IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v36y2008i9p3300-3311.html
   My bibliography  Save this article

Managing carbon regulatory risk in utility resource planning: Current practices in the Western United States

Author

Listed:
  • Barbose, Galen
  • Wiser, Ryan
  • Phadke, Amol
  • Goldman, Charles

Abstract

Concerns about global climate change have substantially increased the likelihood that future policy will seek to minimize carbon dioxide emissions. As such, even today, electric utilities are making resource planning and investment decisions that consider the possible implications of these future carbon regulations. In this article, we examine the manner in which utilities assess the financial risks associated with future carbon regulations within their long-term resource plans. We base our analysis on a review of the most recent resource plans filed by 15 electric utilities in the Western United States. Virtually all of these utilities made some effort to quantitatively evaluate the potential cost of future carbon regulations when analyzing alternate supply- and demand-side resource options for meeting customer load. Even without federal climate regulation in the US, the prospect of that regulation is already having an impact on utility decision-making and resource choices. That said, the methods and assumptions used by utilities to analyze carbon regulatory risk, and the impact of that analysis on their choice of a particular resource strategy, vary considerably, revealing a number of opportunities for analytic improvement. Though our review focuses on a subset of US electric utilities, this work holds implications for all electric utilities and energy policymakers who are seeking to minimize the compliance costs associated with future carbon regulations.

