainty in Electricity Markets

Sensitivity Analysis of Key Factors Influencing Carbon Prices under the EU ETS

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