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Structure of the Dynamic Integrated Economy/Energy/Emissions Model: Electricity Component, DIEM-Electricity

This paper, a companion to NI WP 14-12, describes the structure of, and data sources for, the electricity component of the Dynamic Integrated Economy/Energy/Emissions Model (DIEM), which was developed at the Nicholas Institute for Environmental Policy Solutions at Duke University. The DIEM model includes a macroeconomic, or computable general equilibrium (CGE), component and an electricity component that gives a detailed representation of U.S. regional electricity markets. The electricity model (DIEM-Electricity) discussed in thus paper can be run as a stand-alone model or can be linked to the DIEM-CGE macroeconomic model to incorporate feedbacks among economy-wide energy policies and electricity generation decisions and interactions between electricity-sector policies and the rest of the U.S and global economies. Broadly, DIEM-Electricity is a dynamic linear-programming model of U.S. wholesale electricity markets that represents intermediate- to long-run decisions about generation, capacity planning, and dispatch of units. It provides results for generation, capacity, investment, and retirement by type of plant. It also determines wholesale electricity prices, production costs, fuel use, and CO2 emissions. Currently, the model can consider, at a national policy level, renewable portfolio standards, clean energy standards, caps on electricity-sector CO2 emissions, and carbon taxes.

Author: Martin T. Ross

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Policy and Design

Environmental Economics

Climate Change Policy

Energy Sector

Modeling

Working Papers

Structure of the Dynamic Integrated Economy/Energy/Emissions Model: Computable General Equilbrium Component, DIEM-CGE

This paper, a companion to NI WP 14-11, describes the structure of, and data sources for, the macroeconomic component of the Dynamic Integrated Economy/Energy/Emissions Model (DIEM), which was developed at the Nicholas Institute for Environmental Policy Solutions at Duke University. The DIEM model includes a macroeconomic, or computable general equilibrium (CGE), component and an electricity component that gives a detailed representation of U.S. regional electricity markets, DIEM-Electricity. The DIEM-CGE component can be run as a stand-alone model to look at both global and U.S. domestic policies related to the economy, energy, or greenhouse gas emissions. Alternatively, DIEM-CGE can be linked to DIEM-Electricity to investigate the macroeconomic impacts of policies affecting electricity generation. This paper describes DIEM-CGE’s model structure, data sources, representations of production technologies, and possible linkages to DIEM-Electricity. It provides an overview of the model and details of the equilibrium structure underlying the model. It presents the production equations and discusses the model’s data and forecast sources. It also presents information on the model’s greenhouse gas emissions and abatement options as well as details of the linkage between DIEM-CGE and DIEM-Electricity.

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Environmental Economics

Climate Change Policy

Energy Sector

Modeling

Working Papers

Assessing Carbon-Pricing Policy Options in the United States

Much of the focus of efforts to reduce greenhouse gas emissions has been on the pursuit of policy mechanisms that will put a price on carbon. In the United States, such mechanisms have been established in several states and were the central feature of federal legislative proposals of the last decade. With the political failure of those proposals in 2009-2010, creation of a de novo carbon-pricing regime was given little attention—until recently. Calls for fiscal reform and an evolving regulatory setting (especially use of the Clean Air Act to regulate greenhouse gases) might create political appetite for a new effort to pursue a carbon-pricing policy. To inform discussion, this paper identifies and assesses options for establishing a price on carbon in the United States.

Authors: Brian Murray, Tim Profeta, and Billy Pizer

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Environmental Economics

Climate Change Policy

National

Working Papers

Optimizing the Scale of Markets for Water Quality Trading

Allowing polluters to buy, sell or trade water-quality credits could significantly reduce pollution in river basins and estuaries faster and at a lower cost than requiring facilities to meet compliance costs on their own, a new Duke University led study finds. The scale and type of the trading programs, though critical, may matter less than just getting them started. The analysis in the journal Water Resources Research shows that water-quality trading of any kind can significantly lower the costs of achieving Clean Water Act goals.

Author(s): Martin Doyle, Lauren Patterson, Yanyou Chen, Kurt Schnier, and Andrew Yates

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Science

Water

Ecosystem Services

Environmental Economics

National

Journal Articles

Terminating Links between Emission Trading Programs

Links between emission trading programs are not immutable, as highlighted by New Jersey's exit from the Regional Greenhouse Gas Initiative. This raises the question of what to do with existing permits that are banked for future use—choices that have consequences for market behavior in advance of, or upon speculation about, delinking. We consider two delinking policies. One differentiates banked permits by origin, the other treats banked permits the same. We describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead to price divergence, even with only speculation about delinking.

