State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes

We have developed a state-scale version of the MARKAL energy optimization model, commonly used to model energy policy at the US national scale and internationally. We apply the model to address state-scale impacts of a renewable electricity standard (RES) and a carbon tax in one southeastern state, Georgia. Biomass is the lowest cost option for large-scale renewable generation in Georgia; we find that electricity can be generated from biomass co-firing at existing coal plants for a marginal cost above baseline of 0.2–2.2 cents/kWh and from dedicated biomass facilities for 3.0–5.5 cents/kWh above baseline. We evaluate the cost and amount of renewable electricity that would be produced in-state and the amount of out-of-state renewable electricity credits (RECs) that would be purchased as a function of the REC price. We find that in Georgia, a constant carbon tax to 2030 primarily promotes a shift from coal to natural gas and does not result in substantial renewable electricity generation. We also find that the option to offset a RES with renewable electricity credits would push renewable investment out-of-state. The tradeoff for keeping renewable investment in-state by not offering RECs is an approximately 1% additional increase in the levelized cost of electricity.     

Additionality of wind energy investments in the U.S. voluntary green power market

In the United States, electricity consumers are told that they can “buy” electricity from renewable energy projects, versus fossil fuel-fired facilities, through participation in voluntary green power markets. The marketing messages communicate to consumers that they are causing additional renewable energy generation and reducing emissions through their participation and premium payments for a green label. Using a spatial financial model and a database of registered Green-e wind power facilities, the analysis in this paper shows that the voluntary Renewable Energy Certificate (REC) market has a negligible influence on the economic feasibility of these facilities. Nevertheless, voluntary green power marketers at least implicitly claim that buying their products creates additional renewable energy. This study indicates the contrary. Participants in U.S. voluntary green power markets associated with wind power, therefore, appear to be receiving misleading marketing messages regarding the effect of their participation. In the process of completing this analysis, a potentially relevant factor in explaining investor behavior was identified: the potential for the overlap of voluntary REC markets with compliance REC markets that supply utilities need to meet their obligations of Renewable Energy Portfolio Standard (RPS). The majority of state RPS rules allow for regional or even national sourcing of RECs, meaning that projects are generally eligible to provide compliance RECs to utilities not only in their home states, but in several other states.     

Modeling light-duty plug-in electric vehicles for national energy and transportation planning

This paper sets forth a family of models of light-duty plug-in electric vehicle (PEV) fleets, appropriate for conducting long-term national-level planning studies of the energy and transportation sectors in an integrated manner. Using one of the proposed models, three case studies on the evolution of the U.S. energy and transportation infrastructures are performed, where portfolios of optimum investments over a 40-year horizon are identified, and interdependencies between the two sectors are highlighted. The results indicate that with a gradual but aggressive introduction of PEVs coupled with investments in renewable energy, the total cost from the energy and transportation systems can be reduced by 5%, and that overall emissions from electricity generation and light-duty vehicle (LDV) tailpipes can be reduced by 10% over the 40-year horizon. The annual gasoline consumption from LDVs can be reduced by 66% by the end of the planning horizon, but an additional 800 TWh of annual electricity demand will be introduced. In addition, various scenarios of greenhouse gas (GHG) emissions reductions are investigated. It is found that GHG emissions can be significantly reduced with only a marginal cost increment, by shifting electricity generation from coal to renewable sources.     

Price determination of ETS allowances through the switching level of coal and gas in the power sector

This paper discusses the opportunities that exist for reducing greenhouse gases (GHG) emissions by switching from coal to gas‐fired units in electricity generation, ‘forced’ by the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) price level of CO₂. It attempts to find efficient GHG cost profiles leading to a reasonable GHG emission reduction. In a methodological demonstration case (an electricity generation system consisting of two coal and two gas‐fired power plants), we demonstrate how a GHG emission cost can lead to a certain switch of power plants with an accompanying GHG emission reduction. This GHG emission cost is dependent on the load level. The switching point method is applied to an electricity generation system similar to the Belgian one. It is found that the greatest opportunities for GHG emission reductions are situated in the summer season. By switching only the coal‐fired units with the combined cycle (CC) gas‐fired units, a significant GHG emission reduction is possible at a modest cost. With the simulation tool E‐Simulate, the effect of a GHG emission cost in the summer season is investigated. A potential GHG emission reduction of 9.5% in relation to the case where there is no cost linked to GHG emission is possible at a relative low cost. When implementing a GHG cost in winter season, a smaller GHG reduction occurs while costs are higher. Copyright © 2006 John Wiley & Sons, Ltd.     

