CO2 Policy and Win-Wins
Margaret TaylorStanford University – Precourt Energy Efficiency Center
Lawrence Berkeley National Laboratory – Energy Technologies Area
Reducing Inequality in a Sustainable World ConferenceThursday, 03/05/15
Plenary Session 2: Policies to Promote Sustainability In a More Equitable World
Roadmap
• Framing the issues– Carbon emissions, energy, and poverty
• Policy and prices
• A stylized fact– Regarding regulation, government cost over-estimates are
common– Certainly true of “first best” policy instruments
• Retrospective review, innovation, and appliance standards– A deep dive on a prominent “complementary policy instrument”– Prices and quality are better-than-expected
• Discussion• Acknowledgements
Framing the Issues
The Economy, Energy, and Carbon
Energy in our economic system
Carbon in our energy system
Reflects the fact that it has historically tended to be cheaper – even productivity-enhancing – to use less energy than to decarbonize energy
“First best” policy instruments that price carbon because of the CO2
externality should help the energy system find and pick the cheapest, low-hanging fruit (i.e., cap-and-trade, carbon tax)
“Complementary” policy instruments target energy in our economic system (i.e. efficiency standards) or carbon in our energy system (i.e. renewable portfolio standards)
U.S. Poverty
Poverty and Energy Use
0
100
200
300
400
500
600
700
800
900
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
Total U.S.
Below 100% of Poverty Line
Average Household End-Use Expenditures ($) in the U.S. 2009
Source: U.S.DOE Residential Energy Consumption Survey (RECS) 2009
• High energy prices are hard on the poor• An important consideration in energy utility regulation
Prices and CO2 Policy
• Concern about what CO2 policy options will do to prices. Specifically:
– Energy (an operating expense)
– Other prices (if more efficient things have higher prices)
A Stylized Fact
RIA: A Tool to Analyze Policy Tradeoffs
• Prospective regulatory impact assessment (RIA) helps policy-makers weigh societal goals against other public priorities – Required by a growing number of nations, including the U.S.,
before finalizing any government regulation
A “Stylized Fact”: Significant Cost (Over-) Estimation Errors are Common in RIAs
About three-quarters of the 60+ U.S. RIA cost estimates that have been retrospectively reviewed over the last 40 years have proven to be significantly inaccurate (see Harrington 2006, Simpson 2011)
– The standard benchmark used since Harrington, Morgenstern, Nelson (2000) to define significant inaccuracy is true values falling outside the range of +/- 25% of the ex ante estimate.
– Most inaccurate RIA projections are over-estimates of the costs of regulation. • Researchers have not been able to reject the hypothesis that this
robust finding is evidence of systematic bias (see Simpson 2011)
10
A “Stylized Fact”: Significant Cost (Over-) Estimation Errors are Common in RIAs
About three-quarters of the 60+ U.S. RIA cost estimates that have been retrospectively reviewed over the last 40 years have proven to be significantly inaccurate (see Harrington 2006, Simpson 2011)
– The standard benchmark used since Harrington, Morgenstern, Nelson (2000) to define significant inaccuracy is true values falling outside the range of +/- 25% of the ex ante estimate.
– Most inaccurate RIA projections are over-estimates of the costs of regulation. • Researchers have not been able to reject the hypothesis that this
robust finding is evidence of systematic bias (see Simpson 2011)
11
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Expected vs. Actual: Title IV Prices ($/Ton SO2)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Phase I (Trading Begins) Phase II
Expected Prices, before CTP
Allowance Prices
CTP
Government
Source: Taylor (2012)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Expected vs. Actual: OTC-NBP Prices ($/Ton NOX)
OTC Phase II
(Trading Starts)
NBP
CTP
Government
Expected Prices, before CTP
Allowance PricesSource: Taylor (2012)
Compliance options used – Evidence of technological change in the marketplace
SO2
1. Switched to lower sulfur coals (1970s strategy)
2. Balanced with post-combustion control
• Either increased utilization of existing systems or
• A smaller-than-expected number of new installations
NOx
1. Utilized existing zero-emitting nuclear power plants and lower
NOx natural gas-fired power plants more extensively
2. Purchased off-peak power from outside the region
3. Benefited from better-than-expected performance from existing
control technologies
Source: Taylor (2012)
Retrospective review, innovation, and appliance standards
Authors (alphabetical):C. Anna SpurlockMargaret TaylorHung-Chia Yang
What about Complementary Instruments?
