Abstract

http://ssrn.com/abstract=2197979
 


 



Designing Renewable Electricity Policies to Reduce Emissions


Harrison G. Fell


Resources for the Future

Joshua Linn


Resources for the Future

Clayton Munnings


Resources for the Future

December 12, 2012

Resources for the Future Discussion Paper No. 12-54

Abstract:     
A variety of renewable electricity policies to promote investment in wind, solar, and other types of renewable generators exist across the United States. The federal renewable energy investment tax credit, the federal renewable energy production tax credit, and state renewable portfolio standards are among the most notable. Whether the benefits of promoting new technology and reducing pollution emissions from the power sector justify these policies’ costs has been the subject of considerable debate. We argue in this paper that the debate is misguided because it does not consider two important interactions between renewable electricity generators and the rest of the power system. First, the value of electricity from a renewable generators depends on the generation and investment it displaces. Second, a large increase in renewable generation can reduce electricity prices, increasing consumption and emissions from fossil generators, and offsetting some of the environmental benefits of the policies. Two policy conclusions follow. First, existing renewable electricity policies can be redesigned to promote investment in the highest-value generators, which can greatly reduce the cost of achieving a given emissions reduction. Second, subsidies financed out of general tax revenue reduce emissions less than subsidies financed by charges to electricity consumers.

Number of Pages in PDF File: 29

Keywords: renewable portfolio standard, production tax credit, investment tax credit, feed-in tariff, clean energy standard, cost-effectiveness, intermittency, wind energy, solar energy

JEL Classification: Q40, Q54, L94

working papers series


Download This Paper

Date posted: January 9, 2013  

Suggested Citation

Fell, Harrison G. and Linn, Joshua and Munnings, Clayton, Designing Renewable Electricity Policies to Reduce Emissions (December 12, 2012). Resources for the Future Discussion Paper No. 12-54. Available at SSRN: http://ssrn.com/abstract=2197979 or http://dx.doi.org/10.2139/ssrn.2197979

Contact Information

Harrison G. Fell
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
202-328-5005 (Phone)
Joshua Linn (Contact Author)
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
Clayton Munnings
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
Feedback to SSRN


Paper statistics
Abstract Views: 164
Downloads: 37

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.641 seconds