Author(s): William Pizer and Andrew Yates

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Climate & Energy

Environmental Economics

Climate Change Policy

Energy Sector

National

Working Papers

Regulating Existing Power Plants under the Clean Air Act: Present and Future Consequences of Key Design Choices

In June 2014, the EPA released its proposal for rules to regulate carbon dioxide emissions from existing fossil fuel power plants, triggering considerable debate on the proposal’s environmental and economic consequences and on alternatives highlighted by the proposal and by other stakeholders. One question not addressed by this debate is this: What if the EPA regulations turn out to be inadequate to address future mitigation goals? That is, what will the landscape for future policies look like if these regulations turn out to be just an interim measure? This analysis explores the long-term consequences of several key regulatory design choices, including mass-based versus rate-based standards, tradable versus non-tradable standards, and differentiated versus single standards. It finds that these consequences may be significant: differentiated standards lead to relatively greater investment in coal retrofits; non-tradable standards lead to relatively greater retirement of coal capacity. It may be the case that key policy choices entail one set of tradeoffs if proposed EPA rules are viewed as relatively permanent and final and another set of tradeoffs if the rules are viewed as an interim solution.

Authors: Brian C. Murray, William A. Pizer, and Martin Ross

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Environmental Economics

Climate Change Policy

Energy Sector

Modeling

Working Papers

Mangrove Ecosystem Services Valuation: State of the Literature

A growing body of literature provides estimates of ecosystem services values derived from mangroves. If this literature is to be useful in decision making, it must have a solid foundation of value estimates. This paper identifies gaps in data and knowledge regarding mangrove ecosystem services valuations and recommends ways that future research could advance understanding of mangrove ecology, ecosystem services valuation, and conservation. 

Authors: Tibor Vegh, Megan Jungwiwattanaporn, Linwood Pendleton, and Brian Murray

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Oceans & Coasts

Marine Ecosystem Services

Ecosystem Services

Marine

Environmental Economics

Working Papers

Synthesis and Review: Advancing Agricultural Greenhouse Gas Quantification

Reducing emissions of agricultural greenhouse gases (GHGs), such as methane and nitrous oxide, and sequestering carbon in the soil or in living biomass can help reduce the impact of agriculture on climate change while imporving productivity. A new article in a special focus issue of Environmental Research Letters synthesizes the current findings on the state of the capacity for agricultural GHG quantification. It concludes that strategic investment in quantification can lead to significant global improvement in agricultural GHG estimation in the near term.

Author(s): Lydia P. Olander, Eva Wollenberg, Francesco N. Tubiello, and Martin Herold

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Climate & Energy

Agriculture

Ecosystem Services

T-AGG

T-AGG International

Environmental Economics

National

Journal Articles

Completing the Energy Innovation Cycle: The View from the Public Utility Commission

Achieving a widespread adoption of innovative electricity generation technologies involves a complex system of research, development, demonstration, and deployment, with each phase then informing future developments. Despite a number of non-regulatory programs at the federal level to support this process, the innovation premium—the increased cost and technology risk often associated with innovative generation technologies—creates hurdles in the state public utility commission (PUC) process. This article in the Hastings Law Journal examines how and why innovative energy technologies face challenges in the PUC process, focusing on case studies where PUCs have approved or denied utility proposals to deploy high cost, first-generation energy technologies. It concludes with an outline of possible strategies to address PUC concerns by allocating the innovation premium beyond a single utility's ratepayers.

Author(s): Jonas Monast and Sarah Adair 

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Climate & Energy

Policy and Design

State Utility Regulation

Environmental Economics

Climate Change Policy

Energy Sector

States & Regions

State Policy

Journal Articles

Land Use in a Future Climate Agreement

The second options assessment report, Land Use in a Future Climate Agreement, is in support of the ADP negotiations on a post-2020 agreement and focuses specifically on the role of emissions and removals from land use. It is part of a series of option reports funded by the U.S. Department of State but is not in support of, or reflecting, U.S. Government positions and is the sole work of an independent author team. 

Author(s): Manuel Estrada, Donna Lee, Brian Murray, Robert O'Sullivan, Jim Penman, and Charlotte Streck

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Climate & Energy

Policy and Design

Land

Environmental Economics

International

REDD

Reports

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