Hummer, Merritt-senior thesis final April 2010.pdf - CASTLE Lab ...

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1.2.3 State-‐wide Renewable Tax Credits Introduction to the Energy Problem In addition to federal tax incentives, many state governments offer their own tax breaks for renewable energy or energy efficiency. In total, twenty-‐two states offer personal tax credits for renewable energy [52]. 4 Of those, five states—Arizona, Maryland, Montana, New Mexico, and New York—offer more than one personal tax credit for renewable energy. In comparison, just thirteen states offer personal tax credits for energy efficiency [52]. 1.3 The Cost of Carbon Despite its widespread usage in everyday publications, the “cost of carbon” is ambiguous and may refer to two distinct concepts: the social cost of carbon, and the carbon tax. For clarity’s sake, neither of these concepts will hereafter be called the “cost of carbon”; they will be referred to only by their more descriptive names. 1.3.1 The Social Cost of Carbon The social cost of carbon (SCC) is formally defined as the marginal cost of emitting an additional unit of carbon (in the form of carbon dioxide) [5]. It is usually expressed in dollars per metric ton of carbon. It is calculated by quantifying the long-‐term environmental damage done by the additional unit of carbon, and discounting the damage to its present value in dollars. The SCC, therefore, can be interpreted as “a measure of the seriousness of climate change”: the more grim the 4 Alabama, Arizona, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Montana, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, Utah, Vermont, and West Virginia [52]. 10
Introduction to the Energy Problem assumptions about the environmental impact of carbon, the higher the SCC estimate will be. To complicate matters for policymakers, there is no single widely accepted SCC value. In fact, estimates of the SCC vary considerably. The not-‐for-‐profit Investor Responsibility Research Center projects that the SCC will be $28.24 per ton in 2012 [6]. Richard Tol, a leading authority on SCC research, estimates that the mean SCC is $23 per ton with a 1% chance that it exceeds $78 per ton [5]. Other estimates put the cost of carbon at a much higher price than that; the United Nations Intergovernmental Panel on Climate Change (IPCC) pointed out that there was a $98 difference between the highest and lowest peer-‐reviewed estimates in 2005 [8]. According to the IPCC, peer-‐reviewed estimates of the SCC put its mean value at $43 per ton with a standard deviation of $83 per ton in 2005 dollars [35]. The SCC value is critically important to shaping energy legislation, which will have a varying degree of impact based on SCC assumptions. The gap in estimates, however, is not likely to narrow anytime soon. The variance in SCC estimates is mostly attributable to different choices of discount rate, uncertainty about the science of climate change, and varying assumptions about future population growth, economic growth, and greenhouse gas emissions [5]. 1.3.2 The Carbon Tax As is evident from its name, the carbon tax is not an economic measure but rather a government-‐imposed levy on carbon dioxide emissions. Importantly, the carbon tax is not strictly a tax per ton of carbon emitted; it is understood to be a tax per ton of carbon dioxide, which is only partially composed of carbon. As of this 11
Page 1 and 2: Greening the Grid: Optimal Tax Poli
Page 3 and 4: Abstract Wind and solar energy prov
Page 5 and 6: The habit of expression leads to th
Page 7 and 8: 3.2.2 Impact of the Renewable Tax C
Page 9 and 10: 1. Introduction to the Energy Probl
Page 11 and 12: Introduction to the Energy Problem
Page 17: 1.2.1 Residential Renewable Energy
Page 21 and 22: 1.4 Overview of the Thesis Introduc
Page 23 and 24: Methodology of Cost Comparison regi
Page 25 and 26: Methodology of Cost Comparison the
Page 27 and 28: Methodology of Cost Comparison In a
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Page 31 and 32: € € Methodology of Cost Compari
Page 33 and 34: € € € 2.3.4 Installation and
Page 35 and 36: Methodology of Cost Comparison Beca
Page 37 and 38: € 2.3.6 Overall Price of Solar El
Page 39 and 40: 2.4 Wind Energy Methodology of Cost
Page 41 and 42: Figure 8. Wind Energy Resource Map
Page 43 and 44: Methodology of Cost Comparison The
Page 45 and 46: € € € € € Methodology of
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Page 59 and 60: € € 3.1 The Quantitative Model
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State % Retail Applying Government
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Applying Government Forces to the E
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Optimizing Environmental Tax Policy
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€ € Because wind C 0,mntc,i con
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4.2 Calculating the Social Cost of
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4.3 Modeling Consumer Behavior Opti
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4.4 Declining Costs of Renewable Te
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5. Results of the Mathematical Mode
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Figure 30 Figure 31 Results of the
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Figure 34 Figure 35 Results of the
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Results of the Mathematical Model e
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Figure 36. Close-‐up of Figure
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Results of the Mathematical Model a
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Results of the Mathematical Model
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5.2 Net Savings to Society Over Tim
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Results of the Mathematical Model F
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Results of the Mathematical Model t
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6. Summary and Conclusion The twent
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6.2 Limitations of this Model Summa
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6.3 Areas for Further Investigation
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Appendix A-1. Solar Appendix: Excel
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A-3. Wind Appendix: Excel worksheet
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%figure 4 - Montana - illustration
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A-6. MATLAB code for calculating so
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Appendix A-7. Data from the Environ
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A-11. Renewable Portfolio Standards
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References . [12] "Energy Use in Ho
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References [33] Pernick, Ron, Clint
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[55] "Insolation." Dictionary.com.
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References [79] Osborne, Mark. "Sol
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