Targeting one bird with two stones: The impact of combining a renewable electricity standard and a vehicle fuel economy standard. Valerie J. Karplus, Ph.D. Jennifer Morris, Ph.D. candidate MIT Joint Program on the Science and Policy of Global Change June 21, 2011.
Valerie J. Karplus, Ph.D.
Jennifer Morris, Ph.D. candidate
MIT Joint Program on the Science and Policy of Global Change
June 21, 2011
Background – Model – Combining Reg. – ConclusionsPassenger vehicles and electric power generation together account for aroundhalf of U.S. GHG emissions…
Source: EIA, Emissions of Greenhouse Gases Report, (2009).
Background – Model – Combining Reg. – ConclusionsComparing two options for reducing GHG emissions (and petroleum use)
1) Combine policies focused on individual sectors :
Renewable electricity standard
(State-level RES policies)
Fuel economy standard
(U.S. Corporate Average Fuel Economy Standards)
2) Achieve same reduction with single economy-wide policy :
Cover many sectors, incentivize reductions at least cost
How do the costs of each approach compare?
Background – Model – Combining Reg. – ConclusionsElectricity sector and passenger vehicle fleet detail were added into an economy-wide macroeconomic model
The MIT Emissions Prediction and Policy Analysis Model
New passenger vehicle sector
Detailed physical accounting
(1) Travel demand
(2) Fuel efficiency
(3) Alt. Technology
Goods and Services
Background – Model – Combining Reg. – ConclusionsRepresenting policies in the EPPA model
Renewable Electricity Standard
Vehicle fuel economy standard
Halves vehicle fuel consumption by 2030, constant thereafter.
Reaches 22.5% by 2030 and constant thereafter.
Background – Model – Combining Reg. – ConclusionsImpact on the electricity sector
Changes in Installed Capacity
Electricity – Primary fuel use
Background – Model – Combining Reg. – ConclusionsWhat if GHG emissions were instead limited by a cap-and-trade policy?
Capped emissions are equivalent to combined FES + RES policy
CAT policy covers all sectors of the economy.
Emissions are reduced relative to reference, but modest.
Background – Model – Combining Reg. – ConclusionsRegulatory policy combination is 3X more costly than cap-and-trade policy
Background – Model – Combining Reg. – ConclusionsWhat are the effects of combining the regulatory policies with a tough cap-and-trade policy?
Background – Model – Combining Reg. – ConclusionsWhat is the effect of adding the two regulatory policies in the background of a more stringent cap-and-trade policy?
Background – Model – Combining Reg. – ConclusionsConclusions
No. Can achieve same GHG reduction at 1/3 of the cost with cap-and-trade system!
It will cost you more to get the same reduction, regardless of whether technology cost is high or low…
Prof. John Heywood
Prof. Jake Jacoby
Prof. Kenneth Oye
Prof. John Reilly
Dr. Mustafa Babiker (Saudi Aramco)
Prof. Dick Eckaus
Prof. Jerry Hausman
Prof. Kenneth Train (Berkeley)
Rosie Albinson (BP)
Dr. Sebastian Rausch
Dr. Niven Winchester
Awesome JP & SAL students
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Error bars on 2010 PHEV and EV indicate emissions using electricity exclusively from coal (high) or wind (low).