In an effort to compare the effectiveness of possible policy options to tackle a range of energy and environmental issues, we employ an integrated assessment model which couples a technology-rich bottom-up model of the U.S. electricity sector with a fully dynamic forward-looking general equilibrium model of the U.S. economy. The model provides a unique and consistent modeling framework for energy and environmental policy analysis. The results from the model show that a carbon tax would be the most cost-effective tool for lowering carbon dioxide emissions, and an energy tax would most cost-effectively lower total energy consumption. Though energy efficiency standards are found to be the least cost-effective at reducing energy usage or mitigating carbon emissions, their appeal is likely to rest on assumptions about specific market failures or on political factors. doi: 10.5547/ISSN0195-6574-EJ-Vol32-SI1-9
Get full access to this article
View all access options for this article.
References
1.
BalistreriEdwardRutherfordThomas F. (2001). “Dynamic General Equilibrium Analysis at the state level: Assessing the Economic Implications of the Kyoto Protocol.” Presented at the 4th Annual Conference on Global Economic Analysis. Purdue University, Indiana, USA, June 27-29.
2.
BosettiV.CarraroC.GaleottiM.MassettiE.TavoniM. (2006). “WITCH: A World Induced Technical Change Hybrid Model”, The Energy Journal, Special Issue. Hybrid Modeling of Energy-Environment Policies: Reconciling Bottom-up and Top-down, 13-38.
3.
BohringerChristophLoschelAndreasRutherfordThomas F. (2006). “Decomposing the Integrated Assessment of Climate Change.” Journal of Economic Dynamics and Control31(2): 683-702.
4.
BohringerChristophRutherfordThomas F. (2006). “Combining Top-Down and Bottom-up in Energy Policy Analysis: A Decomposition Approach.” Discussion Paper 06-07, Centre for European Research (ZEW).
5.
CoaseRonald (1960). “The Problem of Social Cost.” Journal of Law and Economics3(1): 1-44.
6.
Energy Information Administration, Monthly Energy Review June2010: 16.
7.
Energy Modeling Forum (EMF) (2010). “EMF 25 Scenario Design.” Stanford University, Stanford, CA. Document available online at http://emf.stanford.edu/files/res/2372/25design2.pdf.
8.
GillinghamKennethNewellRichard G.PalmerKaren. (2009). “Energy Efficiency Economics and Policy.” The RFF Discussion Paper RFF DP 09-13.
9.
GoldRachelFurreyLauraNadelStevenJohnA. “Skip” Laitner, and Elliott, R. N. (2009). “Energy Efficiency in the American Clean Energy and Security Act of 2009: Impacts of Current Provisions and Opportunities to Enhance the Legislation.” ACEEE Report E096.
10.
GoulderLawrenceParryIan W.H. (2008). “Instrument Choice in Environmental Policy.” Review of Environmental Economics and Policy2(2): 152-174.
11.
KasaharaSatoruPaltsevSergeyReillyJohnJacobyHenryDenny EllermanA. (2007). “Climate Change Taxes and Energy Efficiency in Japan.” Environmental & Resource Economics37(2): 377-410
12.
LaitnerJohn A. “Skip” and Donald A. Hanson (2006). “Modeling Detailed Energy-Efficiency Technologies and Technology Policies within a CGE Framework,” Energy Journal, Hybrid Modeling of Energy-Environmental Policies: Reconciling Bottom-up and Top-down, Special Issue 2006.
13.
Lane LeeL. (2002). “Greenhouse Gas Abatement Costs.” Climate Policy Center (http://www.cleanair-coolplanet.org).
14.
Minnesota IMPLAN Group (2004). IMPLAN Pro software and database, Minnesota.
15.
DavidMontgomery W.BernsteinPaulLeeL.LaneAnne SmithTuladharSugandha D. (2010). “Discussion of Market Failures.” Charles River Associates Analysis of the CaliforniaARB’s Scoping Plan.
16.
NorthDouglass C. (1990). Institutions, Institutional Change, andEconomic Performance. New York: Cambridge University Press.
17.
RutherfordThomas F. (1999). “Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax.” Computational Economics14: 1-46.
18.
RutherfordThomas F. (1999). “On the Assessment of Economic cost in Dynamic Economic Models.” Preliminary Notes, University of Colorado. Available from www.mpsge.org
19.
StavinsRobertJaffeJudsonSchatskiTodd (2007). “Too Good to Be True? An Examination of Three Economic Assessments of California Climate Change Policy.” Working Paper Series rwp07-016, Harvard University, John F. Kennedy School of Government.
20.
TuladharSugandha D.YuanMeiBernsteinPaulDavid MontgomeryW.SmithAnne (2009). “A top-down bottom-up modeling approach to climate change policy analysis.” Energy Economics31, Supplement 2, International, U.S. and E.U. Climate Change Control Scenarios: Results from EMF 22: S223-S234.
21.
U.S. Department of Energy, Energy Information Administration. (2009). “Annual energy 0utput2009 Stimulus (AEO09).” DOE/EIA-0383(2008). Washington, DC: US Department of Energy.
