Are renewables portfolio standards cost-effective emission abatement policy?
Renewables portfolio standards (RPS) could be an important policy instrument for 3P and 4P control. We examine the costs of renewable power, accounting for the federal production tax credit, the market value of a renewable credit, and the value of producing electricity without emissions of SO2, NOx, mercury, and CO2. We focus on Texas, which has a large RPS and is the largest U.S. electricity producer and one of the largest emitters of pollutants and CO2. We estimate the private and social costs of wind generation in an RPS compared with the current cost of fossil generation, accounting for the pollution and CO2 emissions. We find that society paid about 5.7 cent/kWh more for wind power, counting the additional generation, transmission, intermittency, and other costs. The higher cost includes credits amounting to 1.1 cent/kWh in reduced SO2, NOx, and Hg emissions. These pollution reductions and lower CO2 emissions could be attained at about the same cost using pulverized coal (PC) or natural gas combined cycle (NGCC) plants with carbon capture and sequestration (CCS); the reductions could be obtained more cheaply with an integrated coal gasification combined cycle (IGCC) plant with CCS.
Dobesova
Katerina
K
Carnegie Mellon Electricity Industry Center, Tepper School of Business, and Department of Engineering and Public Policy, 254 Posner Hall, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213, USA.
Apt
Jay
J
Lave
Lester B
LB
D000397:Air Pollution / Q000191:economics / Q000517:prevention & control; D002245:Carbon Dioxide / Q000032:analysis / Q000378:metabolism; D003362:Cost-Benefit Analysis; D005161:Facility Regulation and Control; D008628:Mercury / Q000032:analysis / Q000378:metabolism; D009589:Nitrogen Oxides / Q000032:analysis / Q000378:metabolism; D011210:Power Plants / Q000191:economics* / Q000379:methods; D013458:Sulfur Dioxide / Q000032:analysis / Q000378:metabolism; D013781:Texas; D014919:Wind
D009589:Nitrogen Oxides; D013458:Sulfur Dioxide; D002245:Carbon Dioxide; D008628:Mercury