Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals

Regulatory measures have proven the favored approach to climate change mitigation in the U.S., while market-based policies have gained little traction. Using a model that resolves the U.S. economy by region, income category, and sector-specific technology deployment opportunities, this paper studies the magnitude and distribution of economic impacts under regulatory versus market-based approaches. We quantify heterogeneity in the national response to regulatory policies, including a fuel economy standard and a clean or renewable electricity standard, and compare these to a cap–and–trade system targeting carbon dioxide or all greenhouse gases. We find that the regulatory policies substantially exceed the cost of a cap–and–trade system at the national level. We further show that the regulatory policies yield large cost disparities across regions and income groups, which are exaggerated by the difficulty of implementing revenue recycling provisions under regulatory policy designs.We acknowledge support of the MIT Joint Program on the Science and Policy of Global Change through a combination of government, industry, and foundation funding, the MIT Energy Initiative, and additional support for this work from a coalition of industrial sponsors. This work is also supported by the DOE Integrated Assessment Grant (DE-FG02-94ER61937). For development of the USREP-ReEDS model, the authors further acknowledge the support of the Joint Institute for Strategic Energy Analysis, which is operated by the Alliance for Sustainable Energy, LLC, on behalf of the U.S. Department of Energy’s National Renewable Energy Laboratory, the University of Colorado-Boulder, the Colorado School of Mines, the Colorado State University, the Massachusetts Institute of Technology, and Stanford University

Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models

Top-down energy-economic modeling approaches often use deliberately simple techniques to represent heterogeneous resource inputs to production. We show that for some policies, such as feed-in tariffs (FIT) for renewable electricity, detailed representation of renewable resource grades is required to describe the technology more precisely and identify cost-effective policy designs. We extend a hybrid approach for modeling heterogeneity in the quality of natural resource inputs required for renewable energy production in a stylized computable general equilibrium (CGE) framework. Importantly, this approach resolves nearflat or near-vertical sections of the resource supply curve that translate into key features of the marginal cost of wind resource supply, allowing for more realistic policy simulation. In a second step, we represent the shape of a resource supply curve based on more detailed data. We show that for the case of onshore wind development in China, a differentiated FIT design that can only be modeled with the hybrid approach requires less than half of the subsidy budget needed for a uniform FIT design and proves to be more cost-effective.This work was supported by Eni S.p.A., ICF International, the French Development Agency (AFD), and Shell, founding sponsors of the MIT-Tsinghua China Energy and Climate Project. We are further thankful for support provided by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and U.S. federal grants. In particular, this work was supported by the DOE Integrated Assessment Grant (DE-FG02-94ER61937)

The Future Energy and GHG Emissions Impact of Alternative Personal Transportation Pathways in China

A major uncertainty in future energy and greenhouse gas (GHG) emissions projections for China is the evolution of demand for personal transportation modes. This paper explores the implications of divergent personal transportation scenarios, either favoring private vehicles, or emphasizing a sector including all purchased transport (including local public transit, rail and aviation) as substitute for vehicle travel. Motivated by a wide range of forecasts for transport indicators in the literature, we construct plausible scenarios with low-, medium- and high-transport demand growth, and implement them in a technology-rich model which represents opportunities for fuel economy improvement and switching to plug-in hybrid-electric vehicles (PHEVs). The analysis compares primary energy use and GHG emissions in China in the absence and presence of climate policies. We find that a policy that extends the current Chinese emissions-intensity goals through 2050 mostly affects other sectors with lower abatement costs, and so only lightly engages household transport, permitting nearly the same large increases in refined oil demand (by more than five times) and private vehicle stocks (to 430–500 million) as in the reference case. A stringent climate stabilization policy affects household transport, limiting vehicle ownership and petroleum demand, but drives up the share of household spending on transport, and carries high economy-wide costs. The large projected scale of vehicle fleets, refined oil use and transport purchases all suggest that the rate and type of travel demand growth deserves attention by policymakers, as China seeks to address its energy, environmental, and economic goals

Molecular dynamics of folding of secondary structures in Go-type models of proteins

We consider six different secondary structures of proteins and construct two types of Go-type off-lattice models: with the steric constraints and without. The basic aminoacid-aminoacid potential is Lennard Jones for the native contacts and a soft repulsion for the non-native contacts. The interactions are chosen to make the target secondary structure be the native state of the system. We provide a thorough equilibrium and kinetic characterization of the sequences through the molecular dynamics simulations with the Langevin noise. Models with the steric constraints are found to be better folders and to be more stable, especially in the case of the $\beta$-structures. Phononic spectra for vibrations around the native states have low frequency gaps that correlate with the thermodynamic stability. Folding of the secondary structures proceeds through a well defined sequence of events. For instance, $\alpha$-helices fold from the ends first. The closer to the native state, the faster establishment of the contacts. Increasing the system size deteriorates the folding characteristics. We study the folding times as a function of viscous friction and find a regime of moderate friction with the linear dependence. We also consider folding when one end of a structure is pinned which imitates instantaneous conditions when a protein is being synthesized. We find that, under such circumstances, folding of helices is faster and of the $\beta$-sequences slower.Comment: REVTeX, 14 pages, EPS figures included, JCP in pres

Static magnetization induced by time-periodic fields with zero mean

We consider a single spin in a constant magnetic field or an anisotropy field. We show that additional external time-periodic fields with zero mean may generate nonzero time-averaged spin components which are vanishing for the time-averaged Hamiltonian. The reason is a lowering of the dynamical symmetry of the system. A harmonic signal with proper orientation is enough to display the effect. We analyze the problem both with and without dissipation, both for quantum spins (s=1/2,1) and classical spins. The results are of importance for controlling the system's state using high or low frequency fields and for using new resonance techniques which probe internal system parameters, to name a few.Comment: 11 pages, 2 figure