Competition for the biomass resource: Greenhouse impacts and implications for renewable energy incentive schemes

In Australia, the Mandatory Renewable Energy Target (MRET) scheme, which targets a 9.5 TWh per annum increase in renewable electricity generation by 2010, is stimulating interest in bioenergy. Development of bioenergy projects may cause competition for biomass resources. For example, sawmill residues are an attractive feedstock for bioenergy, but are also utilised for particleboard manufacture. This study compares the greenhouse gas (GHG) mitigation impacts of alternative scenarios where sawmill residues are used either for generation of electricity or for manufacture of particleboard. The study considers a theoretical particleboard plant processing 100 kt feedstock of dry sawmill residues per annum. If the sawmill residues are used instead for bioenergy, and the particleboard plant utilises fresh plantation biomass, 205 kt CO₂eq emissions are displaced. However, GHG emissions for particleboard manufacture increase by about 38 kt CO₂eq, equivalent to 19% of the fossil fuel emissions displaced, due to the higher fossil fuel requirements to harvest, transport, chip and dry the green biomass. Also, plantation carbon stock declines by 147 kt CO₂eq per year until a new equilibrium is reached after 30 years. This result is influenced particularly by the fossil fuel displaced, the relative efficiency of the fossil fuel and bioenergy plants, the moisture content of the sawmill residues, and the efficiency of the dryer in the particleboard plant.Under MRET, calculation of Renewable Energy Certificates is based solely on the quantity of power generated. This study illustrates that indirect consequences can reduce the GHG mitigation benefits of a bioenergy project. Increased emissions off-site, and loss of forest carbon stock, should be considered in calculating the net GHG mitigation benefit, and this should determine the credit earned by a bioenergy project.     

Simulating greenhouse gas (GHG) allowance cost and GHG emission reduction in Western Europe

 Due to the growing concern for global warming, the EU25 have implemented the European Union Greenhouse Gas Emission Trading Scheme (EU ETS). In the first trading period (2005–2007), part of the targeted GHG emission reductions presumably will have to result from a switch from coal fired electricity generation to gas fired electricity generation. It is possible to calculate the allowance cost necessary to switch a certain coal fired plant with a certain gas fired plant in the merit order. The allowance cost obtained is a so called switching point. When comparing historic European Union Allowance (EUA) prices (2005) with the corresponding historic switching points, the EUA prices were found high enough to cause a certain switch in the summer season. This finding leads to the use of switching points in establishing allowance cost profiles for several scenarios. A variable gas price profile is used in the simulation tool E-Simulate to simulate electricity generation and related GHG emissions in an eight zonal model representing Western Europe. Several GHG allowance cost profile scenarios are examined. For each scenario, electricity generation in the considered countries is clarified. The focus however lies on the GHG emission reduction potentials. These potentials are addressed for each scenario.     

Redefining RECs—Part 2: Untangling certificates and emission markets

Renewable energy and greenhouse gas emissions markets are currently in a state of confusion regarding the treatment of Renewable Energy Certificate (RECs). How should emission-trading schemes treat RECs? How can emission mitigation policies provide real incentives for renewable generation? The objective of REC markets should be to promote additional renewable energy investments. The author asserts that defining RECs in terms of attributes, especially off-site attributes, does not further this goal. Ambiguous language such as “environmental attribute” or “environmental benefit” creates confusion in the marketplace while failing to address the relevant coordination issues with Renewable Portfolio Standard compliance markets, voluntary emission offset markets, or emission cap-and-trade markets. Specifically, defining RECs in terms of off-site attributes creates a number of problems, including that once an emissions cap-and-trade scheme is in place, such definitions of a REC can become indefensible. The author proposes to redefine RECs in terms of on-site attributes, which resolves the aforementioned problems and allows compliance and voluntary renewable energy and emission markets to function without conflicts. Ideally, environmental commodities should be homogeneous, first best measures of the relevant environmental good, as well as easily measured and verified. The author proposes tradable environmental commodities that achieve these characteristics.     

