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Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-Use and Critical Peak Pricing

Currently, U.S. residential and small commercial electricity consumers typically pay a constant price per kWh consumed that accounts for most of their bill. Pure spot pricing is not popular among consumers; consumers value price predictability and bill stability. Also, sudden increases in bills often become a political problem. In this paper, the authors focus on second-best alternatives: time-of-use (TOU) and critical peak pricing (CPP).

Rational Rationing: A Price-Control Mechanism for a Persistent Supply Shock

The 2021 Texas power crisis, caused by a series of winter storms, led to prices that were 100 times higher than anything considered normal. The conflict in Ukraine threatens to disrupt supplies of gas, oil, and electricity in Europe, leading to a chilling prospect that a “Texan Storm” type of event could last for, not just weeks, but months. In this new CEEPR Working paper, the researchers propose and empirically quantify a price-control mechanism for an efficient demand adjustment in such a persistent crisis.

The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target

In this paper, the authors explore the quantitative impact of a carbon tax that reduces emissions by 35 percent—a target consistent with the Biden Administration’s new commitment under the Paris Agreement— on labor market and macroeconomic outcomes in a model with equilibrium unemployment and pollution externalities. In contrast to existing quantitative studies, our framework incorporates two key margins of adjustment to carbon taxation: firm entry and green technology adoption.

Long-term Equilibrium in Electricity Markets with Renewables and Energy Storage Only

Spot power markets for electricity have supported the development and operation of electricity generation systems for years in many regions of the world, but there are several well-known challenges and they are likely to exacerbate as wind and solar generation continues to expand. In this paper, the researchers analyze a simplified 100% renewable system, with therefore zero variable costs, and evaluate analytically how the concept of market prices still exists.

Population, Productivity, and Sustainable Consumption

How does the sustainable level of consumption depend on productivity growth and the size and growth rate of the population? What is the effect of uncertainty over these growth rates? A new paper by Professor Robert Pindyck addresses these questions using a model in which productivity and population growth are stochastic, and social welfare allows for human lives to have (positive or negative) intrinsic value.

September 21, 2022

3 Questions: Janelle Knox-Hayes on producing renewable energy that communities want

Wind power accounted for 8 percent of U.S. electricity consumption in 2020, and is growing rapidly in the country’s energy portfolio. But some projects, like the now-defunct Cape Wind proposal for offshore power in Massachusetts, have run aground due to local opposition. Are there ways to avoid this in the future? MIT professors Janelle Knox-Hayes and Donald Sadoway think so. Read more on MIT News here.

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September 9, 2022

Is nuclear power a green solution? Why world tilts toward ‘yes.’

Environmental groups and policymakers are softening their stances against nuclear power, some reluctantly, some whole-heartedly, and many with a new sort of humility in the face of today’s climate and energy realities. CEEPR’s John Parsons, who worked on a joint MIT-Stanford report which proved pivotal in California’s recent approval of SB 846 extending the life of the Diablo Canyon nuclear facility, comments on this trend in an article for the Christian Science Monitor.

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September 7, 2022

How America Can Make Industrial Policy Work

In an article on Foreign Affairs, MIT Professors John M. Deutch and Ernest J. Moniz discuss how the Inflation Reduction Act, the CHIPS Act, and the 2021 Infrastructure and Jobs Act collectively represent a revolutionary change in US industrial policy. However, the Biden Administration will have to weave them together skillfully to realize a more effective, integrated, and agile economic system and they suggest ways that the Administration can do so.

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The Roosevelt Project

The Roosevelt Project takes a multidisciplinary approach to examine the transitional challenges associated with progress toward a deeply decarbonized U.S. economy. The project aims to chart a path forward through the transition that minimizes worker and community dislocations and enables at-risk communities to sustain employment levels by taking advantage of the economic opportunities present for regional economic development.

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The CATE Project

The Climate Action Through Education Project aims to develop a science-based climate curriculum for U.S high school students, placing particular emphasis on reaching populations who are underserved and on countering climate denial messages. The curriculum will inform students about the causes and consequences of anthropogenic climate change, while equipping them with the knowledge and sense of agency to contribute to climate mitigation and adaptation.

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The E2e Project

Through an interdisciplinary approach to the so-called ‘energy efficiency gap’, the E2e Project seeks to evaluate and strengthen policies and incentives for improved energy efficiency. Proven research designs used to achieve these aims include randomized controlled trials (RCTs) and quasi-experimental designs, with data and customer access provided through formal partnerships with private-sector companies.

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