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A load-based CO 2 cap in the power sector

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  • HAL T. NELSON

Abstract

Oregon's governor has proposed a load-based cap and trade programme that limits carbon dioxide (CO 2 ) emissions to 10% below 1990 levels by 2020. A load-based programme is different from the source-based European Union Emissions Trading Scheme (EU ETS), as it regulates emissions sources, located outside the state, that serve Oregon's electricity load. This article describes the stakeholder process that developed the legislative proposal for the load-based cap. The Oregon Clean Energy Planning Model©, a modified capacity expansion model of annual load resource balances, is used to estimate programme costs. The net present value of the climate policy to Oregon ranges from a $518 million benefit to a $414 million cost under various load growth scenarios. Programme benefits are possible under low and medium load growth because the societal returns of energy efficiency exceed its cost over the life of the programme. CO 2 allowance prices in 2017-2020 are estimated in the medium case at approximately $21 per tonne. Low energy efficiency deployment could raise allowance costs to $36, while an aggressive efficiency programme could reduce them to $13.50. Competition for Northwest renewable resources could increase allowance prices in final phase to $37, indicating the interdependence in programme design among state climate policies.

Suggested Citation

  • Hal T. Nelson, 2009. "A load-based CO 2 cap in the power sector," Climate Policy, Taylor & Francis Journals, vol. 9(1), pages 56-70, January.
    • Handle: RePEc:taf:tcpoxx:v:9:y:2009:i:1:p:56-70
    DOI: 10.3763/cpol.2007.0448
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