First-Best Policy and Decentralized Mechanisms

Mitigating Curtailment and Carbon Emissions through Load Migration between Data Centers

Major US electric utility climate pledges have the potential to collectively reduce power sector emissions by one-third

Imposing versus Enacting Commitments for the Long‐Term Energy Transition: Perspectives from the Firm

In Chaps. 4– 6, we treated operational and investment problems from the perspective of power companies. In particular, these firms’ decisions concern generation-capacity expansion and offerings to the electricity market given a particular transmission network. Consequently, the impact of various environmental policies could be examined while taking into account the physical constraints of the network, which are often paramount to the exertion of market power. However, since some environmental policies, e.g., renewable portfolio standards (RPS), aim to incentivize investment in renewable energy (RE) technologies, either expansions to or reinforcements of the transmission grid are necessary. Yet, as discussed in Chap. 1, the restructured nature of the power sector in most OECD countries means that transmission planning is typically conducted by a welfare-maximizing transmission system operator (TSO), whereas generation expansion and operations are carried out by profit-maximizing power companies. Thus, a credible assessment of policy proposals requires a suitable framework that models this distinction between decision makers’ motives directly. Toward that end, we propose a bi-level modeling approach in this chapter in which a TSO at the upper level makes transmission-expansion decisions while constrained by the generators’ decisions at the lower level. After a discussion of the role of the TSO and a survey of the literature, we develop two types of models. Initially, we formulate a benchmark central-planning model that abstracts from the realities of restructured power sectors to provide first-best policy insights stemming from optimal generation and transmission investment in response to the cost of damage from CO\(_2\) emissions. Next, a bi-level modeling approach is taken in which the TSO at the upper level must anticipate the response of industry’s generation-capacity investment and operations. The effectiveness of a carbon tax in inducing socially optimal behavior by industry is investigated. We conclude the chapter with a summary of its content and extensions to the models therein. GAMS codes for implementing the approaches are provided at the end of this chapter.

Energy-related activities are a major contributor of greenhouse gas (GHG) emissions. A growing body of knowledge clearly depicts the links between human activities and climate change. Over the last century the burning of fossil fuels such as coal and oil and other human activities has released carbon dioxide (CO2) emissions and other heat-trapping GHG emissions into the atmosphere and thus increased the concentration of atmospheric CO2 emissions. The main human activities that emit CO2 emissions are (1) the combustion of fossil fuels to generate electricity, accounting for about 37% of total U.S. CO2 emissions and 31% of total U.S. GHG emissions in 2013, (2) the combustion of fossil fuels such as gasoline and diesel to transport people and goods, accounting for about 31% of total U.S. CO2 emissions and 26% of total U.S. GHG emissions in 2013, and (3) industrial processes such as the production and consumption of minerals and chemicals, accounting for about 15% of total U.S. CO2 emissions and 12% of total ...

De-risking Renewable Energy Investments in Developing Countries: A Multilateral Guarantee Mechanism

Which policy instruments attract foreign direct investments in renewable energy?

ABSTRACTThe impact of renewable energy technologies and investments in reducing carbon levels is important. This issue has been little addressed so far due to a lack of data. The most important feature of this study is that it examines the impact of renewable energy investments and renewable energy technologies on reducing oil‐derived carbon emissions for the first time across 27 European Union countries for the years 2006–2021. Another new aspect of the study is that it divides European countries into two, based on income level, and considers the impact of governance indicators such as regulatory quality, political stability, and democracy on European countries' carbon neutrality targets. For this purpose, the robust Driscoll and Kraay robust estimator panel data method was applied in the study, based on the Hausman test, autocorrelation test, inter‐unit correlation test, and heteroscedasticity tests. The findings show that renewable energy investments and technologies help reduce carbon emissions in different models. In addition, although economic growth is beneficial for the environment, it has been determined that it has an increasing effect on carbon emissions in European countries with higher income levels. Trade openness reduces carbon emissions in high‐income countries and increases them in low‐income countries. Population density contributes to reducing carbon emissions. Overall, the results suggest that European countries need to increase renewable energy investments and support clean technologies to achieve carbon neutrality targets. The study also shows that reducing oil consumption by promoting renewable energy technologies and investments is key for European policymakers to reduce carbon emissions.

Public policy influence on renewable energy investments—A panel data study across OECD countries

This paper examines the impact of public policy measures on renewable energy (RE) investments in electricity-generating capacity made by institutional investors. Using a novel combination of datasets and a longitudinal research design, we investigate the influence of different policy measures in a sample of OECD countries to suggest an effective policy mix which could tackle failures in the market for clean energy. The results call for technology-specific policies which take into account actual market conditions and technology maturity. To improve the conditions for institutional investments, advisable policy instruments include economic and fiscal incentives such as feed-in tariffs (FIT), especially for less mature technologies. Additionally, market-based instruments such as greenhouse gas (GHG) emission trading systems for mature technologies should be included. These policy measures directly impact the risk and return structure of RE projects. Supplementing these with regulatory measures such as codes and standards (e.g. RPS) and long-term strategic planning could further strengthen the context for RE investments.

Greenhouse gas emissions, including carbon dioxide and non-CO2 gases, are mainly generated by human activities such as the burning of fossil fuels, deforestation, and agriculture. These emissions disrupt the natural balance of the global ecosystem and contribute to climate change. However, by investing in renewable energy, we can help mitigate these problems by reducing greenhouse gas emissions and promoting a more sustainable future. This research utilized a panel data model to explore the impact of carbon dioxide and non-CO2 greenhouse gas emissions on global investments in renewable energy. The study analyzed data from 63 countries over the period from 1990 to 2021. Firstly, the study established a relationship between greenhouse gas emissions and clean energy investments across all countries. The findings indicated that carbon dioxide had a positive effect on clean energy investments, while non-CO2 greenhouse gas emissions had a negative impact on all three types of clean energy investments. However, the impact of flood damage as a representative of climate change on renewable energy investment was uncertain. Secondly, the study employed panel data with random effects to examine the relationship between countries with lower or higher average carbon dioxide emissions and their investments in solar, wind, and geothermal energy. The results revealed that non-CO2 greenhouse gas emissions had a positive impact on investments only in wind power in less polluted countries. On the other hand, flood damage and carbon dioxide emissions were the primary deciding factors for investments in each type of clean energy in more polluted countries.

Using Renewable Portfolio Standards to Accelerate Development of Negative Emissions Technologies

Overlapping carbon pricing and renewable support schemes under political uncertainty: Global lessons from an Australian case study

Implementing the Renewable Fuel Standard with the Renewable Portfolio Standard in the US: Implications for Policy Costs and Greenhouse Gas Emissions

Towards carbon-neutral world: The effect of renewable energy investments and technologies in G7 countries