Chapter

Handbook of CO₂ in Power Systems

Part of the series Energy Systems pp 131-165

Date:

Locational Carbon Footprint of the Power Industry: Implications for Operations, Planning and Policy Making

  • Aleksandr RudkevichAffiliated withNewton Energy Group Email author 
  • , Pablo A. RuizAffiliated withCharles River Associates, Boston University

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Abstract

Jurisdictions across the globe are implementing CO2 emissions reduction policies. These policies typically ignore most locational issues, probably because the consequences of greenhouse gas emissions do not depend on the exact emission location. However, the response to emission policies and the costs and effectiveness of emissions reduction in power systems are time-varying and locational in nature. The first part of the paper elaborates on the economic properties of the concept of locational marginal carbon intensity and formulates an allocation of the carbon footprint of the electrical grid to individual generating units, transmission facilities and end users on a real time basis. In the second part, the theory of the marginal carbon footprint is applied to the derivation of the optimal investment policy underlying Renewable Portfolio Standards (RPS). The argument is made that the existing RPS policies are at best sub-optimal in their goal to reduce emissions of Carbon Dioxide and other greenhouse gases. A proposed optimal investment rule could serve to improve the efficiency of RPS policies.

Keywords

Electrical grid Transmission congestion Marginal carbon intensity Renewable portfolio standard Carbon footprint