Economical evaluation of electricity generation considering externalities

The economics of renewable energy are the largest barrier to renewable penetration. Nevertheless, the strong desire to reduce environmental emissions is considered a great support for renewable energy sources. In this paper, a full analysis for the cost of the kWh of electricity generated from different systems actually used in Egypt is presented. Also renewable energy systems are proposed and their costs are analyzed. The analysis considers the external cost of emissions from different generating systems. A proposed large scale PV plant of 3.3 MW, and a wind farm 11.25 MW grid connected at different sites are investigated. A life cycle cost analysis for each system was performed using the present value criterion. The comparison results showed that wind energy generation has the lowest cost, followed by a combined cycle–natural gas fired system. A photovoltaic system still uses comparatively expensive technology for electricity generation; even when external costs are considered the capital cost of photovoltaic needs to be reduced by about 60% in order to be economically competitive.     

美国可再生能源证书交易市场

可再生能源发电产业正由早期靠政府扶持逐步进入商业化阶段,其中以可再生能源配额制(RPS)和可再生能源证书(RECs)交易市场为典型。RECs分为捆绑式和非捆绑式两种形式,其主要商业应用模式包括:用来满足可再生能源RPS要求;批发捆绑式RECs;作为独立产品销售非捆绑式RECs;远期销售RECs;聚集小系统的RECs参与强制和自愿市场。RECs的价格是通过市场竞争来决定的,体现了可再生能源所具有的环境价值,在理想情况下,RECs的价格等于可再生能源和常规电力的边际成本之差。此外,RECs价格还受到很多其他因素的影响。RECs市场由自愿市场和强制市场组成,交易方式主要有3种:单一短期合同购买非捆绑式RECs;短期和长期合同混合购买非捆绑式和捆绑式RECs;在零售市场没有开发的情况下,美国公用事业主要依靠长期合同购买捆绑式电力。为了保证RECs交易的方便和非重复性销售,购买RECs需通过审计机构独立认证和核实。美国的许多思路和做法值得我国借鉴。     

Life cycle assessment study of solar PV systems: An example of a 2.7 kWp distributed solar PV system in Singapore

In life cycle assessment (LCA) of solar PV systems, energy pay back time (EPBT) is the commonly used indicator to justify its primary energy use. However, EPBT is a function of competing energy sources with which electricity from solar PV is compared, and amount of electricity generated from the solar PV system which varies with local irradiation and ambient conditions. Therefore, it is more appropriate to use site-specific EPBT for major decision-making in power generation planning. LCA and life cycle cost analysis are performed for a distributed 2.7 kW_p grid-connected mono-crystalline solar PV system operating in Singapore. This paper presents various EPBT analyses of the solar PV system with reference to a fuel oil-fired steam turbine and their greenhouse gas (GHG) emissions and costs are also compared. The study reveals that GHG emission from electricity generation from the solar PV system is less than one-fourth that from an oil-fired steam turbine plant and one-half that from a gas-fired combined cycle plant. However, the cost of electricity is about five to seven times higher than that from the oil or gas fired power plant. The environmental uncertainties of the solar PV system are also critically reviewed and presented.     

The role of public policy in optimizing renewable energy development in the greater southern Appalachian mountains

This research presents a third component of a comprehensive decision support system for energy planning that allows for combining existing electricity generating capabilities with increased use of renewable energy sources. It focuses on energy planning at the regional level, and concentrates specifically on the greater southern Appalachian mountains of the eastern United States: a region that was chosen for analysis not only due to its heavy dependence on coal for electricity, but also because of its potential for increased use of wind and solar power. Previous research used a geographic information system (GIS) model for identifying renewable energy potential to provide input data for a multi-objective linear programming (MOLP) model to determine the optimal constrained mix of renewable energy sources and existing fossil fuel facilities by balancing annual generation costs against the corresponding greenhouse gas emissions. This new component of the system analyzes three potential public policies—renewable portfolio standard, carbon tax, and renewable energy production tax credit—that have been used to foster increased renewable energy usage. These policies require minor modifications to the MOLP model for implementation. The results of these policy cases were then analyzed to determine the impact that these policies have on generation cost and pollution emissions within the region.     

Comprehensive evaluation of effects of straw-based electricity generation: A Chinese case

Greater use of renewable energy is being aggressively promoted to combat climate change by the Chinese government and by other governments. Agricultural straw is the kind of renewable energy source that would become a pollution source if it is not well utilized. We select the Shiliquan straw-based electricity generation project in Shandong Province, China as a case and assess environmental externalities of straw utilization in power plants by using life-cycle analysis. Results show that straw-based electricity generation has far fewer greenhouse gas (GHG) emissions than that of coal-based electricity generation. Improvement in the energy efficiency of equipment used for straw’s pretreatment would lead to a decrease of GHG emissions and energy consumption in the life-cycle of straw-based electricity generation. In case 400 million tonnes of wasted straw in China could be used as a substitute for 200 million tonnes of coal, annually the straw 291 Terrawatt hours (TWh) of electricity could be generated, resulting in an annual total CO₂ emissions savings of 193 million tonnes. Straw-based electricity generation could be a high-potential alternative for electricity generation as well as an incentive for utilizing wheat straw instead of burning it in the field.     

