Decarbonization of the U.S. electricity sector: Are state energy policy portfolios the solution?

• Published in: Energy economics 2011-09, Vol.33 (5), p.1004-1023
• Main Author: Carley, Sanya
• Format: Article
• Language: English
• Subjects: Applied sciences; Carbon; Carbon dioxide; Carbon emissions; Climate; Climate change; Climate policy; Economic data; Economic policy; Economics; Electric energy; Electric power; Electricity; Electricity markets; Electricity markets Energy policy Carbon dioxide Climate policy; Emissions control; Emissions trading; Energy; Energy consumption; Energy economics; Energy market; Energy policy; Energy prices; Energy resources; Environmental economics; Environmental management; Environmental policy; Exact sciences and technology; General, economic and professional studies; Pollution control; Power marketers; Prices; Renewable energy sources; Saving; State government; Studies; U.S.A
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2011.05.002

State governments have taken the lead on U.S. energy and climate policy. It is not yet clear, however, whether state energy policy portfolios can generate results in a similar magnitude or manner to their presumed carbon mitigation potential. This article seeks to address this lack of policy evidence and contribute empirical insights on the carbon mitigation effects of state energy portfolios within the U.S. electricity sector. Using a dynamic, long-term electricity dispatch model with U.S. power plant, utility, and transmission and distribution data between 2010 and 2030, this analysis builds a series of state-level policy portfolio scenarios and performs a comparative scenario analysis. Results reveal that state policy portfolios have modest to minimal carbon mitigation effects in the long run if surrounding states do not adopt similar portfolios as well. The difference in decarbonization potential between isolated state policies and larger, more coordinated policy efforts is due in large part to carbon leakage, which is the export of carbon intensive fossil fuel-based electricity across state lines. Results also confirm that a carbon price of $50/metric ton CO 2e can generate substantial carbon savings. Although both policy options – an energy policy portfolio or a carbon price – are effective at reducing carbon emissions in the present analysis, neither is as effective alone as when the two strategies are combined. ► Scenario modeling exercise to assess effectiveness of state energy policy portfolios. ► Regional coordination has greater decarbonization potential than state policies. ► Some states benefit more from regional policy coordination than others. ► Emissions leakage attenuates the effect of isolated state policy portfolios. ► Carbon price with coordinated energy portfolio has greatest decarbonization potential.