ABSTRACT

The New York Independent System Operator (NYISO) has developed a carbon-pricing proposal to reduce carbon intensive electricity generation in anticipation of future clean energy goals in the state. The proposed measure is a so-called ‘carbon adder’ on CO₂ emissions from the power sector that targets the social cost of carbon amidst existing overlapping policies. The carbon adder is set as the difference between the targeted social cost of carbon and the prevailing RGGI price for CO₂ emission allowances. We investigate the economic and environmental impacts from the imposition of a carbon adder on New York’s power sector. Our analysis indicates that the carbon adder gives the ‘right’ price signal for New York’s power generation to turn into a greener one and is shown to be more cost-effective than clean energy standards. Requirements for permit price floors in the RGGI market induces carbon permit retirements across RGGI states leading to small reductions in region- and country-wide emissions levels.The proposed border carbon adjustments on electricity trade are shown to further mitigate emission leakage.

Key policy insights

• NYISO’s proposed carbon adder provides strong incentives for decarbonization and renewable power generation in the New York region.

• The carbon adder is shown to be more cost-effective than New York's clean energy standard measures in achieving an equivalent level of emissions reductions. This is because the carbon adder targets energy carriers by their specific CO₂ emissions while the clean energy standard implicitly targets energy carriers by their specific CO₂ emissions while the clean energy standard implicitly provides a uniform subsidy to all clean energy carriers.

• The existing RGGI price floor mechanism assures that NYISO’s unilateral use of carbon adder is environmentally effective by generating overall emission reductions in the RGGI region in order to maintain the existing price floor.

• Border carbon adjustments on the embodied carbon of electricity imports to New York, and an emission containment reserve, which dynamically adjusts RGGI cap as a response to RGGI price change, will likely mitigate leakage further and improve competitiveness of the New York’s energy sector.

摘要

纽约独立系统运营商 (NYISO) 制定了一项碳定价提案，以减少碳密集型发电，以期实现该州未来的清洁能源目标。_{提议的措施是对电力部门CO 2}排放的所谓“碳添加剂”，其目标是在现有重叠政策中针对碳的社会成本。碳加法器设置为碳的目标社会成本与 CO _{2的现行 RGGI 价格之间的差额}排放配额。我们调查了碳添加剂对纽约电力部门的经济和环境影响。我们的分析表明，碳添加剂为纽约的发电转变为更环保的发电提供了“正确”的价格信号，并且显示出比清洁能源标准更具成本效益。RGGI 市场对许可证价格下限的要求会导致 RGGI 各州的碳许可证退役，从而导致区域和国家范围内的排放水平小幅降低。拟议的电力贸易边境碳调整被证明可以进一步减轻排放泄漏。

主要政策见解

• NYISO 提议的碳添加剂为纽约地区的脱碳和可再生能源发电提供了强有力的激励措施。

• 与纽约的清洁能源标准措施相比，碳添加剂在实现同等水平的减排方面更具成本效益。这是因为碳添加剂以能源载体的特定 CO ₂排放量为目标，而清洁能源标准隐含地以能源载体的特定 CO ₂排放量为目标，而清洁能源标准隐含地为所有清洁能源载体提供统一的补贴。

• 现有的 RGGI 价格下限机制通过在 RGGI 地区产生整体减排以维持现有的价格下限，确保 NYISO 单方面使用碳添加剂对环境有效。

• 对纽约电力进口的隐含碳进行边境碳调整，以及动态调整 RGGI 上限以响应 RGGI 价格变化的排放遏制储备，可能会进一步减少泄漏并提高纽约能源部门的竞争力。