Status: Published
Citation: Bistline, JE; Rose, SK. 2018. “Social Cost of Carbon Pricing of Power Sector CO2: Accounting for Leakage and Other Social Implications from Subnational Policies.” Published in Environmental Research Letters 13:014027.
In areas where climate policy has partial coverage or unequal participation, CO2 emissions may shift to locations or sectors where emissions are unregulated, which is called “leakage.” Leakage can affect the net emissions reductions associated with particular climate policies and has been studied at national levels but has not been analyzed at the subnational level. A new peer-reviewed article “Social Cost of Carbon Pricing of Power Sector CO2: Accounting for Leakage and Other Social Implications from Subnational Policies” published in the scientific journal Environmental Research Letters explores leakage potential, net emissions changes, and other social implications in the U.S. energy system when there is regionally differentiated pricing of power sector CO2 emissions. The US-REGEN model is used to conduct an economic analysis where power sector CO2 emissions are priced in individual U.S. regions with a range of social cost of carbon values. The analysis finds that potentially significant CO2 leakage is possible within and outside the electric sector that would affect CO2 reduction benefits. The study also observes other potential societal effects within and across regions, such as higher electricity prices, changes in power sector investments, and overall consumption losses. Finally, the study finds that efforts to reduce leakage, such as constraining power imports into the SCC pricing region, likely reduce leakage, but could also result in lower net emissions reductions, as well as larger price increases. Thus, it is important to look beyond leakage and consider a broader set of environmental and economic metrics.
Link to Journal Publication: Environmental Research Letters