Distributional and efficiency impacts of clean and renewable energy standards for electricity

Sebastian Rausch and Matthew Mowers

Resource and Energy Economics, 2014, vol. 36, issue 2, 556-585

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 a 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-à-vis a carbon pricing policy is that no revenue is generated that can be used to alter unintended distributional consequences.

Keywords: Climate policy; Renewable energy; Electricity; Clean energy standards; Top-down; Bottom-up; General equilibrium modeling (search for similar items in EconPapers)
JEL-codes: C61 C68 D58 Q43 Q54 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:36:y:2014:i:2:p:556-585

DOI: 10.1016/j.reseneeco.2013.09.001

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