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(Not So) Clean Peak Energy Standards

By Jeffrey Shrader, Christy Lewis, Gavin McCormick, Isabelle Rabideau, and Burcin Unel
December 10, 2019

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Filed under Climate Change and Energy Policy, Electricity, Academic Articles/Working Papers, Jobs and Regulation

Growth in electricity storage has the potential to increase emissions from power generation. Concerns about this outcome are currently prompting many policies to address the issue. We study a particularly popular policy proposal called the “Clean Peak Standard” that incentivizes storage to discharge during periods of high electricity demand. The stated goal of the policy is to shift storage discharge to offset production from generators with high pollution emissions. We show that the policy is largely ineffective at achieving this emissions reduction goal. The policy reinforces existing incentives faced by storage operators, so it does not have a strong effect on discharging behavior. It is also unable to capture high-frequency changes in marginal operating emissions rates. Alternative policies, such as a carbon tax, are more effective at reducing the emissions increase caused by storage. Policymakers considering Clean Peak-style policies should instead consider these alternative policies.