M-RCBG Associate Working Paper No. 78

Tilting at Windmills: Making a case for reframing electric sector climate policies

Lawrence Makovich



Tilting at Windmills: Making a case for reframing electric sector climate policies is a study that evaluates current climate policies through the application of performance metrics reflecting a proportional electric sector emission allocation in a 22 Gt by 2040 two-degree scenario. The study evaluates international electric sector climate policy shortcomings and draws electricity sector climate policy lessons from a case study of California. The study develops the components of an Electricity CO2Emission Footprint Pathway Model (E-Path) and applies this analytical framework to US power systems to quantify how increasing anthropogenic CO2 emission charges can map the least-cost pathway for reducing the 2040 US electricity sector CO2 emission footprint. The assessment indicates that an efficient US electricity climate policy initiative would increase 2040 real retail electricity prices by around 43 percent, including the 11 percent price increase from internalizing a 125 $(2014) per metric ton COemission charge that recirculates around 46 billion ($2016) revenues per year to consumers. The study concludes with climate policy recommendation that the US lead by example to achieve a global warming solution by phasing-out subsidies and mandates, and phasing-in a CO2 emission charge that starts out around 40 $(2014) per metric ton and increases to around 125 $(2014) per metric ton by 2040.

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