skip to main content


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

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 CO 2 with a 3% discount rate. Federal aid makes the decision between natural gas and wind nearly cost neutral for Colorado.
 [1] ;  [2] ;  [2] ;  [3]
  1. Istanbul Technical Univ. (Turkey)
  2. Colorado State Univ., Fort Collins, CO (United States)
  3. National Renewable Energy Lab. (NREL), Golden, CO (United States)
Publication Date:
Report Number(s):
Journal ID: ISSN 0301-4215
Grant/Contract Number:
Accepted Manuscript
Journal Name:
Energy Policy
Additional Journal Information:
Journal Volume: 102; Journal ID: ISSN 0301-4215
Research Org:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org:
Joint Institute for Strategic Energy Analysis (JISEA) Innovative Research Analysis Award Program (IRAAP); USDOE
Country of Publication:
United States
29 ENERGY PLANNING, POLICY, AND ECONOMY; renewable portfolio standard; computable general equilibrium
OSTI Identifier:
Alternate Identifier(s):
OSTI ID: 1396871