Center for the Study of Energy Markets
California's Greenhouse Gas Policies: Local Solutions to a Global Problem?
- Author(s): Bushnell, Jim B
- Peterman, Carla Joy
- Wolfram, Catherine D
- et al.
emissions. This paper summarizes the initiatives likely to impact the electricity generating sector. We present calculations showing that there is a substantial risk that two of the most prominent policies could simply result in a reshuffling, on paper, of the electricity generating resources within the West that are dedicated to serving California. This reshuffling is different from the conventional leakage problem as it involves no physical changes to the way electricity is generated across regulated and unregulated regions, but is instead driven by a contractual reshuffling of who buys power from whom. The problem is similar to an ineffective consumer boycott. The problem is still present but less severe if more Western states adopt carbon limitations. We also show that some of the least market-based initiatives, the renewable portfolio standards (RPS), are likely to have the biggest near-term impact on the carbon-intensity of electricity generation in the West. Thus the scale of RPS programs may be limiting the potential role of non-renewable options in reducing carbon emissions from the electricity sector.