Economics of herbaceous bioenergy crops for electricity generation: Implications for greenhouse gas mitigation

This paper examines the optimal land allocation for two perennial crops, switchgrass and miscanthus that can be co-fired with coal for electricity generation. Detailed spatial data at county level is used to determine the costs of producing and transporting biomass to power plants in Illinois over a 15-year period. A supply curve for bioenergy is generated at various levels of bioenergy subsidies and the implications of production for farm income and greenhouse gas (GHG) emissions are analyzed. GHG emissions are estimated using lifecycle analysis and include the soil carbon sequestered by perennial grasses and the carbon emissions displaced by these grasses due to both conversion of land from row crops and co-firing the grasses with coal. We find that the conversion of less than 2% of the cropland to bioenergy crops could produce 5.5% of the electricity generated by coal-fired power plants in Illinois and reduce carbon emissions by 11% over the 15-year period. However, the cost of energy from biomass in Illinois is more than twice as high as that of coal. Costly government subsidies for bioenergy or mandates in the form of Renewable Portfolio Standards would be needed to induce the production and use of bioenergy for electricity generation. Alternatively, a modest price for GHG emissions under a cap-and-trade policy could make bioenergy competitive with coal without imposing a fiscal burden on the government.     

Life cycle assessment of hydrogen supply chain with special attention on hydrogen refuelling stations

The controversial and highly emotional discussion about biofuels in recent years has shown that greenhouse gas² (GHG) emissions can only be evaluated in an acceptable way by carrying out a full life cycle assessment (LCA) taking the overall life cycle including all necessary pre-chains into consideration. Against this background, the goal of this paper is it to analyse the overall life cycle of a hydrogen production and provision. A state of the art hydrogen refuelling station in Hamburg/Germany opened in February 2012 is therefore taken into consideration. Here at least 50% hydrogen from renewable sources of energy is produced on-site by water electrolysis based on surplus electricity from wind (mainly offshore wind parks) and water. The remaining other 50% of hydrogen to be sold by this station mainly to hydrogen-fuelled buses is provided by trucks from a large-scale production plant where hydrogen is produced from methane or glycerol as a by-product of the biodiesel production. These two pathways are compared within the following explanations with hydrogen production from biomass and from coal. The results show that – with the goal of reducing GHG emissions on a life cycle perspective – hydrogen production based on a water electrolysis fed by electricity from the German electricity mix should be avoided. Steam methane reforming is more promising in terms of GHG reduction but it is still based on a finite fossil fuel. For a climatic sound provision of hydrogen as a fuel electricity from renewable sources of energy like wind or biomass should be used.     

Redefining RECs—Part 1: Untangling attributes and offsets

Renewable energy and greenhouse gas emissions markets are currently in a state of confusion regarding the treatment of Renewable Energy Certificates (RECs). Should consumers buy RECs or emission offsets? After examining this question, the author concludes that RECs are not equivalent to emission offset credits, and as currently defined, the retiring of a REC may have no impact on emissions from electric power generation. Consumers who purchase RECs in voluntary green power markets are providing financial assistance to renewable generators in the form of a production subsidy. Generators that sell RECs are not transferring emission reductions, since they are unlikely to have ownership or the ability to quantify reductions using a commonly accepted standard. More importantly, RECs currently sold in voluntary markets do not pass credible additionality tests and can, at best, be expected to have a market demand effect, which will be less than the supply of RECs on the market. REC definitions that use the term “environmental attributes” or “environmental benefits” are almost universally ambiguous, providing the mistaken impression that consumers are purchasing a good instead of subsidizing a public good.     

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.     

Sustainable energy system design with distributed renewable resources considering economic,environmental and uncertainty aspects

Electricity generation using renewable energy generation technologies is one of the most practical alternatives for network planners in order to achieve national and international Greenhouse Gas (GHG) emission reduction targets. Renewable Distributed Generation (DG) based Hybrid Energy System (HES) is a sustainable solution for serving electricity demand with reduced GHG emissions. A multi-objective optimisation technique for minimising cost, GHG emissions and generation uncertainty has been proposed in this paper to design HES for sustainable power generation and distribution system planning while considering economic and environmental issues and uncertainty in power availability of renewable resources. Life cycle assessment has been carried out to estimate the global warming potential of the embodied GHG emissions from the electricity generation technologies. The uncertainty in the availability of renewable resources is modelled using the method of moments. A design procedure for building sustainable HES has been presented and the sensitivity analysis is conducted for determining the optimal solution set.     

