An article authored by Brattle economists that discusses calculating the implied value of CO2 abatement costs in green energy policies was recently featured in the October 2012 issue of Public Utilities Fortnightly.
In the article, the authors present a straightforward calculation that can help to clarify the implied willingness-to-pay for CO2 reductions. Balancing abatement costs with the social value gained from reducing CO2 emissions is becoming increasingly challenging. The calculation discussed in the article will be a helpful planning tool for regulators, utilities, and independent developers as they consider policy design and resource planning. The authors propose that, absent a federal program that explicitly values CO2, using an implied CO2 externality metric will add some clarity to the potential willingness-to-pay of various state and regional policies.
The article, “What Price, GHGs?” was authored by Brattle principal Philip Hanser and associate Mariko Geronimo.