Carbon Pricing Scheme Research Articles

Projected climate change impacts on Indiana’s Energy demand and supply

This paper estimates changes in future energy demand and supply for Indiana due to projected climate change impacts. We first estimate demand changes under both the business-as-usual emissions scenario (RCP 8.5) and a scenario based on reduced emissions consistent with a 2-degree increase in global mean temperature (RCP 4.5), on both a statewide basis and for major urban areas. We then use our adjusted statewide energy demand projections as an input to a comprehensive model of Indiana’s energy system, to project expected changes in the state’s energy supply under both scenarios. Finally, we consider the potential impacts of two policy scenarios—a carbon pricing scheme and a renewable energy investment tax credit—on emissions and future energy supply choices. Our results suggest that climate change will have a relatively modest effect on energy demand and supply in Indiana, slightly increasing commercial demand and decreasing residential demand but having little effect on energy supply choices. In addition, our results suggest the potential for policy proposals currently being adopted in other states, such as a relatively small carbon price or investment credits for renewable energy sources, to have a larger impact on the state’s future energy mix, increasing production from low or zero carbon energy sources and reducing emissions.

The wealth effects of the announcement of the Australian carbon pricing scheme

In this study, we examine the wealth effects associated with the announcement of the Australian Carbon Pricing Scheme (the “carbon tax”), made by the then Prime Minster Julia Gillard on 24 February 2011. Building on studies that use the event study method originally developed by Fama et al. (1969) and Ball and Brown (1968), we propose a novel approach to analyzing announcements with unresolved uncertainty. With this approach, we separate out the news effect and the value effect associated with the announcement of the Australian Carbon Pricing Scheme. Our findings show that the average news effect associated with the announcement is 1.11% (A$254 million dollars), indicating that the market was favorably disposed towards the news that the government was taking action on climate change. The average value effect was −4.46% (−A$1.12 billion dollars), indicating that the scheme destroyed significant value for existing firms. The announcement of the Australian Carbon Pricing Scheme was more value-destructive for carbon-intensive firms (−6.97%) than for the other firms (−3.67%). The method presented in this study can be applied to any policy announcements with unresolved uncertainty

An optimization model for fleet management with economic and environmental considerations, under a cap-and-trade market

The objective of traditional fleet optimization models has been to find the economic life of the assets, neglecting their environmental impacts. However, due to the effect of carbon pricing schemes, in addition to the international concerns about global warming and carbon emissions, it is essential for affected fleet owners to incorporate environmental burdens into their asset management systems. The contribution of this paper is twofold. First, a fleet optimization model is proposed, which factors in the environmental impacts of a fleet of assets over a finite horizon, in addition to its total cost of ownership. As an indicator of environmental impacts, the greenhouse gas (GHG) emissions associated with the fleet ownership is considered. GHG emissions are converted into a monetary value, using the expected price of carbon in the Western Climate Initiative (WCI) market. Thus, the second contribution of this study is to develop a model to predict the price of carbon in this market. The optimization model is then applied to a fleet of excavators located in Ontario, Canada, and the price of carbon in the WCI market is forecasted over the planning horizon of the optimization model.

Coming Out Clean: Australian Carbon Pricing and Clean Technology Adoption

Australia implemented a carbon pricing scheme from July 2012 to July 2014 to reduce emissions. Using data envelopment analysis, I investigate whether the uptake of clean technology accelerated during this period. I also explore a few other related strategies firms used to reduce emissions. I find that during the scheme firms accelerated the adoption of cleaner technology. Much of this acceleration came from firms lagging in technology catching up with the frontier. Reallocation of operation towards cleaner facilities and opting for more efficient scale sizes also helped the pace of emissions reduction. The pattern shows some variation from industry to industry. All these activities subside as soon as the carbon pricing is repealed.

