Setting the Stage: Economic/Market Realities Frank Felder Center for Energy, Economic and Environmental Policy Bloustein School of Planning and Public Policy Rutgers, The State University of New Jersey New Jersey Clean Air Council Annual Public Hearing April 1, 2009

Context Importance of economic efficiency Key questions Alternatives Q&A

Context – International/National/Regional – Wholesale electricity market (PJM) – Mixture of regulation/planning and markets – SO2, NOx and CO2 markets

Importance of Economic Efficiency – Doing more with less – More encompassing than engineering efficiency – Not just jobs – Involves tradeoffs – Incentives matter

Key Questions – What are the objectives that the proposal is trying to solve? – Is there a way to achieve those same objectives at a lower cost to society? – Does the proposal acknowledge its limitations? – What are the conditions under which the proposal should not be adopted?

Alternatives – Alternatives include specific technologies, e.g., biomass, nuclear, solar, wind, …. – Alternative also include types of polices to induce those technologies, e.g., cap and trade, taxes, subsidies, …. – Must consider policies individually and collectively

Q&A