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Title: Implications of Carbon Regulation for Green Power Markets

Abstract

This paper examines the potential effects that emerging mandatory carbon markets have for voluntary markets for renewable energy, or green power markets. In an era of carbon regulation, green power markets will continue to play an important role because many consumers may be interested in supporting renewable energy development beyond what is supported through mandates or other types of policy support. The paper examines the extent to which GHG benefits motivate consumers to make voluntary renewable energy purchases and summarizes key issues emerging as a result of these overlapping markets, such as the implications of carbon regulation for renewable energy marketing claims, the demand for and price of renewable energy certificates (RECs), and the use of RECs in multiple markets (disaggregation of attributes). It describes carbon regulation programs under development in the Northeast and California, and how these might affect renewable energy markets in these regions, as well as the potential interaction between voluntary renewable energy markets and voluntary carbon markets, such as the Chicago Climate Exchange (CCX). It also briefly summarizes the experience in the European Union, where carbon is already regulated. Finally, the paper presents policy options for policymakers and regulators to consider in designing carbon policies tomore » enable carbon markets and voluntary renewable energy markets to work together.« less

Authors:
 [1];  [2];  [1]
  1. National Renewable Energy Lab. (NREL), Golden, CO (United States)
  2. Ed Holt & Associates Inc., Harpeswell, ME (United States)
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE), Energy Analysis (EI-30) (Energy Analysis Corporate)
OSTI Identifier:
1219270
Report Number(s):
NREL/TP-640-41076
5241
DOE Contract Number:
AC36-99-GO10337
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
renewable energy; markets; carbon regulation; cap and trade; voluntary purchases; voluntary renewable energy markets; greenhouse gases; GHG; emissions; policy; policies; motivation; renewable energy certificates; REC; RECs

Citation Formats

Bird, Lori, Holt, Ed, and Carroll, Ghita. Implications of Carbon Regulation for Green Power Markets. United States: N. p., 2007. Web. doi:10.2172/1219270.
Bird, Lori, Holt, Ed, & Carroll, Ghita. Implications of Carbon Regulation for Green Power Markets. United States. doi:10.2172/1219270.
Bird, Lori, Holt, Ed, and Carroll, Ghita. Sun . "Implications of Carbon Regulation for Green Power Markets". United States. doi:10.2172/1219270. https://www.osti.gov/servlets/purl/1219270.
@article{osti_1219270,
title = {Implications of Carbon Regulation for Green Power Markets},
author = {Bird, Lori and Holt, Ed and Carroll, Ghita},
abstractNote = {This paper examines the potential effects that emerging mandatory carbon markets have for voluntary markets for renewable energy, or green power markets. In an era of carbon regulation, green power markets will continue to play an important role because many consumers may be interested in supporting renewable energy development beyond what is supported through mandates or other types of policy support. The paper examines the extent to which GHG benefits motivate consumers to make voluntary renewable energy purchases and summarizes key issues emerging as a result of these overlapping markets, such as the implications of carbon regulation for renewable energy marketing claims, the demand for and price of renewable energy certificates (RECs), and the use of RECs in multiple markets (disaggregation of attributes). It describes carbon regulation programs under development in the Northeast and California, and how these might affect renewable energy markets in these regions, as well as the potential interaction between voluntary renewable energy markets and voluntary carbon markets, such as the Chicago Climate Exchange (CCX). It also briefly summarizes the experience in the European Union, where carbon is already regulated. Finally, the paper presents policy options for policymakers and regulators to consider in designing carbon policies to enable carbon markets and voluntary renewable energy markets to work together.},
doi = {10.2172/1219270},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Sun Apr 01 00:00:00 EDT 2007},
month = {Sun Apr 01 00:00:00 EDT 2007}
}

Technical Report:

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  • This paper examines the potential effects that emerging mandatory carbon markets have for voluntary markets for renewable energy, or green power markets. In an era of carbon regulation, green power markets will continue to play an important role because many consumers may be interested in supporting renewable energy development beyond what is supported through mandates or other types of policy support. The paper examines the extent to which GHG benefits motivate consumers to make voluntary renewable energy purchases and summarizes key issues emerging as a result of these overlapping markets, such as the implications of carbon regulation for renewable energymore » marketing claims, the demand for and price of renewable energy certificates (RECs), and the use of RECs in multiple markets (disaggregation of attributes). It describes carbon regulation programs under development in the Northeast and California, and how these might affect renewable energy markets in these regions, as well as the potential interaction between voluntary renewable energy markets and voluntary carbon markets, such as the Chicago Climate Exchange (CCX). It also briefly summarizes the experience in the European Union, where carbon is already regulated. Finally, the paper presents policy options for policymakers and regulators to consider in designing carbon policies to enable carbon markets and voluntary renewable energy markets to work together.« less
  • Green power marketing has been heralded by some as a means to create a private market for renewable energy that is driven by customer demand for green products. This report challenges the premise--sometimes proffered in debates over green markets--that profitable, sizable, credible markets for green products will evolve naturally without supportive public policies. Relying primarily on surveys and interviews of US green power marketers, the article examines the role of specific regulatory and legislative policies in enabling the green market, and searches for those policies that are believed by marketers to be the most conducive or detrimental to the expansionmore » of the green market. The authors find that marketers: (1) believe that profitable green power markets will only develop if a solid foundation of supportive policies exists; (2) believe that establishing overall price competition and encouraging customer switching are the top priorities; (3) are somewhat leery of government-sponsored or mandated public information programs; and (4) oppose three specific renewable energy policies that are frequently advocated by renewable energy enthusiasts, but that may have negative impacts on the green marketers' profitability. The stated preferences of green marketers shed light on ways to foster renewables by means of the green market. Because the interests of marketers do not coincide perfectly with those of society, however, the study also recognizes other normative perspectives and highlights policy tensions at the heart of current debates related to green markets. By examining these conflicts, they identify three key policy questions that should direct future research: (1) to what extent should price competition and customer switching be encouraged at the expense of cost shifting; (2) what requirements should be imposed to ensure credibility in green products and marketing; and (3) how should the green power market and broader renewable energy policies interact?« less
  • In this report, we quantify the potential size and impact of the green power market in the United States, and identify features of the market that will most affect its ultimate growth trajectory.
  • The Green Power Market Model (GPMM or the model) identifies and analyzes the potential electric-generating capacity additions that will result from “green power” programs, which are not captured in the “least-cost” analyses performed by the National Energy Modeling System (NEMS) and the Market Allocation (MARKAL) model. The term "green power" is used to define power generated from renewable energy sources, such as wind, solar, geothermal, and various forms of biomass. The Green Power market is an increasingly important element of the national renewable energy contribution, with changes in the regulatory and legislative environment and the recent dramatic changes in naturalmore » gas prices slowly altering the size of this opportunity.« less
  • The Green Power Market Model (GPMM or the model) identifies and analyzes the potential electric-generating capacity additions that will result from “green power” programs, which are not captured in the “least-cost” analyses performed by the National Energy Modeling System (NEMS). The model projects green power-capacity additions through both green power marketing programs in deregulated markets, and utility green pricing programs in regulated markets.