In the European Union Emissions Trading Scheme’s third trading period (2013-2020), the free allocation of emission allowances will be based on greenhouse gas performance benchmarks. This policy note describes how the revised rules were developed, how they will be applied in practice, and what they imply for operators of installations subject to the system. It…
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Impacts of Biofuels Policies in the EU
Biofuels have the potential of playing an important role in the renewable energy sources panorama, ensuring the achievement of multiple goals such as security of supply, reduction of greenhouse gas (GHG) emissions, creation of green jobs, and development of business opportunities in the agricultural and rural sectors. Subsidies to the sector were justified on this…
Cost-effectiveness and Economic Incidence of a Clean Energy Standard
A Clean Energy Standard (CES) is a flexible, market-based policy instrument that could be adopted to reduce greenhouse gas emissions from the U.S. electricity system over time. This paper uses several well-known energy system and electricity models to analyze a CES that reflects broad principles outlined in President Obama’s January 2011 State of the Union…
German Nuclear Policy Reconsidered: Implications for the Electricity Market
In the aftermath of the nuclear catastrophe in Fukushima-Daiichi, German nuclear policy has been reconsidered. This paper demonstrates the economic effects of an accelerated nuclear phase-out in Germany on the European electricity market. An optimization model is used to analyze two scenarios with different lifetimes for nuclear plants in Germany (phase-out vs. prolongation). Based on…
Marginal Costs with Wings a Ball and Chain Pipelines and Institutional Foundations for the U.S. Gas Market
The United States has highly competitive gas markets (spot and futures), showing prices in recent years that have definitively diverged from world oil prices. Those gas markets were not “built” in the manner of administered electricity markets. Rather, they were the result of a revolution in federal pipeline regulation designed purposely to free the gas…
Support Schemes for Renewable Energy: An Economic Analysis
We consider leading approaches to the decarbonisation of electricity supply. Price supports through long term contracts, such as feed-in-tariffs have been very effective at eliciting rapid escalation of renewable supply, largely because risks have been transferred away from suppliers and tariffs have been generous. However, countries with the most ambitious programs of this type (Denmark,…
Can Bioenergy Assessments Deliver?
The role of biomass as a primary energy resource is highly debated. Next generation biofuels are suggested to be associated with low specific greenhouse gas emissions. But land consumption, demand for scarce water, competition with food production and harmful indirect land-use effects put a question mark over the beneficial effects of bioenergy deployment. In this…
Market and Policy Barriers to Deployment of Energy Storage
There has recently been resurgent interest in energy storage, due to a number of developments in the electricity industry. Despite this interest, very little storage, beyond some small demonstration projects, has been deployed recently. While technical issues, such as cost, device efficiency, and other technical characteristics are often listed as barriers to storage, there are…
Solar Integration
Solar energy can enter our energy systems through many doors and windows, mostly as heat and electricity. As costs go down, especially for photovoltaic electricity, the variability of the resource becomes a dominant issue.Interconnections,load management, flexible fossil or hydro power plants and storage capacities of pumped hydro plants combine to make the daily variability manageable,…
Contracting for Wind Generation
The UK Government proposes offering long-term Feed-in-Tariffs (FiTs) to low-carbon generation to reduce risk and encourage new entrants. Their preference is for a Contract-for-Difference (CfD) for all generation regardless of type. I argue that a standard CfD is unsuitable for on-shore wind, where a fixed FiT appears less risky. The estimated extra trading and balancing…