Federal policies for renewable electricity: Impacts and interactions

Three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the United States are a cap-and-trade program (CTP) on emissions, a renewable portfolio standard (RPS) for electricity production, and tax credits for renewable electricity producers. Each of these policies would have different consequences, and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts. This paper utilizes the Haiku electricity market model to evaluate the economic and technology outcomes, climate benefits, and cost-effectiveness of three such policies and all possible combinations of the policies. A central finding is that the carbon dioxide (CO₂) emissions reductions from CTP can be significantly greater than those from the other policies, even for similar levels of renewable electricity production, since of the three policies, CTP is the only one that distinguishes electricity generated by coal and natural gas. It follows that CTP is the most cost-effective among these approaches at reducing CO₂ emissions. An alternative compliance payment mechanism in an RPS program could substantially affect renewables penetration, and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets, which varies across the country.     

Supply amount and marginal price of renewable electricity under the renewables portfolio standard in Japan

The Renewables Portfolio Standard (RPS) in Japan requires that approximately 1.35% of each retail supplier's electricity sales in FY2010 come from renewable energy sources (RES), for example, photovoltaics, wind, biomass, geothermal, and small hydropower. To help retail suppliers and renewable generators develop effective strategies, this study provides a quantitative analysis of the impact of this measure. We assume the supply conditions for electricity generation from renewable energy sources (RES-E) based on regional resource endowments, and we derive the cost-effective compositions of renewable portfolios, RES-E certificate prices, and additional costs to retail suppliers. The future prospects of RES-E are assessed based on technology, region, and year up to FY2010. The analysis reveals that wind power and biomass power generated from municipal waste will provide the majority of the total supply of RES-E under the RPS. It also indicates that the marginal price of RES-E certificates will be approximately 5.8 JPY/kWh (5.2 USc/kWh) in FY2010, in the case wherein the marginal price of electricity is assumed to be 4 JPY/kWh (3.6 USc/kWh). In order to elaborate on this further, sensitivity analyses for some parameters of RES and the price of electricity are provided. The dynamic supply curves of RES-E certificates are also indicated.     

Why is South Korea's renewable energy policy failing? A qualitative evaluation

This study explores the causes of the South Korean government's failure to successfully deploy its renewable energy policy. Despite the South Korean government’s ongoing efforts since 2002 to promote the deployment of renewable energy, the established deployment target has not been met and the share of renewable energy supply in total primary energy supply is poor compared to peer countries with a similar level of economic development. Therefore, we attempt to find the causes of this policy failure using qualitative evaluation methods. Through the analyses, conducted using focused interviews and secondary data, we found that the domination of the fossil fuel and nuclear power industry's interests, inconsistent policy shifts, policy design that lacks sufficient support schemes, poorly coordinated government activities, and unsystemic and untimely monitoring and feedback have led to the failure of renewable energy deployment policies in South Korea. To overcome these problems, we suggest that the South Korean government should set more ambitious policy goals, establish a new independent organization that focuses on energy policy issues, use a varied policy mix, and secure political support from diverse policy actors.     

Design limitations in Australian renewable electricity policies

Renewable electricity is pivotal to the medium and long-term reduction of Australia’s greenhouse gas (GHG) emissions, if deep cuts in them are eventually implemented. This paper examines the effectiveness of the principal existing policies that could potentially promote the expansion of renewable electricity (RElec) in Australia: the expanded Renewable Energy Target (RET); the proposed emissions trading scheme (ETS); and the state and territory-based feed-in tariffs. We find the effectiveness of RET is severely eroded by the inclusion of solar and heat pump hot water systems; by the inclusion of ‘phantom’ tradable certificates; and by high electricity consumption growth. We also find that the ETS will not produce a high enough carbon price to assist most RElec technologies before 2020; and that most of the feed-in tariffs exclude large-scale RElec and will give little assistance to small-scale RElec because they are mostly net tariffs. Unless there is a major revision of its RElec policy mechanisms, Australia will fail to reach its renewable electricity target and in particular will fail to build up its solar generation capacity which could be a major source of future deep cuts in the country’s electricity generation emissions.     

