Estimating the implied cost of carbon in future scenarios using a CGE model: The Case of Colorado

Hannum, Christopher; Cutler, Harvey; Iverson, Terrence; Keyser, David

doi:10.1016/j.enpol.2016.12.046

Title: Estimating the implied cost of carbon in future scenarios using a CGE model: The Case of Colorado

Journal Article · Sat Jan 07 00:00:00 EST 2017 · Energy Policy

DOI:https://doi.org/10.1016/j.enpol.2016.12.046· OSTI ID:1342825

Hannum, Christopher ^[1]; Cutler, Harvey ^[2]; Iverson, Terrence ^[2]; Keyser, David ^[3]

Istanbul Technical Univ. (Turkey)
Colorado State Univ., Fort Collins, CO (United States)
National Renewable Energy Lab. (NREL), Golden, CO (United States)

We develop a state-level computable general equilibrium (CGE) model that reflects the roles of coal, natural gas, wind, solar, and hydroelectricity in supplying electricity, using Colorado as a case study. Also, we focus on the economic impact of implementing Colorado's existing Renewable Portfolio Standard, updated in 2013. This requires that 25% of state generation come from qualifying renewable sources by 2020. We evaluate the policy under a variety of assumptions regarding wind integration costs and assumptions on the persistence of federal subsidies for wind. Specifically, we estimate the implied price of carbon as the carbon price at which a state-level policy would pass a state-level cost-benefit analysis, taking account of estimated greenhouse gas emission reductions and ancillary benefits from corresponding reductions in criteria pollutants. Our findings suggest that without the Production Tax Credit (federal aid), the state policy of mandating renewable power generation (RPS) is costly to state actors, with an implied cost of carbon of about $17 per ton of CO₂ with a 3% discount rate. Federal aid makes the decision between natural gas and wind nearly cost neutral for Colorado.

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Research Organization:: National Renewable Energy Laboratory (NREL), Golden, CO (United States)

Sponsoring Organization:: Joint Institute for Strategic Energy Analysis (JISEA) Innovative Research Analysis Award Program (IRAAP); USDOE

Grant/Contract Number:: AC36-08GO28308

OSTI ID:: 1342825

Alternate ID(s):: OSTI ID: 1396871

Report Number(s):: NREL/JA-6A20-67657

Journal Information:: Energy Policy, Vol. 102; ISSN 0301-4215

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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Cited by: 24 works

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