• Most prominent national complementary instrument is minimum efficiency performance standards (MEPs) for appliances and similar energy-using technologies– Origins in the states after the Northeast blackout in the
1960s• California particularly important pioneer in the 1970s
– Federal attention begins in the 1970s with a focus on consumer pocketbooks• First federal standards in the late 1980s/early 1990s
• Particularly prominent in the Obama Administration as part of its policy efforts on CO2
– Relevant internationally
What about Complementary Instruments?
• Most prominent national complementary instrument is minimum efficiency performance standards (MEPs) for appliances and similar energy-using technologies– Origins in the states after the Northeast blackout in the
1960s• California particularly important pioneer in the 1970s
– Federal attention begins in the 1970s with a focus on consumer pocketbooks• First federal standards in the late 1980s/early 1990s
• Particularly prominent in the Obama Administration as part of its policy efforts on CO2
– Relevant internationally
Mar
ket
Shar
e o
f P
rod
uct
s
Product efficiency level
MEPs
Policy and the Assumed Distribution of Appliance Price and Efficiency on the Market
Energy Star
HighlightsCuts out
Product price
Product features
Overview of Our Study
• Review expectations versus outcomes for various parts of the RIAs underlying MEPs rulemakings for five products:– Room AC Reviewed price projections, energy use
– Dishwashers Reviewed price projections, energy use
– Refrigerators Reviewed price projections, energy use
– Dryers Reviewed price projections
– Clothes Washers Reviewed price projections, energy use, projections of market share by efficiency level
• Investigate whether there are quality tradeoffs or win-wins in meeting the MEPs
19
What we do
Data
NPDConsumer Reports –
Rating
Consumer Reports –
Brand Reliability
FTC Energy
DataCEC
ENERGY
STAR
User
Manual
Data
Room AC 2003-20111990-2002, 2004-2005,
2010-20121991, 1993
2003-2008,
2010-2012
Dishwasher 2003-2011
1983, 1987, 1990, 1993,
1995, 1997-1998, 2000-
2002, 2004-2012
1987, 1990, 1993, 1995,
1997, 1999, 2000-2002,
2004-2012
2003-2012
Refrigerator 2003-2011
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
2003-2012
Dryer 2003-2011
1989, 1992-1993, 1995,
1998-2002, 2004-2008,
2010-2012
1988, 1992-1993, 1995,
1998-2002, 2005-2008,
2010-2012
Clothes
Washer2003-2011
1989, 1991-1993, 1995-
1997, 1999-2002, 2004-2012
1989, 1991-1993, 1995-
1997, 1999-2002, 2004-
2008, 2011
2003-2012 1993-2013 2001-2013 P
Monthly panel of model-specific prices and market shares
Quality and reliability metrics
Energy use data Detailed product feature data
Federal Policy EventsYear RAC REF DW CW DR
1987
1988 1st NAECA 1st NAECA 1st NAECA
1989
1990 1st NAECA 1st NAECA
1991
1993 2nd NAECA
1994 2nd NAECA 2nd NAECA 2nd NAECA
1997
2000 2nd NAECA*
2001 3rd NAECA* * *
2003 * *
2004 * 3rd NAECA Tier 1*
2005 *
2007 * 3rd NAECA Tier 2*
2008 *
2009 * *
2010 * 1st EISA
2011 * 1st EISA
2012 *
2013 * Joint Petition * *
20143rd NAECA/Joint
Petition1st EISA* *
21
NPDData
Organization of Findings
• Outcomes vs. RIA expectations re:1. Product price
2. Product energy use
3. Product market share
• Outcomes vs. concerns re:4. Product quality
a. At the time of purchase
b. After the purchase
• 5. Technological change in the marketplace
1. Outcomes vs. RIA expectations re: PRODUCT PRICE
• For all five products, sales-weighted average prices were lower than projected during our study period
• Held for products as a whole
• Held for products as broken down by product class
• Held for products as broken down by efficiency levels
23
2. Outcomes vs. RIA expectations re: ENERGY USE
24