Importance of GHG emissions assessment in the electricity grid expansion towards a low-carbon future: A time-varying carbon intensity approach

Abstract Electricity demand is likely to continue to increase due to industrialization and population growth in the developing world. To meet this extra demand, new generation capacity is indispensable, of which there are two main objectives. First, to ensure that the maximum possible amount of generation is from renewable sources. Second, to identify ways of optimizing fossil fuel generation, so that greenhouse gas (GHG) emissions can be minimised. For developing countries, in particular, it is important to ensure a trade-off between the expansion of electricity generation for desperately-needed social and economic benefits, and the impact of the associated GHG emissions on the global climate. Why is it crucial to explore GHG emissions in relation to planned electricity network expansion? This has been investigated in the present analysis through a time-varying carbon intensity approach in the case of Bangladesh. This is the first study that applies the time-varying carbon intensity approach to assess GHG emissions of an electricity system that is dominated by fossil fuel generation. Primarily, three factors can be assessed from time-varying carbon intensity analysis towards future grid expansion plans aimed at reducing GHG emissions: (a) appropriateness of demand-side management application; (b) renewable integration opportunities; and (c) impact of power plant efficiencies. In addition, this analysis also helps to propose a time-varying carbon pricing scheme. This type of assessment could assist policymakers to make more informed decisions about GHG emission reduction and demand-side management-related policymaking to mitigate climate change and help conserve the environment from further pollution.

Minimum energy performance standards for the 1.5\xa0\xb0C target: an effective complement to carbon pricing

Radical energy efficiency improvements are needed to keep global warming within 1.5 °C until the end of the century. Minimum energy performance standards (MEPS) are a widely applied policy instrument to improve the energy efficiency of appliances and reduce CO2 emissions, but they are criticized as redundant if an overarching carbon pricing scheme is in place. In order to better understand how MEPS could play a more effective role in reaching the 1.5 °C target, life cycle costs (LCC) for four home appliances were modelled considering a cost for emitting CO2. First, a significant social cost of carbon was introduced in a LCC optimisation model and it was found that a modest tightening of MEPS is sufficient to account for the climate externality. Second, more stringent MEPS were modelled and it was found that the switching prices needed to incentivize a shift up one or two efficiency classes were far higher than current carbon prices. These results have several implications for climate policy towards the 1.5 °C target. MEPS can easily internalize the climate externality and have the advantage over carbon pricing that policy makers can be certain that consumers actually move to more efficient appliances. While stringent MEPS do not appear to be economically efficient on the short-run, they are likely cost-effective in long-run 1.5 °C-consistent scenarios.

Determinants and Characteristics of Korean Companies’ Carbon Management under the Carbon Pricing Scheme

In response to the domestic emission trading scheme, Korean companies are required to shift their strategies from voluntary or regulation-driven management approaches to innovative carbon management utilizing their carbon option linked with economic value. Using a questionnaire survey targeting companies subjected to the emission trading scheme, this study explores the status of Korean companies’ carbon management in a series of five strategies and identifies the correlation between companies’ proactive carbon strategies and pre-listed determinant factors. This study found that Korean companies’ practices in accordance with carbon pricing deviate little from conventional energy and environmental management in this phase. They are likely to be affected by the need to appear socially responsible or to make a social contribution, without having to exceed this mandate in terms activities outside of this remit. Yet, only a small proportion of companies have advanced to the stage of proactive carbon management. For them, top managers’ support and understanding are essential factors together with government pressure to factor-in issues related to carbon with their business strategies. This study provides implications for policy and corporate in promoting carbon-oriented management under the carbon policy.

Low-carbon investments from the perspective of electric utilities: The burden of the past

Within the Paris agreement, Europe has adopted ambitious climate targets. Achieving these targets through appropriate low-carbon investments is thus key. This study aims at providing new insight into this issue by considering the DNE21 + model, an optimization model that assesses global energy systems, and the Investment Preference Index model, a simulation model where decision-making is based on technology preferences from a utility's perspective. We evaluate the impact of a climate-policy scenario on the European electricity sector using these models with harmonized assumptions. The resulting investment choices provide insight into the effectiveness of a low-carbon investment policy. We find that various types of incentives are required before companies abandon their historical preferences and low-carbon technologies can flourish. Testing various options has revealed that a negative constraint on coal is more efficient than adding further positive incentives for low-carbon technologies (such as carbon pricing and support schemes). However, we also expect these preferences to shift over time.

