A Federal Clean Electricity Standard:
Implications of Design Features and
Uncertainties
July 27th 2011
Terry M. Dinan
and
Brian Prest
RFF/U.S. EPA Climate Workshop - A Federal Clean Energy Standard
Study Objective and Method
 Understand how design features and varying
assumptions about future costs affect:
– Regional power generation
– U.S. CO2 emissions
– Regional electricity prices
 Findings based on:
– Apples-to-apples comparisons of existing studies
that differ with respect to:
• Design features
• Cost assumptions and resource availability
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Seven Analyses Used for Comparison
 Three 25 percent RES Policies
– With triple credits for solar PV (EIA/NEMS)
– With triple credits for solar PV (NREL/ReEDS)
– Without triple credits (RFF/NEMS)
 Two 20 percent RES Policies (RFF/Haiku)
– With $25 ACP
– Without $25 ACP
 Two 25 percent CES Policies (RFF/NEMS)
– No credits for natural gas
– Partial credits for incremental natural gas
Focus not on particular policies, but on isolating effect
of design features
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Other Key Observations about Design
Features
 All analyses assumed:
– Standards phased in, no banking or borrowing
– Full trading
– State standards fully implemented
 All analyses run using NEMS assumed $50
ACP, but had little effect on outcomes.
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Results of Seven Analyses Mapped into
Five Consistent Regions
NE
WEST
P
L
A
I
N
S
East Central
Southeast
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Percent of Qualifying Generation, Pre- and
Post-Policy for Final Year of Projection
25% RES
Triple
Credits
20% RES
Triple No Triple
Credits
Credits
Exemption for
Small Utilities
Optimistic
Cost Effect
W/ACP W/O ACP
ACP Effect
25% CES
No NG
W/NG
Partial
Credits
Effect
Triple
Credits
5
Policy-Induced Change in Renewable Generation
for Final Year of Projection, by Source
(billions of kWh)
25% RES
450
EIA
(NEMS)
NREL
(ReEDs)
25% CES
20% RES
RFF
(NEMS)
w/ ACP
(Haiku)
w/o ACP
(Haiku)
No NG
(NEMS)
w/ NG
(NEMS)
400
350
300
250
200
Triple
Credits
150
100
50
0
Wind
Biomass
Geothermal
Solar
6
Policy-Induced Change in Renewable Generation
for Final Year of Projection, by Region
(billions of kWh)
200
180
25% RES
EIA
(NEMS)
NREL
(ReEDS)
25% CES
20% RES
w/o ACP
(Haiku)
RFF
(NEMS)
w/ ACP
(Haiku)
Southeast
East Central
No NG
(NEMS)
w/ NG
(NEMS)
160
140
120
100
80
60
40
20
0
-20
Northeast
Plains
West
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Policy-Induced Change in Electricity Prices,
by Region (percent)
25% RES
12
10
EIA
(NEMS)
NREL
(ReEDS)
20% RES
RFF
(NEMS)
w/ ACP w/o ACP
(Haiku) (Haiku)
25% CES
No NG
(NEMS)
w/ NG
(NEMS)
8
6
Northeast
4
2
0
Southeast
East Central
Plains
West
-2
-4
-6
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Features Helpful in Minimizing Cost of Reducing
CO2 Emissions through an RES or CES
 Wide range of eligible sources
– Effect of CES versus RES
– Effect of including natural gas (with partial credits)
– Effect of including existing sources
• Cost effects
• Distributional effects
 Free Trading of Credits
– Trading by third parties
– Derivatives
 Gradual and Flexible Timing
– Phasing in the standard
– Banking and Borrowing
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For More Information See….
The Effects of Renewable or Clean
Electricity Standards
Available at:
http://www.cbo.gov/doc.cfm?index=12166
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