Discussion of “Is Realtime Pricing Green?” Benjamin F. Hobbs Yihsu Chen Dept. Geography & Environmental Engineering Whiting School of Engineering The Johns Hopkins University POWER Conference, 14 March 2003

Cap & Trade Regulation of Pollution Implies … Local regulations do not change emissions & may worsen impacts

Cap & Trade Regulation of Pollution Implies … Local regulations do not change emissions & may worsen impacts “New Source Review” increases cost with no environmental benefit

Cap & Trade Regulation of Pollution Implies … Local regulations do not change emissions & may worsen impacts “New Source Review” increases cost with no environmental benefit Net emissions impact of load changes = 0

8760 hr MW PJM Simulation: Summer 2000

} } } Peak (Gas, Oil) Cycling (Coal) Base (Coal) Base (Nucl) } 8760 hr } MW PJM Simulation: Summer 2000

5% peak reduction/ 1.7% shift in energy } } } Peak (Gas, Oil) Cycling (Coal) Base (Coal) Base (Nucl) } 8760 hr } MW PJM Simulation: Summer 2000

5% peak reduction/ 1.7% shift in energy No NOx cap: $33.9/MWh saved +0.57% CO % NOx } } } Peak (Gas, Oil) Cycling (Coal) Base (Coal) Base (Nucl) } 8760 hr } MW PJM Simulation: Summer 2000

5% peak reduction/ 1.7% shift in energy No NOx cap: $33.9/MWh saved +0.57% CO % NOx (Partial) NOx cap: $27.6/MWh saved -0.26% CO % NOx } } } Peak (Gas, Oil) Cycling (Coal) Base (Coal) Base (Nucl) } 8760 hr } MW PJM Simulation: Summer 2000

5% peak reduction/ 1.7% shift in energy No NOx cap: $33.9/MWh saved +0.57% CO % NOx (Partial) NOx cap: $27.6/MWh saved -0.26% CO % NOx Emission reductions worth ~10% of $ savings } } } Peak (Gas, Oil) Cycling (Coal) Base (Coal) Base (Nucl) } 8760 hr } MW PJM Simulation: Summer 2000

Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs)

Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) Renewable portfolio standards are inefficient (if emissions is only goal)

Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) Renewable portfolio standards are inefficient (if emissions is only goal) So too is demand-side management—unless retail market is broken

Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) Renewable portfolio standards are inefficient (if emissions is only goal) So too is demand-side management—unless retail market is broken Real-time pricing principle should be applied as well to emissions (NOx in SF Bay region: C. Marnay, LBL)