Basic finding: In all five cases, energy efficiency of products was better than the standard
Expected energy use:Sales-weighted average of diff
b/t MEPs and actual energy eff:
MEPs ENERGY STAR
-1
-.5
0
.5
1
ener
gy p
erce
nt
dif
fere
nce
(2000 s
td -
obse
rved
)/(2
000 s
td)
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
2013
m1
time
Avg. energy percent diff (sales weighted) 95% CI
ENERGY STAR
Room AC Energy Use
-1
-.5
0
.5
1
ener
gy
per
cen
t d
iffe
ren
ce
(19
94
std
- o
bse
rved
)/(1
99
4 s
td)
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
2013
m1
time
Avg. energy percent diff (sales weighted) 95% CI
ENERGY STAR MEPS: Congress
Test Procedure
Dishwasher Energy Use
-1
-.5
0
.5
1
ener
gy p
erce
nt
dif
fere
nce
(2001 s
td -
obse
rved
)/(2
001 s
td)
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
2013
m1
time
Avg. energy percent diff (sales weighted) 95% CI
ENERGY STAR
Refrigerator Energy Use
-1
-.5
0
.5
1
ener
gy p
erce
nt
dif
fere
nce
(2007 s
td -
obse
rved
)/(2
007 s
td)
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
2013
m1
time
Avg. energy percent diff (sales weighted) 95% CI
ENERGY STAR MEPS: DOE
MEPS: Congress
Clothes Washer Energy Use
0
25
50
75
100
0
25
50
75
100
0
25
50
75
100
0
25
50
75
100
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Below 2004 Minimum Standard
Below 2007 Minimum Standard
Meets or Exceeds 2007 Standard
More efficient than 2007 standard by 30% or more
Projected Market Share Observed Marker Share
ENERGY STAR MEPS: DOE
MEPS: Congress
mark
et
share
(perc
ent)
time
Clothes Washer RetrospectiveMarket Share Comparison
3. Outcomes vs. RIA expectations re: MARKET SHARE
25
Categorized CW Models by 4 Efficiency Levels
Very high-efficient products – beyond compliance products – had higher market share than expected
Expected market share: Observed market share:
MEPs ENERGY STAR
Least Efficient
Most Efficient
Only detailed expectation information on market share for CW
4a. Outcomes vs. concerns re: QUALITY AT TIME OF PURCHASE
26
Metric: Consumer Reports variables that span all relevant MEPs through 2012
Basic finding: All five products show improvements in quality attributes consumers care about at the time the MEPs come into effect.
• Either no significant change or steady increase in ratings.
• Exceptions: – Cycle Times
– ~ Capacity
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
To
p L
oad
erF
ront
Lo
ader
Washing Performance
Overall Score
Energy Efficiency Score
Cycle Time (mins)
Capacity Score
Washing Performance
Overall Score
Energy Efficiency Score
Cycle Time (mins)
Capacity Score
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
2011200720041994
Clothes Washer Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
27
4a: Clothes WashersFr
on
t-Lo
ader
Top
-Lo
ader
• Either no significant change or steady increase in ratings.
• Exceptions: – Cycle Times
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
Washing Performance
Overall Score
Energy Efficiency Score
Cycle Time (min.)
2010
1994
2010
1994
2010
1994
2010
1994
Dishwasher Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
28
4a: Dishwashers
• Either no significant change or steady increase in ratings.
• Exceptions: – None
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
Sm
all
Cap
acit
y (
<7
K b
tu/h
r)M
ed C
apac
ity
(7-9
K b
tu/h
r)L
arge
Cap
acit
y (
9K
+ b
tu/h
r)
Overall Score
EE Ratio
Comfort Score
Overall Score
EE Ratio
Comfort Score
Overall Score
EE Ratio
Comfort Score
2000
2000
2000
2000
2000
2000
2000
2000
2000
Room AC Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
29
4a: Room ACsLa
rge
Cap
acit
y>9
K b
tu/h
rSm
all C
apac
ity
<7K
btu
/hr
Med
Cap
acit
y7
-9K
btu
/hr
• Either no significant change or steady increase in ratings.