Suggested Citation

  • Barbose, Galen & Wiser, Ryan & Phadke, Amol & Goldman, Charles, 2008. "Managing carbon regulatory risk in utility resource planning: Current practices in the Western United States," Energy Policy, Elsevier, vol. 36(9), pages 3300-3311, September.
    • Handle: RePEc:eee:enepol:v:36:y:2008:i:9:p:3300-3311
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(08)00190-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wiser, Ryan & Bachrach, Devra & Bolinger, Mark & Golove, William, 2004. "Comparing the risk profiles of renewable and natural gas-fired electricity contracts," Renewable and Sustainable Energy Reviews, Elsevier, vol. 8(4), pages 335-363, August.
    2. Robert J. Lempert & David G. Groves & Steven W. Popper & Steve C. Bankes, 2006. "A General, Analytic Method for Generating Robust Strategies and Narrative Scenarios," Management Science, INFORMS, vol. 52(4), pages 514-528, April.
    3. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    4. Lutsey, Nicholas & Sperling, Daniel, 2008. "America's bottom-up climate change mitigation policy," Energy Policy, Elsevier, vol. 36(2), pages 673-685, February.
    5. Lutsey, Nicholas P. & Sperling, Dan, 2008. "America's Bottom-Up Climate Change Mitigation Policy," Institute of Transportation Studies, Working Paper Series qt8jj755d4, Institute of Transportation Studies, UC Davis.
    6. Cavanagh, Ralph & Gupta, Ashok & Lashof, Dan & Tatsutani, Marika, 1993. "Utilities and CO2 emissions: Who bears the risks of future regulation?," The Electricity Journal, Elsevier, vol. 6(2), pages 64-75, March.
    7. Repetto, R. & Henderson, J., 2003. "Environmental exposures in the US electric utility industry," Utilities Policy, Elsevier, vol. 11(2), pages 103-111, June.
    8. Bokenkamp, Karl & LaFlash, Hal & Singh, Virinder & Bachrach Wang, Devra, 2005. "Hedging Carbon Risk: Protecting Customers and Shareholders from the Financial Risk Associated with Carbon Dioxide Emissions," The Electricity Journal, Elsevier, vol. 18(6), pages 11-24, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carvallo, Juan Pablo & Sanstad, Alan H. & Larsen, Peter H., 2019. "Exploring the relationship between planning and procurement in western U.S. electric utilities," Energy, Elsevier, vol. 183(C), pages 4-15.
    2. Wiser, Ryan & Bolinger, Mark & Heath, Garvin & Keyser, David & Lantz, Eric & Macknick, Jordan & Mai, Trieu & Millstein, Dev, 2016. "Long-term implications of sustained wind power growth in the United States: Potential benefits and secondary impacts," Applied Energy, Elsevier, vol. 179(C), pages 146-158.
    3. Zhifang Zhou & Tao Zhang & Kang Wen & Huixiang Zeng & Xiaohong Chen, 2018. "Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1131-1144, December.
    4. Abadie, Luis M. & Chamorro, José M., 2009. "Income risk of EU coal-fired power plants after Kyoto," Energy Policy, Elsevier, vol. 37(12), pages 5304-5316, December.
    5. Barbose, Galen & Wiser, Ryan & Heeter, Jenny & Mai, Trieu & Bird, Lori & Bolinger, Mark & Carpenter, Alberta & Heath, Garvin & Keyser, David & Macknick, Jordan & Mills, Andrew & Millstein, Dev, 2016. "A retrospective analysis of benefits and impacts of U.S. renewable portfolio standards," Energy Policy, Elsevier, vol. 96(C), pages 645-660.
    6. Hannum, Christopher & Cutler, Harvey & Iverson, Terrence & Keyser, David, 2017. "Estimating the implied cost of carbon in future scenarios using a CGE model: The Case of Colorado," Energy Policy, Elsevier, vol. 102(C), pages 500-511.
    7. Wiser, Ryan & Millstein, Dev & Mai, Trieu & Macknick, Jordan & Carpenter, Alberta & Cohen, Stuart & Cole, Wesley & Frew, Bethany & Heath, Garvin, 2016. "The environmental and public health benefits of achieving high penetrations of solar energy in the United States," Energy, Elsevier, vol. 113(C), pages 472-486.
    8. Anthony G. Patt & Elke U. Weber, 2014. "Perceptions and communication strategies for the many uncertainties relevant for climate policy," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 5(2), pages 219-232, March.
    9. Barradale, Merrill Jones, 2014. "Investment under uncertain climate policy: A practitioners׳ perspective on carbon risk," Energy Policy, Elsevier, vol. 69(C), pages 520-535.
    10. repec:ehu:ikerla:6508 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bolinger, Mark & Wiser, Ryan, 2009. "Wind power price trends in the United States: Struggling to remain competitive in the face of strong growth," Energy Policy, Elsevier, vol. 37(3), pages 1061-1071, March.
    2. Krause, Rachel M., 2012. "The impact of municipal governments' renewable electricity use on greenhouse gas emissions in the United States," Energy Policy, Elsevier, vol. 47(C), pages 246-253.
    3. Gomi, Kei & Shimada, Kouji & Matsuoka, Yuzuru, 2010. "A low-carbon scenario creation method for a local-scale economy and its application in Kyoto city," Energy Policy, Elsevier, vol. 38(9), pages 4783-4796, September.
    4. Gregor Schwerhoff, 2013. "Leadership and International Climate Cooperation," Working Papers 2013.97, Fondazione Eni Enrico Mattei.
    5. Huseynov, Samir & Palma, Marco A., 2018. "Does California’s LCFS Reduce CO2 Emissions?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274200, Agricultural and Applied Economics Association.
    6. Xue-Ting Jiang & Rongrong Li, 2017. "Decoupling and Decomposition Analysis of Carbon Emissions from Electric Output in the United States," Sustainability, MDPI, vol. 9(6), pages 1-13, May.
    7. Liu, Chung-Ming & Liou, Ming-Lone & Yeh, Shin-Cheng & Shang, Neng-Chou, 2009. "Target-aimed versus wishful-thinking in designing efficient GHG reduction strategies for a metropolitan city: Taipei," Energy Policy, Elsevier, vol. 37(2), pages 400-406, February.
    8. Streimikiene, Dalia, 2015. "Assessment of reasonably achievable GHG emission reduction target in Lithuanian households," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 460-467.
    9. Daniel Culotta & Arnim Wiek & Nigel Forrest, 2016. "Selecting and coordinating local and regional climate change interventions," Environment and Planning C, , vol. 34(7), pages 1241-1266, November.
    10. Yonn Dierwechter & Anne Taufen Wessells, 2013. "The Uneven Localisation of Climate Action in Metropolitan Seattle," Urban Studies, Urban Studies Journal Limited, vol. 50(7), pages 1368-1385, May.
    11. Guerrero-Lemus, Ricardo & Marrero, Gustavo A. & Puch, Luis A., 2012. "Costs for conventional and renewable fuels and electricity in the worldwide transport sector: A mean–variance portfolio approach," Energy, Elsevier, vol. 44(1), pages 178-188.
    12. P Sol Hart & Lauren Feldman, 2016. "The Influence of Climate Change Efficacy Messages and Efficacy Beliefs on Intended Political Participation," PLOS ONE, Public Library of Science, vol. 11(8), pages 1-16, August.
    13. Wang, Rui, 2010. "Leaders, Followers and Laggards: Adoption of the U.S. Conference of Mayors Climate Protection Agreement in California," University of California Transportation Center, Working Papers qt7z31n285, University of California Transportation Center.
    14. Sanya Carley & Richard Andrews, 2012. "Creating a sustainable U.S. electricity sector: the question of scale," Policy Sciences, Springer;Society of Policy Sciences, vol. 45(2), pages 97-121, June.
    15. Guangyuan Xing & Youheng Zhang & Ju’e Guo, 2023. "Environmental Regulation in Evolution and Governance Strategies," IJERPH, MDPI, vol. 20(6), pages 1-25, March.
    16. Anandarajah, Gabrial & McDowall, Will, 2012. "What are the costs of Scotland's climate and renewable policies?," Energy Policy, Elsevier, vol. 50(C), pages 773-783.
    17. Dornan, Matthew & Jotzo, Frank, 2015. "Renewable technologies and risk mitigation in small island developing states: Fiji’s electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 35-48.
    18. Aro, Teuvo, 2009. "Preconditions and tools for cross-sectoral regional industrial GHG and energy efficiency policy--A Finnish standpoint," Energy Policy, Elsevier, vol. 37(7), pages 2722-2733, July.
    19. Skodvin, Tora, 2010. ""Pivotal politics" in US energy and climate legislation," Energy Policy, Elsevier, vol. 38(8), pages 4214-4223, August.
    20. Jing Jin & Duozhang Chen, 2022. "Research on the Impact of the County-to-District Reform on Environmental Pollution in China," Sustainability, MDPI, vol. 14(11), pages 1-12, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:36:y:2008:i:9:p:3300-3311. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.