We estimate the economic impacts on US airlines that may arise from the inclusion of aviation in the European Union Emissions Trading Scheme from 2012 to 2020. We find that the Scheme would only have a small impact on US airlines and emissions, and that aviation operations would continue to grow. If carriers pass on all additional costs, including the opportunity costs associated with free allowances, to consumers, profits for US carriers will increase. Windfall gains from free allowances may be substantial because, under current allocation rules, airlines would only have to purchase about a third of the required allowances. However, an increase in the proportion of allowances auctioned would reduce windfall gains and profits for US airlines may decline.

Australia’s wind resource is considered to be very good, and the utilization of this renewable energy resource is increasing rapidly: wind power installed capacity increased by 35% from 2006 to 2011 and is predicted to account for over 12% of Australia’s electricity generation in 2030. Due to this growth in the utilization of the wind resource and the increasing importance of wind power in Australia’s energy mix, this study sets out to analyze and interpret the nature of Australia’s wind resources using robust metrics of the abundance, variability and intermittency of wind power density, and analyzes the variation of these characteristics with current and potential wind turbine hub heights. We also assess the extent to which wind intermittency, on hourly or greater timescales, can potentially be mitigated by the aggregation of geographically dispersed wind farms, and in so doing, lessen the severe impact on wind power economic viability of long lulls in wind and power generated. Our results suggest that over much of Australia, areas that have high wind intermittency coincide with large expanses in which the aggregation of turbine output does not mitigate variability. These areas are also geographically remote, some are disconnected from the east coast’s electricity grid and large population centers, which are factors that could decrease the potential economic viability of wind farms in these locations. However, on the eastern seaboard, even though the wind resource is weaker, it is less variable, much closer to large population centers, and there exists more potential to mitigate it’s intermittency through aggregation. This study forms a necessary precursor to the analysis of the impact of large-scale circulations and oscillations on the wind resource at the mesoscale.

© 2014 Hallgren et al.

The 2005 hurricane season was particularly damaging to the United States, contributing to significant losses to energy infrastructure –much of it a result of flooding from storm surges during hurricanes Katrina and Rita. Previous research suggests that these events are not isolated, but rather foreshadow a risk that is to continue and likely increase with a changing climate (17). Since extensive energy infrastructure exists along the U.S. Atlantic and Gulf coasts, these facilities are exposed to an increasing risk of flooding. We study the combined impacts of anticipated sea level rise, hurricane activity, and subsidence on energy infrastructure in these regions with a first application to Galveston Bay. Using future climate conditions as projected by four different Global Circulation Models (GCMs), we model the change in hurricane activity from present day climate conditions in response to a climate projected in 2100 under the IPCC A1B emissions scenario using hurricane analysis developed by Emanuel (5). We apply the results from hurricane runs from each model to the SLOSH model (Sea, Lake and Overland Surges from Hurricanes) (19) to investigate the change in frequency and distribution of surge heights across climates. Further, we incorporate uncertainty surrounding the magnitude of sea level rise and subsidence, resulting in more detailed projections of risk levels for energy infrastructure over the next century. With a detailed understanding of energy facilities’ changing risk exposure, we conclude with a dynamic programming cost-benefit analysis to optimize decision making over time as it pertains to adaptation.

Historically, electricity consumption has been largely insensitive to short term spot market conditions, requiring the equating of supply and demand to occur almost exclusively through changes in production. Large scale entry of demand response, however, is rapidly changing this paradigm in the electricity market located in the mid-Atlantic region of the US, called PJM. Greater demand side participation in electricity markets is often considered a low cost alternative to generation and an important step towards decreasing the price volatility driven by inelastic demand. Recent experience in PJM, however, indicates that demand response in the form of a peaking product has the potential to increase energy price level and volatility.

Currently, emergency demand response comprises the vast majority of demand side participation in PJM. This is a peaking product dispatched infrequently and only during periods of scarcity when thermal capacity is exhausted. While emergency demand response serves as a cheaper form of peaking resource than gas turbines, it has recently contributed to increases in energy price volatility by setting price at the $1,800/MWh price cap, substantially higher than the marginal cost of most thermal generation. Additionally, the entry of demand response into the PJM capacity market is one of primary drivers for capacity prices declining by over fifty percent. This study investigates the large penetration of emergency demand response in PJM and the implications for the balance between energy and capacity prices and energy price volatility. A novel model is developed that dynamically simulates generation entry and exit over a long term horizon based on endogenously determined energy and capacity prices. The study finds that, while demand response leads to slight reductions in total generation cost, it shifts the bulk of capacity market revenues into the energy market and also vastly increases energy price volatility.

This transition towards an energy only market will send more accurate price signals to consumers as costs are moved out of the crudely assessed capacity charge and into the dynamic energy price. However, the greater volatility will also increase the risk faced by many market participants. The new market paradigm created by demand response will require regulators to balance the importance of sending accurate price signals to consumers against creating market conditions that decrease risk and foster investment.