• Exceptions: – None
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
Gas
Dry
er
Ele
ctri
c D
ryer
Overall Score
Drying Performance
Capacity Score
Overall Score
Drying Performance
Capacity Score
1994
1994
1994
1994
1994
1994
Dryer Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
30
4a: DryersEl
ectr
ic D
ryer
Gas
Dry
er
• Either no significant change or steady increase in ratings.
• Exceptions: – Bottom-Freezer
Energy Costs in 2001 (they got bigger)
– Built-in Capacity in 2001 (they had maxed out in preceding years)
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
Bu
ilt-
In
Bo
ttom
Fre
ezer
Temperature Performance
Overall Score
Energy Efficiency Score
Energy Cost (2013$/yr)
Capacity (cu.ft.)
Temperature Performance
Overall Score
Energy Efficiency Score
Energy Cost (2013$/yr)
Capacity (cu.ft.)
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
Refrigerator Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
31
4a: Refrigerators (1)B
ott
om
Fre
ezer
Bu
ilt-I
n
• Either no significant change or steady increase in ratings.
• Exceptions: – Side-by-Side
Capacity in 1990 (Standard not based on AV)
– Top-Mount in 2001 (manufacturers were pushing side-by-side and bottom mounts)
-.5 0 .5 1 1.5 Worse Percent Change in Score Better
To
p-M
oun
t
Sid
e-by
-Sid
e
Temperature Performance
Overall Score
Energy Efficiency Score
Energy Cost (2013$/yr)
Capacity (cu.ft.)
Temperature Performance
Overall Score
Energy Efficiency Score
Energy Cost (2013$/yr)
Capacity (cu.ft.)
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
200119931990
Refrigerator Consumer Reports ScoresPercent Change in CR Ratings at Each MEPS Effective Date
32
4a: Refrigerators (2)Si
de
-by-
Sid
e w
/TTD
Top
Mo
un
t
4b. Outcomes vs. concerns re: QUALITY AFTER THE PURCHASE
33
10
20
30
40
Av
erag
e R
epai
r R
ate
(per
cen
t)
1985 1990 1995 2000 2005 2010Year
Dishwasher ENERGY STAR
Min Std: DOE Min Std: Congress
Test Procedure
Consumer Reports Repair RateDishwasher
01
02
03
04
0
Av
erag
e R
epai
r R
ate
(per
cen
t)
1985 1990 1995 2000 2005 2010Year
Top-mount Top-mount with TTD ice
Side-by-side Side-by-side with TTD ice
Bottom-mount ENERGY STAR
Min Std: DOE Min Std: Congress
Consumer Reports Repair RateRefrigerator
01
02
03
04
0
Av
erag
e R
epai
r R
ate
(per
cen
t)
1990 1995 2000 2005 2010Year
Electric Dryer Gas Dryer
Min Std: DOE Min Std: Congress
Consumer Reports Repair RateDryer
10
20
30
40
Av
erag
e R
epai
r R
ate
(per
cen
t)
1990 1995 2000 2005 2010Year
Front Loaders Top Loaders
ENERGY STAR Min Std: DOE
Min Std: Congress
Consumer Reports Repair RateClothes Washer
For all five products, the significant repair rate generally declines over our study period,
according to surveys of CR readers
0
.5
1
0
.5
1
2003m
1
2004m
1
2005m
1
2006m
1
2007m
1
2008m
1
2009m
1
2010m
1
2011m
1
2012m
1
2003m
1
2004m
1
2005m
1
2006m
1
2007m
1
2008m
1
2009m
1
2010m
1
2011m
1
2012m
1
2003m
1
2004m
1
2005m
1
2006m
1
2007m
1
2008m
1
2009m
1
2010m
1
2011m
1
2012m
1
Bottom-mount Compact Side-by-side
Side-by-side with TTD ice Top-mount Top-mount with TTD ice
ENERGY STAR
Mar
ket
Sh
are
Time
Market Shares by Product TypeRefrigerators
-1500
-1000
-500
0
500
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Compact [n=327] Top-mount [n=1132]
Side-by-side with TTD ice [n=2141] Bottom-mount [n=1343]
ENERGY STAR
Sales-Weighted Within-Model Price TrendsRefrigerators
5. Technological Change in the Marketplace -Refrigerators
34
-1500
-1000
-500
0
500
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Top-loaders [n=626] Front-loaders [n=486]
ENERGY STAR Min Std: NAECA
Min Std: EISA
Sales-Weighted Within-Model Price TrendsClothes Washers
0
.2
.4
.6
.8
1
Mar
ket
Sh
are
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Time
Top-loaders Front-loaders
ENERGY STAR MEPS: NAECA
MEPS: EISA
Market Shares by Product TypeClothes Washers
5. Technological Change in the Marketplace - Clothes Washers
35
Price trend of front-loaders started trending downward significantly faster after the 2004 standard effective date (significant relative to a counterfactual)
Never count a dominant design out!
