The Challenges of Climate for Energy Markets

Timothy Brennan

RFF Working Paper Series from Resources for the Future

Abstract: Among the many complex issues of technology, governance, and market design affecting the electricity sector, climate policy has become dominant. From the perspective of a nonspecialist looking at this changing dominance, a quiz illuminates some of the peculiar uses of language one can find in climate change and energy efficiency policy. Six economic challenges are then examined: cap-and-trade vs. taxes, non-price regulations, energy efficiency policies, mitigation vs. adaptation, trade effects, and transmission planning. Three additional challenges affect not just the means to the climate policy end but also the end itself: the “fat tails” problem, discount rates, and whether environmental protection should be evaluated by aggregating willingness to pay across persons. Planners in the public and private sectors need to be aware of not only the economic policy challenges but also arguments that may influence the intensity of the climate policies with which they have to cope.

Keywords: climate cahnge; energy policy; electricity (search for similar items in EconPapers)
JEL-codes: L94 Q48 Q54 (search for similar items in EconPapers)
Date: 2009-09-03
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: The Challenges of Climate for Energy Markets (2009)
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