Getting ready for future carbon abatement under uncertainty – Key factors driving investment with policy implications

Carbon capture and storage (CCS) is considered a key technology option for abating CO2 emissions in carbon-intensive sectors, e.g. the power sector. However, high investment costs and risk hinder the diffusion of CCS. To avoid stranded assets or high future costs for retrofitting, new plants can be made carbon capture ready (CCR) to enable them to accommodate future CCS retrofitting at low additional costs. Current CCR investment decisions are closely related to future CCS retrofitting and CCS operation decisions in subsequent stages, all of which would be affected by uncertainties. We develop a three-stage CCR investment decision model under multiple uncertainties which allows for investment and especially operating flexibilities. Applying this model to China shows that CCS operating flexibility under the carbon-pricing scheme may actually lower the probability of investing in a CCR plant, and neglecting it may overestimate the propensity for investing in CCR. Moreover, learning effects, which reduce the costs of future CCS retrofitting, may be detrimental to CCR investment, indicating that the policy support for research on, development of, and deployment of CCS to reduce CCS costs should be coordinated with CCR investments. Although higher electricity prices can increase the value of an investment opportunity, it may restrain CCR investment. Finally, CCR investment does not appear to be economically viable under current conditions in China because of low carbon prices, high carbon price risks, high CCR investment costs and the high opportunity costs of CCS operation.

Regional Carbon Pricing for International Maritime Transport: Challenges and Opportunities for Global Geographical Coverage

Although the existing literature identifies a fuel levy imposed by means of a global agreement as the most efficient policy for carbon pricing in the maritime sector, scholars and policy makers debate the possibility for regional measures to be introduced in case a global agreement cannot be achieved. This debate has highlighted several economic, legal, and political challenges that the implementation of an efficient and effective regional scheme would have to face. This paper compares the relative performance of various regional measures for carbon pricing based on the following criteria: jurisdictional basis, data availability, environmental effectiveness and avoidance strategies, impact on competitiveness, differentiation for developing countries, and incentives for reaching a global agreement. The main finding is that, if carefully designed, a cargo-based measure that covers the emissions released throughout the whole voyage to the cargo destination presents various advantages compared with other carbon pricing schemes. These advantages have been largely ignored in the literature.

Lessons from first campus carbon-pricing scheme.

Putting a value on emissions can lower energy use, write Kenneth Gillingham, Stefano Carattini and Daniel Esty.

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

The translation of a greenhouse gas (GHG) emissions reduction policy objective to the required investment in low emissions technologies may be hindered by political contest over the policy instruments employed to achieve it. Political contest may also result in enactment of overlapping policy instruments which, from a ‘policy purist’ perspective, may not appear well calibrated to a shared GHG emissions reduction objective. This paper reports insights gained from an integrated real options and portfolio optimisation model of electricity generation investment behaviour under political uncertainty over the futures of interacting carbon pricing and renewable portfolio standard (RPS) instruments. We compare modelling results and actual outcomes in Australia, where an emission reduction target has had bipartisan support but the means to achieve it has not, to test the assertion that overlapping policy instruments must always increase the social costs of GHG abatement. Results suggest that overlapping a politically contested carbon pricing policy with an RPS may result in a lower risk, renewable energy (RE) investment environment, as the overlap allows investors to hedge their portfolio against political uncertainty through RE additions. Consequently, GHG abatement objectives may be achieved at lower cost than would be the case without the policy interaction. The policies overlap can provide a ‘safety valve’ or ‘hedge’ to both private investors and policymakers when deep uncertainties over the future of energy and climate policies influence investment strategies.

