Derek Lemoine

The climate impacts of bioenergy systems depend on market and regulatory policy contexts.

Biomass can help reduce greenhouse gas (GHG) emissions by displacing petroleum in the transportation sector, by displacing fossil-based electricity, and by sequestering atmospheric carbon. Which use mitigates the most emissions depends on market and regulatory contexts outside the scope of attributional life cycle assessments. We show that bioelectricitys advantage over liquid biofuels depends on the GHG intensity of the electricity displaced. Bioelectricity that displaces coal-fired electricity could reduce GHG emissions, but bioelectricity that displaces wind electricity could increase GHG emissions. The electricity displaced depends upon existing infrastructure and policies affecting the electric grid. These findings demonstrate how model assumptions about whether the vehicle fleet and bioenergy use are fixed or free parameters constrain the policy questions an analysis can inform. Our bioenergy life cycle assessment can inform questions about a bioenergy mandates optimal allocation between liquid fuels and electricity generation, but questions about the optimal level of bioenergy use require analyses with different assumptions about fixed and free parameters.

Valuing Plug-In Hybrid Electric Vehicles' Battery Capacity Using a Real Options Framework

Plug-in hybrid electric vehicles (PHEVs) enable their drivers to choose whether to use electricity or gasoline, but this fuel flexibility benefit requires the purchase of additional battery capacity relative to most other vehicles. We value the fuel flexibility of PHEVs by representing the purchase of the battery as the purchase of a strip of call options on the price of transportation. We use a Kalman filter to obtain maximum likelihood estimates for three gasoline price models applied to a U.S. municipal market. We find that using a real options approach instead of a discounted cash flow analysis does not raise the retail price at which the battery pays for itself by more than

Climate Sensitivity Distributions Dependence on the Possibility that Models Share Biases

50/kWh (or by more than 15%). A discounted cash flow approach often provides a good approximation for PHEV value in our application, but real options approaches to valuing PHEVsO battery capacity or role in climate policy may be crucial for other analyses.

The Influence of Negative Emission Technologies and Technology Policies on the Optimal Climate Mitigation Portfolio

Uncertainty about biases common across models and about unknown and unmodeled feedbacks is important for the tails of temperature change distributions and thus for climate risk assessments. This paper develops a hierarchical Bayes framework that explicitly represents these and other sources of uncertainty. It then uses models’ estimates of albedo, carbon cycle, cloud, and water vapor‐lapse rate feedbacks to generate posterior probability distributions for feedback strength and equilibrium temperature change. The posterior distributions are especially sensitive to prior beliefs about models’ shared structural biases: nonzero probability of shared bias moves some probability mass toward lower values for climate sensitivity even as it thickens the distribution’s positive tail. Obtaining additional models of these feedbacks would not constrain the posterior distributions as much as narrowing prior beliefs about shared biases or, potentially, obtaining feedback estimates having biases uncorrelated with those impacting climate models. Carbon dioxide concentrations may need to fall below current levels to maintain only a 10% chance of exceeding official 28C limits on global average temperature change.

Trapped Between Two Tails: Trading Off Scientific Uncertainties via Climate Targets

Combining policies to remove carbon dioxide (CO2) from the atmosphere with policies to reduce emissions could decrease CO2 concentrations faster than possible via natural processes. We model the optimal selection of a dynamic portfolio of abatement, research and development (R&D), and negative emission policies under an exogenous CO2 constraint and with stochastic technological change. We find that near-term abatement is not sensitive to the availability of R&D policies, but the anticipated availability of negative emission strategies can reduce the near-term abatement optimally undertaken to meet 2°C temperature limits. Further, planning to deploy negative emission technologies shifts optimal R&D funding from “carbon-free” technologies into “emission intensity” technologies. Making negative emission strategies available enables an 80% reduction in the cost of keeping year 2100 CO2 concentrations near their current level. However, negative emission strategies are less important if the possibility of tipping points rules out using late-century net negative emissions to temporarily overshoot the CO2 constraint earlier in the century.

