Environmental Economics Seminar
"The relationship between policy choice and the size of the policy region: Why small jurisdictions may prefer renewable energy policies to reduce CO2 emissions?" presented by Megan Accordino and Deepak Rajagopal
Monday, November 19, 2012
12:00 PM - 1:00 PM
Room CNSI 5433 South
We analyze how the size of the policy jurisdiction relative to the market as a whole affects policy choice for the goal of reducing carbon dioxide (CO2) emissions from electric power generation. When the policy jurisdiction does not cover the entire market policies intended to curb CO2 emissions may result in pollution leakage from shuffling of pollution between regulated and unregulated markets and also cause an unintended increase in energy use in unregulated markets. We compare three policies, a CO2 tax, a clean energy standard (CES) and a renewable portfolio standard (RPS) with respect to two criteria, namely, emissions and market surplus, as the market share of the policy jurisdiction varies. We identify conditions under which a renewable energy policy may be preferred to a pollution-based policy.