The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption

We analyze the quantitative labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium unemployment. Our model incorporates endogenous labor force participation and two margins of adjustment influenced by carbon taxes: (1) firm creation and (2) green production-technology adoption. A carbon-tax policy that reduces carbon emissions by 35 percent—roughly the emissions reductions that will be required under the Biden Administration’s new commitment under the Paris Agreement—and transfers the tax revenue to households generates mild positive long-run effects on consumption and output; a marginal increase in the unemployment and labor force participation rates; and …

Unsafe At Any Charge: Why Financial Regulators Should Actively Mitigate Climate-Related Risk

Avoiding climate disaster demands an economic transformation unprecedented in speed and scope toward a near-zero emissions economy—a transition that inherently threatens to disrupt financial stability in the absence of timely and effective oversight by financial regulators. Thus far, financial regulators have not taken seriously their role in protecting the financial system from the imminent threat of climate change by guiding the disinvestment in fossil fuel assets that will soon be defunct. Their inaction has been the result of a mischaracterization of climate threats as “risks” to be minimized, rather than as unavoidable harms.

In Unsafe at Any Charge: Why Financial …

Net Zero Producers Forum: A catalyst for climate ambition or yet another delaying tactic?

On April 23rd, the United States, Canada, Qatar, Norway, and Saudi Arabia, which jointly account for 40 percent of global oil and gas production, announced the creation of a Net Zero Producers Forum (NZPF) to “develop pragmatic net-zero emission strategies.” Though the initiative was overshadowed by the flurry of announcements made by Heads of Governments at the Leaders Summit on Climate convened by President Biden, the creation of the NZPF is a significant development as it is arguably the first international initiative bringing together fossil fuel producers to discuss the impact of climate policy on the production of oil and …

Lessons From The Texas Big Freeze

This research analyzes the causes of the February 2021 Texas “Big Freeze” power outages that caused the death of nearly 200 people and more than $90 million in economic damages, finding ERCOT’s market design failed both to prepare the state and acceptably manage the crisis. The research identifies lessons learned from the crisis to help policymakers in Texas and other grid regions better prepare for more frequent extreme weather events including taking a more holistic approach to risk management, planning for “managed failure” of the grid, and deploying more demand-side measures like weatherizing homes.…

Climate and Disaster Risk Screening: Making Energy Projects More Resilient

The power sector remains especially vulnerable to natural disasters and extreme weather events exacerbated by climate change. Planning ahead and investing in resilience to mitigate climate and disaster risks in the power sector can help minimize infrastructure damage and yield savings during recovery from a natural disaster. Conducting an in-depth climate and disaster risk screening (CDRS) during the planning and preparation stages of energy infrastructure projects is a crucial first step to building resilience. Data sharing, knowledge exchange, and awareness building on CDRS can substantially improve the screening process, while also helping to bring resilience to the forefront of energy …

Mapping Jobs and the Transition to Electric Vehicle Assembly in the U.S.

The automotive sector is one of the largest industries in the U.S. as measured by employment. Over 4 million jobs are tied to assembly, the supply chain, wholesalers, retailers, and repair services. But given the global and highly competitive nature of auto manufacturing, America cannot afford to take these benefits for granted. If the domestic auto industry doesn’t keep up with where the market is heading, our companies will lose business and a lot of our workforce will lose their jobs.

Intense competition means that companies must constantly stay ahead of technology trends and focus on outdoing their rivals in …

Where’s the Beef? Enchant’s San Juan Generating Station CCS Retrofit Remains Behind Schedule, Financially Unviable

Over the last two years, it has become clear that the project by Enchant Energy and the City of Farmington (Enchant) to extend the life of the San Juan Generating Station is in serious trouble. Limited progress has been made. But the project is already significantly behind schedule in securing the full $1.5 billion financing for the project, construction has not started, and project permitting is going to take far longer than Enchant either realizes or is willing to acknowledge.

Enchant has admitted that the project is six to 10 months behind schedule due to plant outages that prevented testing …

A Just Green Recovery from Covid-19

The Covid-19 recovery window offers a rare opportunity to transform economies and accelerate the green transition. There is renewed openness to large scale public investment as governments seek to restore their economic health, boost long-term growth potential, and accelerate decarbonization. But the inequality exposed by the Covid-19 crisis also demonstrates the need for policies that can advance equity and justice. This paper examines green recovery measures through the lens of a just transition. We use three key dimensions of a just transition—distributional impacts, social inclusion, and transformative intent—to assess green recovery interventions around the world. We highlight promising examples of …

Preparing for Decarbonization: Reforming US Power Markets for the Energy Transition

Organized power markets today face numerous challenges stemming from policy, regulatory, and commercial pressures. Since 2015, sixteen US states and territories, and more than two hundred cities and counties in the United States, have committed to achieving 100 percent clean energy, through either legislation or executive action, acting on the realization that decarbonization of the electricity sector is critical to achieving global emissions reductions goals. A recent study suggests that it is feasible for 90 percent of US electricity generation to be zero emission by 2035, with 70 percent of power being produced by wind, solar, and batteries during normal …

Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection As of the End of 2020

Proposed large-scale electric generation and storage projects must apply for interconnection to the bulk power system via interconnection queues. While many projects that apply for interconnection are not subsequently built, data from these queues nonetheless provide a general indicator for mid-term trends in developer interest. Berkeley Lab compiled and analyzed data from all seven ISOs/RTOs in concert with 35 non-ISO utilities, representing an estimated 85% of all U.S. electricity load. We include all “active” projects in these generation interconnection queues through the end of 2020, as well as data on “completed” and “withdrawn” projects for five of the ISOs (CAISO, …