5. Incremental Technical Change Adds Up
36
0
.2
.4
.6
.8
1
Mar
ket
Shar
e
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Time
Advanced clean action Internal heater Advanced motor
Balance adjustment Reduced noise Smooth suspension
Other dispenser features ENERGY STAR MEPS: DOE
MEPS: Congress
More Core FeaturesMarket Share of Top-Load Clothes Washers
0
.2
.4
.6
.8
1
Mar
ket
Shar
e
2003
m1
2004
m1
2005
m1
2006
m1
2007
m1
2008
m1
2009
m1
2010
m1
2011
m1
2012
m1
Time
NSF certification High heat Silver ion
Steam Washer cleaning cycle ENERGY STAR
MEPS: DOE MEPS: Congress
Sanitization FeaturesMarket Share of Front-Load Clothes Washers
Discussion
Some Good News
• MEPs Win-Wins
– Good for energy expenditures
– Better-than-expected for consumer up-front costs (short-run), quality (appliances have long lifetimes)
• Broader story of CO2 policy instruments
– Stylized fact re: RIA cost over-estimates implies a lot more win-wins than we usually acknowledge
– We don’t have a strong knowledge base regarding what those win-wins are and how they came about
More research is needed re: policy and technical change
39
Policy Technical Change
Sets the degrees of freedom policy-makers have to operate with
More degrees of freedom for Policy-Makers could make an Important Difference
Acknowledgements
Research Team - LBNLLBNL Staff:
Dr. Larry Dale K. Sydny Fujita Dr. Anna Spurlock Dr. Margaret Taylor Hung-Chia Yang Dr. Di Zeng
Collaborators:
http://ees.lbl.gov/economics
Dr. Sébastien HoudeAssistant ProfessorAgricultural and Resource EconUniversity of Maryland
Dr. Michael RobertsAssociate ProfessorEconomicsUniversity of Hawaii
Dr. Michael CarnallEconomics Consultant
Dr. Daniel HagenProfessorEconomics, Business AdminWestern Washington University
Dr. Arlan BrucalEconomicsUniversity of Hawaii
Kim Hyun-gyuStudentEconomics University of Hawaii
42
Research Team - StanfordPEEC Directors and Researchers:
James L. Sweeney John Weyant Carrie Armel Margaret Taylor Dian Grueneich Martin FischerDirector Deputy Director
Post-Doctoral Scholars and Visitors:
http://peec.stanford.edu/index.php
Tobias SchmidtVisiting Professor
ETH Zurich
Diana GinnebaughPostdoctoral Scholar
Regina Ruby Lee ClewlowPostdoctoral Scholar
Micah FullerPostdoctoral Scholar
Wei-Shiuen NgPostdoctoral Scholar
Andreas SchäferVisiting Professor
University College London
43
No picture
available
Back-Up
Mar
ket
Shar
e o
f P
rod
uct
s
Product efficiency level
MEPs
A Different Distribution of Appliance Price and Efficiency on the Market
Cuts out
Product price
Product features
$0
$5,000
$10,000
$15,000
$20,000
$25,000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
Ex Ante Expected Prices
Allowance PricesAllowance PricesAllowance PricesAllowance PricesAllowance Prices
CTP
Expected vs. Actual: NOX RECLAIM Prices ($/Ton)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
Expected vs. Actual: NOX RECLAIM Prices ($/Ton)
Ex Ante Expected Prices
Allowance PricesAllowance PricesAllowance PricesAllowance PricesAllowance Prices
CTP
Major program adjustmentafter this
PRICE DEVELOPMENT FOR CO2 ALLOWANCES (EUAs)
Source: European Environment Agency 2011
Phase 3 EUA price Oct, 2014: 6€
EU ETS Prices
Expected vs. Actual: AB32 Auction Prices
“Beforethe program began, some analysts predicted allowance prices would soar to $70 or more.”
