Renewable Portfolio Standards in the Presence of Green Consumers and Emissions Trading

Yihsu Chen () and Lizhi Wang ()

Networks and Spatial Economics, 2013, vol. 13, issue 2, 149-181

Abstract: Greenhouse gas (GHG) emissions trading, green pricing programs and renewable portfolio standards (RPS) are three concurrent policies implemented in the United States to reduce reliance on fossil fuel and GHG emissions. Despite their differences in policy targets, they are closely related and integrated with competitive electric markets. This paper examines the interactions among these three policies by considering two aspects of the RPS policy design: double-counting and bundling. Whereas the former grants utilities using the same MWh of renewable energy to meet RPS and to sell as green power, the latter allows them to bundle the renewable energy credits/certificates (RECs) with non-renewable electricity and sell as green power. This paper studies the policy designs by formulating each policy combination as a market model, which treats electricity as a differentiated product. We derive the conditions under which the REC price serves as the upper bound of the green premium or vice versa. The theoretical analysis shows that the bundling could be redundant in the presence of double counting. The policies that allow for double-counting appear to be a better choice, since they result in a higher social surplus. Most surplus gains are due to consumers surplus from green power sales. The framework we develop in this paper is capable of incorporating other detailed policy designs in the analysis such as strategic reserve and offset. Copyright Springer Science+Business Media, LLC 2013

Keywords: Renewable portfolio standards; Green pricing programs; Emission trading programs; Electricity market (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11067-012-9176-0 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:netspa:v:13:y:2013:i:2:p:149-181

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11067/PS2

DOI: 10.1007/s11067-012-9176-0

Access Statistics for this article

Networks and Spatial Economics is currently edited by Terry L. Friesz

More articles in Networks and Spatial Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().