We report results from a large field experiment that with a few hours prior notice provided Danish residential consumers with dynamic price and environmental signals aimed at causing them to shift their consumption either into or away from certain hours of the day. The same marginal price signal is found to cause substantially larger consumption shifts into target hours compared to consumption shifts away from target hours. Consumption is also reduced in the hours of the day before and after these into target hours and there is weaker evidence of increased consumption in the hours surrounding away target hours. The same into versus away results hold for the environmental signals, although the absolute size of the eects are smaller. Using detailed household-level demographic information for all customers invited to participate in the experiment, both models are re-estimated accounting for this decision. For both the price and environmental treatments, the same qualitative results are obtained, but with uniformly smaller quantitative magnitudes. These selection-corrected estimates are used to perform a counterfactual experiment where all of the retailer’s residential customers are assumed to face these dynamic price signals. We find substantial wholesale energy cost savings for the retailer from declaring into events designed to shift consumption from high demand periods to low demand perio ds within the day, which suggests that such a pricing strategy could significantly reduce the cost of increasing the share of greenhouse gas free wind and solar electricity production in an electricity supply industry.

Recent behavioral models of reference-dependent or context-dependent preferences have posited that consumers form reference points or consideration sets based on expectations. We investigate this hypothesis empirically within the retail gasoline market. Given that gasoline consumers have been shown to form price expectations based on past price lev- els, reference- or context-dependence would likely cause gasoline demand to become more price-sensitive when prices are high relative to the recent past (i.e., higher than expected). Consistent with these predictions, we find that gasoline demand in the U.S. is up to three times more elastic when prices rise above their average over the previous year than when prices fall below this average. Reference-price effects vary substantially across cities with different demographic and commuting patterns, and cities that have less elastic demand for gasoline are shown to exhibit greater asymmetry in demand responsiveness. These findings provide valuable new evidence to support recent developments in the behavioral litera- ture and also broaden our understanding of the factors affecting temporal and geographic heterogeneity in the price responsiveness of gasoline demand and the influence of price volatility on overall gasoline consumption.

We investigate the relationship between accumulated experience completing wind power projects and the cost of installing wind projects in the U.S. from 2001-2015. Our modeling framework disentangles accumulated experience from input price changes, scale economies, and exogenous technical change; and accounts for both firm-specific and industry-wide accumulated experience. We find evidence consistent with cost-reducing benefits from firm-specific experience for that firm’s cost of future wind power projects, but no evidence of industry-wide learning from the experience of other participants in the industry. Further, our experience measure rapidly depreciates across time and distance, suggesting a stable industry trajectory would lower project costs.

Significant political barriers to implementing na- tional climate policies exist in both the US and China. Successful linkage of regional climate policies in the two countries can help overcome these impediments. Each country can be seen as willing to cooperate with the other to address the global climate challenge, which can help each national government overcome the resistance to formulating its own national climate policy.

Solving the climate challenge involves many years of sustained actions coordinated across the major emitting countries. Like any long journey, it begins with︎ a first step. Coordinating regional policies is such a step.

Californians like to think of themselves as environmentally conscious and forward-thinking. The state’s energy and environmental policies reflect these sentiments. With the passage of SB 100, California has one of the nation’s most ambitious renewable energy goals for its electricity supply industry. The California Solar Initiative rebate program has led to more rooftop solar capacity in the state than the total rooftop solar capacity installed in the next eight highest-capacity states. AB32 established California as the only state with its own cap-and-trade market for greenhouse gas emissions. This market currently sets the nation’s highest price for a ton of greenhouse gas emissions. California recently set a goal of five million electric vehicles in the state by 2030. Under AB 2514, California’s three investor-owned utilities are required to purchase 1,325 megawatts of grid-scale storage capacity and AB 2868 requires them to purchase 500 megawatts of behind-the-meter storage capacity. All of these policies have made California a global leader in the transition to a less carbon-intensive energy sector.

There is one major downside to California’s energy and environmental policies: they are extremely expensive for California consumers. Average residential electricity prices in California are among the highest in the nation—not because it is so expensive to produce electricity in the state, but because the costs of these policies are recovered from retail electricity prices. A comparison to Texas, another large state that also uses natural gas to power most of its electricity generation fleet, illustrates this point. According to the US Energy Information Administration (US-EIA), average residential electricity prices in California are currently about 20 cents per kilowatt-hour (kWh) versus 10 cents per kWh in Texas. However, average wholesale electricity prices in the two states are roughly equal.

This difference in retail prices is primarily due to different policy responses in the two states to the shale gas boom that started in the mid-2000s and ultimately led to a roughly 66 percent decline in the wholesale price of natural gas. California responded to these low natural gas prices with spending on the policies described above and no reductions in retail electricity prices, despite average wholesale electricity prices in California falling by one-half to two-thirds relative to their pre-shale gas boom levels. Texas responded to this decline in natural gas prices by implementing vigorous retail competition for all classes of customers, which passed on the resulting lower wholesale electricity prices into lower retail electricity prices.

What is more surprising about the Texas-versus-California comparison is that over this same time period Texas managed to build more zero-carbon wind and solar generation capacity than California. Texas currently has more than 22,000 megawatts (MWs) of grid-scale wind and solar capacity versus about 17,000 MWs in California. Different from California, Texas has accomplished this massive renewable generation buildout which also produces more renewable energy on an annual basis than California with no state-mandated financial support mechanisms beyond its competitive renewable energy zone (CREZ) policy that proactively expanded the state’s transmission network to regions with significant renewable resources. Texas’s market-based approach to fostering renewable generation entry has led to more capacity at significantly lower cost relative to California’s legislatively mandated and consumer-financed approach.

Because Californians are likely to want to continue to lead the energy transition, the relevant policy design question is: How can the state achieve these low-carbon energy goals in a more cost- effective manner?

As the old saying goes, politics makes strange bedfellows.  A national carbon tax to fund increased border security fits that description. President Trump's request for these funds is a major sticking point with Democrats in the current budget impasse. However, many of the younger generation of Democrats elected to the House in the midterm election strongly support government action to address the climate challenge. 

Is there a way for all sides to declare victory from this solution? Increased funding for border security would allow the president to fulfill a campaign promise that is extremely important to his base. A carbon tax would allow Democrats to score a major climate policy victory. A significant chunk of the revenues from the carbon tax could go to increase the safety of asylum-seekers and the speed at which their requests are processed. The remaining revenues could contribute to the deficit reduction goals of traditional Republicans. Finally, all three groups could claim credit for a reduced risk of global climate change and a more humanitarian approach to dealing with asylum-seekers.

Progressive Democrats assert that the Green New Deal is the best way to reduce global greenhouse gas emissions.

But this claim ignores the fact that subsidizing “green” energy technologies, such as wind and solar, is less effective than taxing the greenhouse gas emissions produced by brown energy sources, such as oil, natural gas and coal.

California’s decision to allow Pacific Gas and Electric (PG&E) to shut off electricity to hundreds of thousands of Californians because high winds and dry conditions may cause a downed powerline to start a wildfire is a third-world solution to a first-world problem.