State renewable energy electricity policies: An empirical evaluation of effectiveness

Over the past decade, state governments have emerged as US energy policy leaders. Across the country, states are adopting policy instruments aimed at carbon mitigation and renewable energy deployment. One of the most prevalent and innovative policy instruments is a renewable portfolio standard (RPS), which seeks to increase the share of renewable energy electrification in the electricity market. This analysis evaluates the effectiveness of state energy programs with an empirical investigation of the linkage between state RPS policy implementation and the percentage of renewable energy electricity generation across states. We use a variant of a standard fixed effects model, referred to as a fixed effects vector decomposition, with state-level data from 1998 to 2006. Results indicate that RPS implementation is not a significant predictor of the percentage of renewable energy generation out of the total generation mix, yet for each additional year that a state has an RPS policy, they are found to increase the total amount of renewable energy generation. These findings reveal a potentially significant shortcoming of RPS policies. Political institutions, natural resource endowments, deregulation, gross state product per capita, electricity use per person, electricity price, and the presence of regional RPS policies are also found to be significantly related to renewable energy deployment.     

The economic costs of reducing greenhouse gas emissions under a U.S. national renewable electricity mandate

The electricity sector is the largest source of greenhouse gas emissions (GHGs) in the U.S. Many states have passed and Congress has considered Renewable Portfolio Standards (RPS), mandates that specific percentages of electricity be generated from renewable resources. We perform a technical and economic assessment and estimate the economic costs and net GHG reductions from a national 25 percent RPS by 2025 relative to coal-based electricity. This policy would reduce GHG emissions by about 670 million metric tons per year, 11 percent of 2008 U.S. emissions. The first 100 million metric tons could be abated for less than $36/metric ton. However, marginal costs climb to $50 for 300 million metric tons and to as much as $70/metric ton to fulfill the RPS. The total economic costs of such a policy are about $35 billion annually. We also examine the cost sensitivity to favorable and unfavorable technology development assumptions. We find that a 25 percent RPS would likely be an economically efficient method for utilities to substantially reduce GHG emissions only under the favorable scenario. These estimates can be compared with other approaches, including increased R&D funding for renewables or deployment of efficiency and/or other low-carbon generation technologies.     

Is the choice of renewable portfolio standards random?

This study investigated factors influencing the adoption or intention to adopt renewable portfolio standards (RPS) by individual states in the United States (U.S). Theory of adoption of innovation was applied as a conceptual framework. A logistic model was used to achieve the task. Gross state product (GSP), growth rate of population (GRP), political party dominancy, education level, natural resources expenditure, and share of coal in electricity generation were used as explanatory variables. Results indicated that the model predicts the dependent variable (state's choice of adopting or not adopting RPS) 82 times correctly out of 100. Results also suggested that education followed by political party dominancy, GSP and GRP are shown to have large impacts on the probability of RPS adoption.     

Towards real energy economics: Energy policy driven by life-cycle carbon emission

Alternative energy technologies (AETs) have emerged as a solution to the challenge of simultaneously meeting rising electricity demand while reducing carbon emissions. However, as all AETs are responsible for some greenhouse gas (GHG) emissions during their construction, carbon emission “Ponzi Schemes” are currently possible, wherein an AET industry expands so quickly that the GHG emissions prevented by a given technology are negated to fabricate the next wave of AET deployment. In an era where there are physical constraints to the GHG emissions the climate can sustain in the short term this may be unacceptable. To provide quantitative solutions to this problem, this paper introduces the concept of dynamic carbon life-cycle analyses, which generate carbon-neutral growth rates. These conceptual tools become increasingly important as the world transitions to a low-carbon economy by reducing fossil fuel combustion. In choosing this method of evaluation it was possible to focus uniquely on reducing carbon emissions to the recommended levels by outlining the most carbon-effective approach to climate change mitigation. The results of using dynamic life-cycle analysis provide policy makers with standardized information that will drive the optimization of electricity generation for effective climate change mitigation.     

