| Abstract: |
Among the many complex issues of technology, governance, and market design
affecting the electricity sector, climate policy has become dominant. From the
perspective of a nonspecialist looking at this changing dominance, a quiz
illuminates some of the peculiar uses of language one can find in climate
change and energy efficiency policy. Six economic challenges are then
examined: cap-and-trade vs. taxes, non-price regulations, energy efficiency
policies, mitigation vs. adaptation, trade effects, and transmission planning.
Three additional challenges affect not just the means to the climate policy
end but also the end itself: the “fat tails†problem, discount rates, and
whether environmental protection should be evaluated by aggregating
willingness to pay across persons. Planners in the public and private sectors
need to be aware of not only the economic policy challenges but also arguments
that may influence the intensity of the climate policies with which they have
to cope. |