Constraining or Enabling Green Capability Development? How Policy Uncertainty Affects Organizational Responses to Flexible Environmental Regulations

AbstractDespite their growing popularity, flexible environmental regulations are increasingly characterized by high levels of policy uncertainty. This uncertainty poses numerous challenges for managers, policymakers and researchers, for we still have a poor understanding of how such uncertainty affects organizational responses and the ability of organizations to generate unique capabilities. This paper presents findings of a qualitative study of how organizations respond to the introduction of flexible environmental regulations amidst extremely high levels of policy uncertainty. Through an investigation of Australia's complex, and ultimately brief, carbon pricing scheme, we find that policy uncertainty forces organizations to focus their responses on short‐term investments and dealing with that very uncertainty, thereby precluding the development of green capabilities and preventing flexible regulations from achieving their intended policy results. However, we also find that organizations are able to develop innovative regulatory coping capabilities and that variation in regulatory response results in a variation in these capabilities.

On the Importance of Baseline Setting in Carbon Offsets Markets

Incorporating carbon offsets in the design of cap-and-trade programs remains a controversial issue because of its potential unintended impacts on emissions. At the heart of this discussion is the issue of crediting of emissions reductions. Projects can be correctly, over- or under-credited for their actual emissions reductions. We develop a unified framework that considers the supply of offsets within a cap-and-trade program that allows us to compare the relative impact of over-credited offsets and under-credited emissions reductions on overall emissions under different levels of baseline stringency and carbon prices. In the context of a national carbon pricing scheme that includes offsets, we find that the emissions impacts of over-credited offsets can be fully balanced out by under-credited emissions reductions without sacrificing a significant portion of the overall supply of offsets, provided emissions baselines are stringent enough. In the presence of high predicted business-as-usual (BAU) emissions uncertainty or low carbon prices, to maintain the environmental integrity of the program, baselines need to be set at stringent levels, in some cases below 50 percent of predicted BAU emissions. As predicted BAU emissions uncertainty declines or as the carbon market achieves higher equilibrium prices, however, less stringent baselines can balance out the emissions impacts of over-credited offsets and under-credited emissions reductions. These results imply that to maintain environmental integrity of offsets programs, baseline stringency should be tailored to project characteristics and market conditions that influence the proportion of over-credited offsets to under-credited emissions reductions.

On the importance of baseline setting in carbon offsets markets

Incorporating carbon offsets in the design of cap-and-trade programs remains a controversial issue because of its potential unintended impacts on emissions. At the heart of this discussion is the issue of crediting of emissions reductions. Projects can be correctly, over- or under-credited for their actual emissions reductions. We develop a unified framework that considers the supply of offsets within a cap-and-trade program that allows us to compare the relative impact of over-credited offsets and under-credited emissions reductions on overall emissions under different levels of baseline stringency and carbon prices. In the context of a national carbon pricing scheme that includes offsets, we find that the emissions impacts of over-credited offsets can be fully balanced out by under-credited emissions reductions without sacrificing a significant portion of the overall supply of offsets, provided emissions baselines are stringent enough. In the presence of high predicted business-as-usual (BAU) emissions uncertainty or low carbon prices, to maintain the environmental integrity of the program, baselines need to be set at stringent levels, in some cases below 50 percent of predicted BAU emissions. As predicted BAU emissions uncertainty declines or as the carbon market achieves higher equilibrium prices, however, less stringent baselines can balance out the emissions impacts of over-credited offsets and under-credited emissions reductions. These results imply that to maintain environmental integrity of offsets programs, baseline stringency should be tailored to project characteristics and market conditions that influence the proportion of over-credited offsets to under-credited emissions reductions.