Reduce growth rate of light-duty vehicle travel to meet 2050 global climate goals

Climate change policies must trade off uncertainties about future warming, about the social and ecological impacts of warming, and about the cost of reducing greenhouse gas emissions. We show that laxer carbon targets produce broader distributions for climate damages, skewed towards severe outcomes. However, if potential low-carbon technologies fill overlapping niches, then more stringent carbon targets produce broader distributions for the cost of reducing emissions, skewed towards high-cost outcomes. We use the technology-rich GCAM integrated assessment model to assess the robustness of 450 and 500 ppm carbon targets to each uncertain factor. The 500 ppm target provides net benefits across a broad range of futures. The 450 ppm target provides net benefits only when impacts are greater than conventionally assumed, when multiple technological breakthroughs lower the cost of abatement, or when evaluated with a low discount rate. Policy evaluations are more sensitive to uncertainty about abatement technology and impacts than to uncertainty about warming.

Escape from Third-Best: Rating Emissions for Intensity Standards

Strong policies to constrain increasing global use of light-duty vehicles (cars and light trucks) should complement fuel efficiency and carbon intensity improvements in order to meet international greenhouse gas emission and climate targets for the year 2050.

Green Expectations: Current Effects of Anticipated Carbon Pricing

An increasingly common type of environmental policy instrument limits the carbon intensity of transportation and electricity markets. In order to extend the policys scope beyond point-of-use emissions, regulators assign each competing fuel an emission intensity rating for use in calculating compliance. I show that welfare-maximizing ratings do not generally coincide with the best estimates of actual emissions. In fact, the regulator can achieve a higher level of welfare by manipulating the emission ratings than by manipulating the level of the standard. Moreover, a fuels optimal rating can actually decrease when its estimated emission intensity increases. Numerical simulations of the California Low-Carbon Fuel Standard suggest that when recent scientific information suggested greater emissions from conventional ethanol, regulators should have lowered ethanols rating (making it appear less emission-intensive) so that the fuel market would clear with a lower quantity.A new type of policy regulates products’ greenhouse gas emissions over their entire life cycles, not just at their points of use. Because regulators cannot directly monitor each product’s life-cycle emissions, they assign emission ratings to classes of products in order to calculate compliance. We show that welfare-maximizing ratings in an intensity standard do not generally coincide with estimated emissions. Further, greater estimated emissions actually call for lower optimal ratings when compliance comes primarily from increased use of the low-emission products. Numerical simulations of the California Low-Carbon Fuel Standard suggest that when new scientic information increased the estimated emissions from conventional ethanol, regulators should have lowered (or loosened) ethanol’s rating so that the fuel market would clear with a lower quantity.

General Equilibrium Rebound from Energy Efficiency Policies

I report evidence that an anticipated strengthening of environmental policy increased emissions. I find that the breakdown of the U.S. Senates 2010 climate effort generated positive excess returns in coal futures markets. This response appears to be driven by an increase in coal storage. The proposed legislation aimed to reduce U.S. greenhouse gas emissions after 2013, but the legislative process itself may have increased emissions by over 12 million tons of carbon dioxide leading up to April 2010.

The Climate Risk Premium: How Uncertainty Affects the Social Cost of Carbon

Energy efficiency improvements “rebound” when economic responses undercut their direct energy savings. I show that general equilibrium channels typically amplify rebound by making consumption goods cheaper but typically dampen rebound by increasing demand for non-energy inputs to production and by changing the size of the energy supply sector. Improvements in the efficiency of the energy supply sector generate especially large rebound because they make energy cheaper in all other sectors. Quantitatively, improving the efficiency of U.S. non-energy supply sectors by 1% would reduce U.S. energy use by 0.58%, with rebound of 28%. General equilibrium channels increase those savings by 19%; however, they reduce the savings from improving the efficiency of the energy supply sector by 65%.To compare the general equilibrium effects of common environmental policies, I develop a model of directed technical change with endogenous exploration for depletable fossil resources, endogenous innovation in technologies for accessing renewable resources, and endogenous innovation in technologies for converting fossil and renewable resources into energy services. I find that a supply restriction and a resource tax each nearly always reduce extraction of fossil resources. In contrast, an efficiency policy and a renewable energy policy each can increase contemporaneous extraction of fossil resources (“backfire”) if those resources are sufficiently depleted. Interactions with innovation and depletion can make the cumulative backfire induced by a time t policy differ substantially from a static analysis.