Source: EDF “Carbon Market California” 2014
RGGI Auction Clearing Price
Source: CRS Report Nov 2014
German Feed-in-Tariffs
Policy makers have to reflect the dynamics of innovation in the instrument design
Source: Hoppmann, J., et al., “Compulsive policy-making—The evolution of the German feed-in tariff system for solar photovoltaic power”. Research Policy (2014), http://dx.doi.org/10.1016/j.respol.2014.01.014
0
10
20
30
40
50
60
70
80
90
100
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Nu
mb
er
of
Pa
ten
ts
Phase II
1990 C
AA
Phase I
TradingTraditional Regulation Trading
Preparation
0
5
10
15
20
25
30
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
1990 C
AA
Phase II
Phase I
TradingTraditional Regulation Trading
Preparation
0
10
20
30
40
50
60
70
80
90
100
110
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Nu
mb
er
of P
ate
nts
OT
C P
hase I (
RA
CT
)
OT
C P
hase II
NB
P
NO
x S
IP C
all
TradingTraditional Regulation Trading
Preparation
0
10
20
30
40
50
60
70
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
OT
C P
hase I (
RA
CT
)
OT
C P
hase II
NB
P
NO
x S
IP C
all
TradingTraditional Regulation Trading
Preparation
(a) Post-combustion SO2 control (b) Pre-combustion SO2 control
(c) Post-combustion NOx control (d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
Commercial-oriented inventive activity
Some relevant literature
Laffont, Jean-Jacques and Tirole, Jean. Pollution permitsand environmental innovation. Journal of Public Economics 62 (1996) 127-141.
Taylor, Margaret. Innovation under cap-and-trade programs. Proceedings of the National Academy of Sciences (2012).
People have More Energy-Using Things in their Homes
Space Heating
Central A/C
Water Heating
Major Appliances (Durable Goods)
Small Apps
Computers, Electronics
These Things are a Rising Share of Household Energy Use
Those in Poverty use Appliances Too
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Use >= 1refrigerator
Use a clotheswasher at
home
Use a clothesdryer at home
Use adishwasher
Use room A/Cunits
Use centralA/C
Total U.S.
Below Poverty Line
People have More Energy-Using Things in their Homes
Source:
U.S. Poverty
These Things are a Rising Share of Household Energy Use
Poverty and Refrigerators
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Use >= 1 refrigerator Use 2 or More Refrigerators
Total U.S.
Below Poverty Line
Overall vs. Electricity Expenditures by Income Group
Income before taxes: Average annual expenditures and characteristicsConsumer Expenditure Survey, 2009
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000
All consumer Units
Less than $5,000
$5,000 to $9,999
$10,000 to $14,999
$15,000 to 19,999
$20,000 to $29,999
$30,000 to $39,999
$40,000 to $49,999
$50,000 to $69,999
$70,000 and more
Electricity expenditures
Average annual expenditures
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Total Air Conditioning Refrigerators Other end uses: includes,e.g., cooking appliances,clothes washers, dryers,dishwashers, televisions,
computers, small electronicdevices, pools, hot tubs, and
lighting
Below 100% of Poverty Line
>=$120,000 annual
Average Energy Expenditures (dollars per household using the end use)