Seven steps to curb global warming

Based on best current estimates that the world needs to reduce global carbon dioxide emissions by 70% by 2050, and that there is at best a 10-year window of opportunity available to initiate the enormous changes needed, this paper proposes a set of seven self-contained steps that can be taken at a global level to tackle the problem with some prospect of success. The steps are self-financing and practicable, in that they are based on existing technologies. They involve agreement to create a new international agency charged with formulating and policing a global carbon pricing regime; a complementary step involving global monitoring of greenhouse gas emissions utilizing satellite resources; taking steps to compensate developing countries for preserving rainforest as carbon sinks; the dismantling of newly created trade barriers holding back global trade in biofuels; global promotion of a transition to renewable sources of electricity through facilitation of grid interconnections with independent power producers; a global moratorium on the building of new coal-fired power stations; and recycling of carbon revenues to promote uptake of renewable energy sources in developing countries, particularly Brazil, India and China. Taken as a group, it is argued that these steps are both necessary and sufficient. They call for institutional innovations at a global level that are politically difficult but feasible, given the magnitude of the problems addressed.     

A missing link? The case of Norway and Sweden: Does increased renewable energy production impact domestic greenhouse gas emissions?

This article examines how the EU׳s RES directive¹ will impact domestic greenhouse gas emissions in Norway and Sweden by 2020. The directive aims for a higher RES share in the energy consumption mix, and Norway and Sweden have established a common electricity certificate scheme to help achieve these RES goals. In terms of how these two national RES plans will impact domestic emissions by 2020, factors such as nuclear power, consumption changes and the energy balance must be considered. The most practical approach to evaluate the plans’ impact on emissions is to focus on changes in carbon-based consumption within the three directive sectors.The Norwegian RES action plan will not affect domestic emissions unless the electricity surplus generated by the certificate market is used to phase out fossil fuels in domestic sectors beyond the scope of the RES directive. The use of electricity to phase out fossil fuel consumption in the offshore sector would substantially reduce Norwegian emissions figures. The Swedish plan would positively impact Swedish greenhouse gas emissions; however, this impact is limited, primarily because a substantial increase in energy consumption is expected.     

Trendy solutions: Why do states adopt Sustainable Energy Portfolio Standards?

Thirty-four states had adopted Sustainable Energy Portfolio Standards (SEPS) or similar goals by the end of 2008, with 14 adoptions since 2006. There appears to be something trendy about SEPS and states may adopt SEPS when internal variables would indicate otherwise. This analysis extends the current discussion of SEPS adoption beyond internal variables, relying on innovation and diffusion theory. Logistic regression with SEPS adoption as the dependent variable is used to test internal determinants and diffusion measures for the years 1997–2008. Of the internal determinants variables, affluence and government ideology were found to be positive and significant. The results show that regional and neighbor diffusion variables are significant in SEPS adoption decisions—even when accounting for ideological distance from previous adopters.     

The effect of financial constraints,technological progress and long-term contracts on tradable green certificates

Tradable green certificates (TGCs) have recently become a diffuse instrument to support renewable electricity in OECD countries. Although it is perhaps too early to draw a conclusive judgement on the effectiveness of this instrument in increasing renewable capacity and decreasing the price of certificates, one view in the literature maintains that long-term contracts are of particular importance for TGCs to be effective. This paper contributes to this debate by analysing how financial constraints and technological progress can induce investors to hold pessimistic expectations of their ability to sell green certificates and still make a profit. Clearly, these expectations will prevent investors from building new capacity to fulfil the quota comprised in TGCs and will keep the price of certificates traded in the market high. As this kind of expectation is not influenced by most design features of TGCs, one can conclude that long-term contracts are particularly important in determining the effectiveness and cost-effectiveness of these instruments. Some attention should therefore be paid to the features of the TGCs, which induce obliged parties to offer long-term contracts to renewable generators.     

