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A Minimal Problem of Marginal Emissions

August 2019

Citation: ELR 10786

Author: Ryan Thomas Trahan

Prof. Richard L. Revesz and Dr. Burcin Unel provide a useful, albeit no longer current, review of electric energy storage in Managing the Future of the Electricity Grid: Energy Storage and Greenhouse Gas Emissions (Managing). The energy storage market has continued its rapid technical and manufacturing evolution. Those advances may reasonably be expected to impact today’s regulatory aims and frameworks, just as prior technological progress influenced administrative goals and processes. Central to the analysis in Managing is the proposition that deploying energy storage may actually increase greenhouse gas emissions. Its recommendations each follow from that base, i.e., internalize emissions externalities, eliminate barriers to entry, and implement rules to guarantee accurate price signals. These policy directives intuitively feel right, resembling as they do first principles of economics. Where theory intersects with administrative process, however, concessions are often made, and so it is here. Taking the prescription reviewed in this brief comment, Managing describes the path toward internalizing emissions externalities (vis-à-vis carbon tax or otherwise integrating with wholesale electricity market prices) as long and uncertain. As such, the actual recommendation to policymakers is to perform cost-benefit analysis. Cost-benefit analysis is a familiar framework for decisionmaking, although Managing forwards two suggestions that may reasonably be viewed as less typical. It takes the position that its recommendations should be achieved prior to energy storage incentive programs being implemented, so as to avoid the specter of inadvertently causing higher emissions. Second, it encourages policymakers to engage in comprehensive analysis of all available energy storage technologies, and all manner of possible generation combinations as substitutes for deploying energy storage. This Comment adddress these suggestions in reverse order.

Ryan Thomas Trahan is a Visiting Scholar at the Vanderbilt Institute for Energy and the Environment.

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