Clean Technology, Regulation and Government Intervention: The Australian Experience

This study assesses the impact of an Australian carbon pricing scheme and a related grant program on the manufacturing industry. A production function approach is used to isolate and examine the portion of emission change linked to technological shift. It also tests whether exposure to facilities that receive the grant encourages the adoption of clean technology elsewhere. Coinciding with the carbon pricing scheme, there is about 10 per cent reduction in emissions due to a sector-wide shift to cleaner technologies. The effect of the grant program is size dependent, and small and very large facilities mainly invested to reduce emission intensity beyond the average. The exposure to the program mostly affects firms where production is geographically concentrated.

Coming Out Clean: Australian Carbon Pricing and Clean Technology Adoption

Australia implemented a carbon pricing scheme from July 2012 to July 2014 as an emission reduction measure. Using data envelopment analysis, I investigate whether the uptake of clean technology accelerated during this period or whether firms opted for alternate responses. I find that during the scheme firms accelerated the adoption of cleaner technology, especially those lagging in technology. Still, some firms resorted to reallocating operation to their cleaner facilities to avoid investing. The patterns, however, vary from industry to industry. Overall, the scheme led to substantial emission reductions in major emitting industries and elsewhere. A drop of 10.5 per cent in emissions is due to technological shift alone, of which about 6 percentage points are credited to the carbon pricing.

Use of sugar kelp aquaculture in Long Island Sound and the Bronx River Estuary for nutrient extraction

MEPS Marine Ecology Progress Series Contact the journal Facebook Twitter RSS Mailing List Subscribe to our mailing list via Mailchimp HomeLatest VolumeAbout the JournalEditorsTheme Sections MEPS 531:155-166 (2015) - DOI: https://doi.org/10.3354/meps11331 Use of sugar kelp aquaculture in Long Island Sound and the Bronx River Estuary for nutrient extraction Jang K. Kim1,*, George P. Kraemer2, Charles Yarish3 1Department of Marine Sciences, University of Connecticut, 1 University Place, Stamford, CT 06901, USA 2Department of Environmental Studies, Purchase College, 735 Anderson Hill Road, Purchase, NY 10577, USA 3Department of Ecology and Evolutionary Biology, University of Connecticut, 1 University Place, Stamford, CT 06901, USA *Corresponding author: jang.kim@uconn.edu ABSTRACT: We previously demonstrated the suitability of seaweed aquaculture as a nutrient management tool, using the warm temperate rhodophyte Gracilaria tikvahiae McLachlan. The present follow-up study revealed an even higher nutrient bioextraction capacity in the cold-water species Saccharina latissima at 3 sites—the mouth of the Bronx River Estuary (Bronx, NY; BRE), western Long Island Sound (Fairfield, CT; WLIS) and central Long Island Sound (Branford, CT; CLIS), during winter and spring of the 2012-2013 growing season. These sites differ in temperature (BRE > CLIS > WIS), salinity (BRE < WLIS = CLIS) and nutrients (BRE >> WLIS = CLIS). We estimated that S. latissima could remove up to 180, 67 and 38 kg N ha-1 at BRE, WLIS and CLIS respectively, in a hypothetical kelp farm system with 1.5 m spacing between longlines. In the same hypothetical kelp farm system, the estimated carbon sequestration values are 1350 (BRE), 1800 (WLIS) and 1100 (CLIS) kg C ha-1. The potential monetary values of N sequestration by the sugar kelp are up to $1600 (BRE), $760 (WLIS) and $430 (CLIS) ha-1, if incorporated in the State of Connecticut Nitrogen Credit Trading Program and a carbon-pricing scheme. The potential economic values of C sequestration are $30-300 (BRE), $40-400 WLIS), and $24-240 (CLIS) ha-1. These results suggest that seaweed aquaculture is a useful technique for nutrient bioextraction in urbanized coastal waters, such as LIS and BRE. Alternation of the warm- and cold-water species would maximize nutrient bioextraction and augment other ecosystem services, producing economic benefits for the region while helping to manage non-source eutrophication. KEY WORDS: Nutrient bioextraction · Kelp aquaculture · Saccharina latissima · Estuary Full text in pdf format PreviousNextCite this article as: Kim JK, Kraemer GP, Yarish C (2015) Use of sugar kelp aquaculture in Long Island Sound and the Bronx River Estuary for nutrient extraction. Mar Ecol Prog Ser 531:155-166. https://doi.org/10.3354/meps11331 Export citation RSS - Facebook - Tweet - linkedIn Cited by Published in MEPS Vol. 531. Online publication date: July 02, 2015 Print ISSN: 0171-8630; Online ISSN: 1616-1599 Copyright © 2015 Inter-Research.