美国可再生能源配额制最新进展及对我国的启示

到目前为止,美国已有30个州依据本州资源、市场、政策背景制定并实施了可再生能源配额制,产生效果不尽相同。为了识别配额制特点及其作用和影响,本文在概述美国配额制最新进展基础上,选取德克萨斯州、加利福尼亚州、新墨西哥州和麻萨诸塞州为例,比较其设计和运行特点,为我国设计实施配额制政策提供借鉴。     

Do state renewable portfolio standards promote in-state renewable generation?

Several US states have passed renewable portfolio standard (RPS) policies in order to encourage investment in renewable energy technologies. Existing research on their effectiveness has either employed a cross-sectional approach or has ignored heterogeneity among RPS policies. In this paper, we introduce a new measure for the stringency of an RPS that explicitly accounts for some RPS design features that may have a significant impact on the strength of an RPS. We also investigate the impacts of renewable portfolio standards on in-state renewable electricity development using panel data and our new measure of RPS stringency, and compare the results with those when alternative measures are used. Using our new measure, the results suggest that RPS policies have had a significant and positive effect on in-state renewable energy development, a finding which is masked when design differences among RPS policies are ignored. We also find that another important design feature – allowing “free trade” of REC’s – can significantly weaken the impact of an RPS. These results should prove instructive to policy makers, whether considering the development of a federal-level RPS or the development or redesign of a state-level RPS.     

Greenhouse gas emissions reduction by use of wind and solar energies for hydrogen and electricity production: Economic factors

This study addresses economic aspects of introducing renewable technologies in place of fossil fuel ones to mitigate greenhouse gas emissions. Unlike for traditional fossil fuel technologies, greenhouse gas emissions from renewable technologies are associated mainly with plant construction and the magnitudes are significantly lower. The prospects are shown to be good for producing the environmentally clean fuel hydrogen via water electrolysis driven by renewable energy sources. Nonetheless, the cost of wind- and solar-based electricity is still higher than that of electricity generated in a natural gas power plant. With present costs of wind and solar electricity, it is shown that, when electricity from renewable sources replaces electricity from natural gas, the cost of greenhouse gas emissions abatement is about four times less than if hydrogen from renewable sources replaces hydrogen produced from natural gas. When renewable-based hydrogen is used in a fuel cell vehicle instead of gasoline in a IC engine vehicle, the cost of greenhouse gas emissions reduction approaches the same value as for renewable-based electricity only if the fuel cell vehicle efficiency exceeds significantly (i.e., by about two times) that of an internal combustion vehicle. It is also shown that when 6000 wind turbines (Kenetech KVS-33) with a capacity of 350 kW and a capacity factor of 24% replace a 500-MW gas-fired power plant with an efficiency of 40%, annual greenhouse gas emissions are reduced by 2.3 megatons. The incremental additional annual cost is about $280 million (US). The results provide a useful approach to an optimal strategy for greenhouse gas emissions mitigation.     

澳大利亚可再生能源配额制及对我国的启示

澳大利亚是世界上最早持续在全国范围内实施可再生能源配额制的国家。本文阐述了澳大利亚可再生能源配额制的发展历程和最新动态,解析评价了其运行机制和实施效果。并从促进可再生能源产业可持续发展和解决当前基本瓶颈的视角,提出了对我国建立可再生能源配额制的启示。     

Energy, economics and environmental impacts of renewable energy systems

The renewable based electricity generation technologies were assessed against a range of sustainability indicators using data obtained from the literature. These indicators are cost of electricity generation, greenhouse gas emissions and energy pay-back time. All the three parameters were found to have a very wide range for each technology. For grading different renewable energy sources a new figure of merit has been proposed, linking greenhouse gas emissions, energy pay-back time and cost of electricity generated by these renewable energy sources. It has been found out that wind and small hydro are the most sustainable source for the electricity generation.