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Implications of Carbon Regulation for Green Power Markets

Implications of Carbon Regulation for Green Power Markets

File: Implications of Carbon Regulation for Green Power Markets

Date: 4/30/2007

While carbon regulation is likely to affect renewable energy development more broadly, this paper focuses primarily on issues pertaining to voluntary renewable energy markets. First, the paper examines the extent to which greenhouse gas (GHG) benefits motivate consumers to make voluntary renewable energy purchases and the claims that large commercial and institutional consumers currently make regarding their purchases. Next, the paper looks at the potential impacts of carbon regulation on future claims, as well as on demand for and the price of renewable energy certificates (RECs), and the use of RECs in multiple markets (disaggregation of attributes). Then, it describes carbon regulation programs under development in the Northeast and California, and how these might affect renewable energy markets in these regions, as well as the potential interaction between voluntary renewable energy markets and voluntary carbon markets, such as the Chicago Climate Exchange (CCX). The paper also briefly summarizes the experience in the European Union, where carbon is already regulated. Finally, the paper presents policy options for policymakers and regulators to consider in designing carbon policies to enable carbon markets and voluntary renewable energy markets to work together.

This information was last updated on April 30, 2007