Obstacles to Carbon Pricing in Canadian Provinces

Key messages:• Market-based instruments (MBIs), either under the form of emissions trading or carbon taxation, have been increasingly popular in OECD countries and, in Canada, at the sub-national level.• Quebec, Alberta, British Columbia and, to a lesser extent Manitoba, have all successfully adopted and implemented carbon pricing policies, while Ontario and Saskatchewan have proposed to adopt MBIs though implementation has not yet proceeded.• The implementation of MBIs began in 2007, after the Harper government decided not to implement any such instrument at the federal level, allowing provinces to experiment without creating redundant carbon pricing schemes.• Three important types of obstacles to the adoption and implementation of MBIs are identified amongst Canadian provinces: administrative obstacles associated with a lack of environmental and climate change policy capacity, political obstacles associated with the provincial party system and salience of MBIs during elections, and finally economic obstacles, especially the policy preferences of main provincial industries.• MBIs remain popular amongst Canadians and different strategies can be adopted to overcome obstacles to their implementation. Policy capacity can be secured rapidly through inter-jurisdictional cooperation and/or by using central agencies such as the ministry of finance or specialized regulatory bodies rather than environment ministries. In provinces where resistance to market-based approaches is more significant, a narrow-based carbon tax or limited form of emissions trading (such as credit-based emissions trading) can be implemented as a first step toward a more comprehensive and effective market instruments. These instruments can also be used to augment financial resources to increase climate change policy capacity or funding for new technologies that might, in the long run, help reduce compliance costs associated with more stringent MBIs.

Flexible dynamic operation of solar-integrated power plant with solvent based post-combustion carbon capture (PCC) process

This paper examines flexible operation of solvent-based post-combustion carbon capture (PCC) for the reduction of power plant carbon emissions while minimizing revenue loss due to the reduced power plant electricity output. The study is conducted using a model superstructure enveloping three plants; a power plant, a PCC plant and a solar thermal field where the power plant and PCC plant are operated flexibly under the influence of hourly electricity market and weather conditions. Reduced (surrogate) models for the reboiler duty and auxiliary power requirement for the carbon capture plant are generated and applied to simulate and compare four cases, (A) power plant with PCC, (B) power plant with solar assisted PCC, (C) power plant with PCC and solar repowering – variable net electricity output and (D) power plant with PCC and solar repowering – fixed net electricity output. Such analyses are conducted under dynamic conditions including power plant part-load operation while varying the capture rate to optimize the revenue of the power plant. Each case was simulated with a lower carbon price of $25/tonne-CO2 and a higher price of $50/tonne-CO2. The comparison of cases B–D found that optimal revenue generation for case C can be up to 42% higher than that of solar-assisted PCC (case B). Case C is found to be the most profitable with the lowest carbon emissions intensity and is found to exhibit a constant capture rate for both carbon prices. The optimal revenue for case D is slightly lower than case C for the lower carbon price ($25/tonne-CO2) while it is considerably lower in the higher carbon price ($50/tonne-CO2) scenario. The highest revenue to electricity ratio is found to be for the case where solar repowering is used for power boosting. This study highlights the significant potential of dynamic flexible operation toward deeper reductions in carbon capture costs. This analysis is based on the presence of a carbon pricing scheme currently not present in the Australian market, but which could be realised in the future.