Proceedings of the 41st Annual Hawaii International Conference on System Sciences (HICSS 2008) (2008)
Waikoloa, Big Island, Hawaii
Jan. 7, 2008 to Jan. 10, 2008
acceptable levels will require a dramatic de-carbonization of the electric generation sector in the U.S. One increasingly discussed way to meet this policy goal is to put an explicit price on carbon emissions, either through a tax or a trading scheme. Increasing demand response has also been discussed as a way to reduce carbon emissions in the U.S. electricity industry. We examine the short-run effectiveness of a policy combining demand response with a carbon tax. Using plant-level operational data, we construct short-run cost curves for three U.S. regional electric systems, and examine the impacts on prices and carbon emissions. In the short run, a carbon tax in the range of $30 - $40 and a price elasticity of demand in the range of -0.1 to -0.2 could reduce carbon emissions in coal-intensive regions by 10% to 25%. With this same set of carbon prices, achieving a 50% reduction in emissions would require a price elasticity of demand in the range of -0.25 to -0.4. Percentage reductions of this magnitude in less carbon-intensive systems are unlikely, even with highly elastic demand and high carbon prices. Index Terms--Climate Change, Carbon Tax, Demand Response
A. Newcomer, L. B. Lave, J. Apt, S. Blumsack and M. G. Morgan, "Electricity Load and Carbon Dioxide Emissions: Effects of a Carbon Price in the Short Term," Proceedings of the 41st Annual Hawaii International Conference on System Sciences (HICSS 2008)(HICSS), Waikoloa, Big Island, Hawaii, 2008, pp. 179.