Estimates of inter-fuel substitution possibilities in Chinese chemical industry

The chemical sector is a key driver of China's remarkable growth record and accounts for about 10% of the country's GDP. This has made the industry energy-intensive and consequently a major contributor to greenhouse gas emissions (GHG) and other pollutants. This study has attempted to investigate the potential for inter-fuel substitution between coal, oil, natural gas and electricity in Chinese chemical sector by employing a translog production and cost function. Ridge regression procedure was adopted to estimate the parameters of the function. Estimation results show that all energy inputs are substitutes. In addition, the study produces evidence that the significant role of coal in the Chinese chemical fuel mix converges over time, albeit slowly. These results suggest that price-based policies, coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity and natural gas; hence, retaining the ability to fuel the chemical sector, while also mitigating GHG emissions. Notwithstanding, one must understand that the extent to which substituting electricity for coal will be effective depends on the extent to which coal or oil is used in generating electricity. The findings of this study provide general insights and underscore the importance of Chinese government policies that focus on installed capacity of renewable electricity, energy intensity targets as well as merger of enterprises.     

The potential for bioenergy production from Australian forests,its contribution to national greenhouse targets and recent developments in conversion processes

Australia is highly dependent on cheap fossil fuels for energy generation and under the Kyoto Protocol was one of only three industrialised nations to be granted an increased greenhouse gas (GHG) emissions target. To help meet an effective GHG reduction of at least 20% below expected growth rates for GHG so that there is an increase of only 8% above 1990 levels by 2010, Australia has implemented a mandatory target for electricity retailers to obtain an additional $\text{9.5}\text{TWh}\text{yr}$ of electricity from renewable sources by 2010. Forest biomass could be a significant and effective renewable energy source. There is a potentially large supply of low-cost residual woody biomass from sawlog-driven harvesting, thinnings, and wood processing. There are also abundant land clearing residues available, but these sources are not sustainable.Various technologies for the conversion of woody biomass to fuels for heat and power generation are outlined: combustion, gasification, carbonisation, densified fuels manufacture, and biochemical conversion. Examples are given of current development and implementation of these technologies in Australia.The establishment of new plantation forests can create carbon sinks that are potentially tradeable. Electricity utilities and large power consumers are being encouraged to invest in reforestation and afforestation to offset their carbon emissions. A plan to treble the commercial plantation forest estate by 2020 that is currently being implemented, would offset up to 6% of Australia's GHG emissions during the first Kyoto commitment period (2008–12).     

Renewable energy technologies for the Indian power sector: mitigation potential and operational strategies

The future economic development trajectory for India is likely to result in rapid and accelerated growth in energy demand, with attendant shortages and problems. Due to the predominance of fossil fuels in the generation mix, there are large negative environmental externalities caused by electricity generation. The power sector alone has a 40 percent contribution to the total carbon emissions. In this context, it is imperative to develop and promote alternative energy sources that can lead to sustainability of the energy–environment system. There are opportunities for renewable energy technologies under the new climate change regime as they meet the two basic conditions to be eligible for assistance under UNFCCC mechanisms: they contribute to global sustainability through GHG mitigation; and, they conform to national priorities by leading to the development of local capacities and infrastructure. This increases the importance of electricity generation from renewables. Considerable experience and capabilities exist in the country on renewable electricity technologies. But a number of techno–economic, market-related, and institutional barriers impede technology development and penetration. Although at present the contribution of renewable electricity is small, the capabilities promise the flexibility for responding to emerging economic, socio–environmental and sustainable development needs. This paper discusses the renewable and carbon market linkages and assesses mitigation potential of power sector renewable energy technologies under global environmental intervention scenarios for GHG emissions reduction. An overall energy system framework is used for assessing the future role of renewable energy in the power sector under baseline and different mitigation scenarios over a time frame of 35 years, between 2000 to 2035. The methodology uses an integrated bottom-up modelling framework. Looking into past performance trends and likely future developments, analysis results are compared with officially set targets for renewable energy. The paper also assesses the CDM investment potential for power sector renewables. It outlines specific policy interventions for overcoming the barriers and enhancing deployment of renewables for the future.