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Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

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I think Professor Rossi nailed it: Part of the question is whether the action is framed as enhancing competition or with the purpose of regulating the environment more broadly, said Jim Rossi, a professor and chair in law at the Vanderbilt University School of Law. "If the argument is 'This is to reduce barriers to competition and to facilitate a competitive market,' I think you are squarely in your wheelhouse. But if you're drawing on broader purposes of regulating carbon, to protect the environment, that's where I think [the statute] really does raise the question of whether you have that jurisdiction," according to Rossi.

IMO, a significant majority of the proponents arguments favoring carbon pricing seem to be aimed at reducing carbon emissions and not to enhance competition.

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Matt Chester's picture
Matt Chester on Oct 1, 2020

Does this angle open up potential wiggle room for stakeholders to disingenuously argue for the market competition aspect when their real motivation is the environmental side? Obviously comments/feedback can't really be identified by their under intent and are taken at face value, but I'm more curious if this might be a strategy employed by those who aren't motivated by the market competition aspect but see it as a means to an end

Richard Brooks's picture
Richard Brooks on Oct 2, 2020

Matt, IMO, the written testimony clearly shows the reason for proposing a carbon price is aimed at reducing carbon emissions. I'm confident that FERC, based on the questions raised durign the meeting, would see through any smoke filled proposals that claim otherwise.

Roger Arnold's picture
Roger Arnold on Oct 4, 2020

Is it really so simple? If the charter is to "enhance competition" and to "facilitate a competitive market", isn't there a proper presumption that it's fair competition that's to be enhanced? It's quite arguable that in the absence of carbon pricing, fossil fuel generation is enjoying the fruits of unfair competition. They're leveraging the unfair advantage of dumping of CO2 to the atmosphere without paying for the damage that it causes.

 

Richard Brooks's picture
Richard Brooks on Oct 5, 2020

Roger, I assure you, Generators that produce carbon emisssions aren't the ones paying the price - it will be you and I and all the other demand side entities. When it comes to electricity "LOAD PAYS FOR EVERYTHING" - including the carbon taxes - the generators will remain whole. This is one of the reasons why fossil and renewable generators have voiced support for carbon pricing.Fossil Generators will pay the carbon pricing tax, using money they collect from you and I, expressed in the LMP. Renewable generators are the real winners in this model.

Bob Meinetz's picture
Bob Meinetz on Oct 6, 2020

Richard, I think you and Roger are arguing the same point - customers will ultimately pay for any price on carbon.

But it brings up another point we've discussed before - to only include electricity in a carbon-pricing model discourages investment in electric vehicles, and electrification in general. Ultimately it will backfire.

As British Columbia learned the hard way, a successful carbon tax (or any Pigouvian tax) must directly address the problem - in this case, carbon emissions. Our goal is to reduce them, not to encourage electric cars, or even to discourage consumption of gasoline.

If a carbon tax induces an automaker to develop a new internal combustion engine that results in fewer well-to-wheels carbon emissions, even if powered by gasoline, we've succeeded in our mission.
 

Bob Meinetz's picture
Bob Meinetz on Oct 1, 2020

"IMO, a significant majority of the proponents arguments favoring carbon pricing seem to be aimed at reducing carbon emissions and not to enhance competition."

I agree, Richard. Carbon pricing limits competition by imposing a penalty on fossil fuel producers. Technically, it's an unfair advantage - and environmental considerations are outside of FERC's purview.

However -

Expecting self-interest (competition) to solve a public problem is a self-defeating proposition.

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Richard Brooks on Oct 2, 2020

So true, Bob.

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