Date of Award
Campus Access Dissertation
Doctor of Philosophy (PhD)
This dissertation investigates the extent to which cap and trade, a policy program designed to increase emission efficiency, might also shift long-run investment in California wholesale electricity generation toward low/zero emissions technology, such as wind, solar and battery storage. The program allows individual firms to buy and sell emission permits while the emission allowance for the industry as a whole is tightened little by little. Whether this path of little nudges will lead the industry to engage in large-scale technological change is not clear. At this point in time, wholesale electricity is at a crossroads, where technology has evolved to provide a number of different potential infrastructural configurations in terms of who demands and supplies electric power, with what resource use and technological base.
Cap and trade may influence the wholesale electricity sector in multiple ways depending on the context in which it is implemented. I examine the issue with several methodologies commonly used to analyze complex systems: relational analysis, agent based modeling, and system dynamics. Parallel to the policy analysis, there is a methodological investigation of how best, or how better, to conceptually capture the most important aspects of the context and the dynamic interaction between greenhouse gas permit trading and the technological mix of long-run investment. A series of simulation models are used to investigate the effect of cap and trade under different policy and technological assumptions. Each method creates a different lens, providing contrasting visions and different insights.
I find that cap and trade directly affects the long-run investment trajectory probably only weakly, at best. However, it may be possible to accelerate technological transition by modifying the program so that revenues gleaned from permit sales are used to subsidize electricity storage.
Hughes, Merritt Randall, "Carbon Pricing in a Complex Adaptive System" (2018). Graduate Doctoral Dissertations. 401.