Combining a New Vehicle Fuel Economy Standard with a Cap-and-Trade Policy: Energy and Economic Impact in the United States

http://globalchange.mit.edu/research/publications/2271The United States has adopted fuel economy standards that require increases in the on-road efficiency of new passenger vehicles, with the goal of reducing petroleum use, as well as (more recently) greenhouse gas (GHG) emissions. Understanding the cost and effectiveness of this policy, alone and in combination with economy-wide policies that constrain GHG emissions, is essential to inform coordinated design of future climate and energy policy. In this work we use a computable general equilibrium model, the MIT Emissions Prediction and Policy Analysis (EPPA) model, to investigate the effect of combining a fuel economy standard with an economy-wide GHG emissions constraint in the United States. First, a fuel economy standard is shown to be at least five to fourteen times less cost effective than a price instrument (fuel tax) when targeting an identical reduction in cumulative gasoline use. Second, when combined with a cap-and-trade (CAT) policy, the fuel economy standard increases the cost of meeting the GHG emissions constraint by forcing expensive reductions in passenger vehicle gasoline use, displacing more cost-effective abatement opportunities. Third, the impact of adding a fuel economy standard to the CAT policy depends on the availability and cost of abatement opportunities in transport—if advanced biofuels provide a cost-competitive, low carbon alternative to gasoline, the fuel economy standard does not bind and the use of low carbon fuels in passenger vehicles makes a significantly larger contribution to GHG emissions abatement relative to the case when biofuels are not available. This analysis underscores the potentially large costs of a fuel economy standard relative to alternative policies aimed at reducing petroleum use and GHG emissions. It also demonstrates the importance of jointly considering the effects of multiple policies aimed at reducing petroleum use and GHG emissions, and the associated economic costs

Analyzing the Regional Impact of a Fossil Energy Cap in China

Decoupling fossil energy demand from economic growth is crucial to China’s sustainable development. In addition to energy and carbon intensity targets enacted under the Twelfth Five-Year Plan (2011–2015), a coal or fossil energy cap is under discussion as a way to constrain the absolute quantity of energy used. Importantly, implementation of such a cap may be compatible with existing policies and institutions. We evaluate the efficiency and distributional implications of alternative energy cap designs using a numerical general equilibrium model of China’s economy, built on the 2007 regional input-output tables for China and the Global Trade Analysis Project global data set. We find that a national cap on fossil energy implemented through a tax on final energy products and an energy saving allowance trading market is the most costeffective design, while a regional coal-only cap is the least cost-effective design. We further find that a regional coal cap results in large welfare losses in some provinces. Capping fossil energy use at the national level is found to be nearly as cost effective as a national CO2 emissions target that penalizes energy use based on carbon content.We acknowledge the support of the Ministry of Science and Technology of China through the Institute for Energy, Environment, and Economy at Tsinghua University, and the support of the Graduate School at Tsinghua University, which are supporting Zhang Da’s doctoral research as a visiting scholar at the Massachusetts Institute of Technology. We further thank Eni S.p.A., ICF International, Shell International Limited, and the French Development Agency (AFD), founding sponsors of the China Energy and Climate Project. We also grateful for support provided by the Social Science Key Research Program from National Social Science Foundation, China of Grant No. 09&ZD029 and by Rio Tinto China. We would further like to thank John Reilly, Sergey Paltsev, Kyung-min Nam, Henry Chen, Paul Kishimoto and Audrey Resutek for helpful comments, discussion and edits

Nonlinear interaction between electromagnetic fields at high temperature

The electron-positron `box' diagram produces an effective action which is fourth order in the electromagnetic field. We examine the behaviour of this effective action at high-temperature (in analytically continued imaginary-time thermal perturbation theory). We argue that there is a finite, nonzero limit as $T\rightarrow \infty$ (where $T$ is the temperature). We calculate this limit in the nonrelativistic static case, and in the long-wavelength limit. We also briefly discuss the self-energy in 2-dimensional QED, which is similar in some respects.Comment: 13 pages, DAMTP 94/3

The Role of China in Mitigating Climate Change

http://globalchange.mit.edu/research/publications/2265We explore short- and long-term implications of several energy scenarios of China’s role in efforts to mitigate global climate risk. The focus is on the impacts on China’s energy system and GDP growth, and on global climate indicators such as greenhouse gas concentrations, radiative forcing, and global temperature change. We employ the MIT Integrated Global System Model (IGSM) framework and its economic component, the MIT Emissions Prediction and Policy Analysis (EPPA) model. We demonstrate that China’s commitments for 2020, made during the UN climate meetings in Copenhagen and Cancun, are reachable at very modest cost. Alternative actions by China in the next 10 years do not yield any substantial changes in GHG concentrations or temperature due to inertia in the climate system. Consideration of the longer-term climate implications of the Copenhagen-type of commitments requires an assumption about policies after 2020, and the effects differ drastically depending on the case. Meeting a 2°C target is problematic unless radical GHG emission reductions are assumed in the short-term. Participation or non-participation of China in global climate architecture can lead by 2100 to a 200–280 ppm difference in atmospheric GHG concentration, which can result in a 1.1°C to 1.3°C change by the end of the century. We conclude that it is essential to engage China in GHG emissions mitigation policies, and alternative actions lead to substantial differences in climate, energy, and economic outcomes. Potential channels for engaging China can be air pollution control and involvement in sectoral trading with established emissions trading systems in developed countries