TY - JOUR
T1 - The efficiency and sectoral distributional impacts of large-scale renewable energy policies
AU - Reguant, Mar
N1 - Funding Information:
Mar Reguant is at the Department of Economics, Northwestern University, the National Bureau of Economic Research, and the Center for Economic and Policy Research (mar.reguant@ nothwestern.edu). I thank Meredith Fowlie and participants at the NBER conference on energy policy trade-offs between economic efficiency and distributional equity for their useful comments and suggestions. I thank Michael Cahana, Lola Segura, and Alex West for their excellent research assistance. I gratefully acknowledge financial support from the Sloan Foundation for this project as part of the Energy Policy Trade-offs between Economic Efficiency and Distributional Equity initiative and the support of National Science Foundation grant SES-1455084.
Publisher Copyright:
© 2019 by The Association of Environmental and Resource Economists. All rights reserved.
PY - 2019/3
Y1 - 2019/3
N2 - Renewable energy policies have grown in popularity. Given that renewable energy costs are mostly nonmarginal, due to the large presence of fixed costs, there are many different ways to implement these policies in both the environmental design and retail pricing margins. I show that the efficiency and distributional implications of large-scale policies crucially depend not only on the design of wholesale policies to incentivize renewables but also on how the costs of such policies are passed-through to consumers. Using data from the California electricity market, I develop a model to illustrate the interaction between large-scale renewable energy policies (carbon taxes, feed-in tariffs, and renewable portfolio standards) and their pricing to final consumers under alternative retail pricing schemes (no pass-through, marginal fees, fixed flat tariffs, and Ramsey pricing). I focus on the trade-off between charging residential versus industrial consumers to highlight tensions between efficiency, distributional, and environmental goals.
AB - Renewable energy policies have grown in popularity. Given that renewable energy costs are mostly nonmarginal, due to the large presence of fixed costs, there are many different ways to implement these policies in both the environmental design and retail pricing margins. I show that the efficiency and distributional implications of large-scale policies crucially depend not only on the design of wholesale policies to incentivize renewables but also on how the costs of such policies are passed-through to consumers. Using data from the California electricity market, I develop a model to illustrate the interaction between large-scale renewable energy policies (carbon taxes, feed-in tariffs, and renewable portfolio standards) and their pricing to final consumers under alternative retail pricing schemes (no pass-through, marginal fees, fixed flat tariffs, and Ramsey pricing). I focus on the trade-off between charging residential versus industrial consumers to highlight tensions between efficiency, distributional, and environmental goals.
KW - Distributional impacts
KW - Efficiency
KW - Renewable policies
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U2 - 10.1086/701190
DO - 10.1086/701190
M3 - Article
AN - SCOPUS:85121397799
SN - 2333-5955
VL - 6
SP - S129-S168
JO - Journal of the Association of Environmental and Resource Economists
JF - Journal of the Association of Environmental and Resource Economists
IS - S1
ER -
