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RGGI Cost Benefit Analysis Subgroup Dwayne Breger MA Division of Energy Resources

Economic Modeling Overview. RGGI Cost Benefit Analysis Subgroup Dwayne Breger MA Division of Energy Resources. Cost-Benefit Analysis Subgroup. Scope/Objectives Analysis of the state and regional economic impacts of the CO 2 cap-and-trade program and policy options.

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RGGI Cost Benefit Analysis Subgroup Dwayne Breger MA Division of Energy Resources

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  1. Economic Modeling Overview RGGI Cost Benefit Analysis Subgroup Dwayne Breger MA Division of Energy Resources

  2. Cost-Benefit Analysis Subgroup Scope/Objectives Analysis of the state and regional economic impacts of the CO2 cap-and-trade program and policy options. Evaluate co-benefits of air pollution emission changes that result from CO2 program. Evaluate impact of CO2 program on energy efficiency and renewable energy sectors.

  3. Economic Model Selection • SWG has selected REMI Policy Insight as modeling tool • NESCAUM will serve as Modeling Agent for RGGI • MA DOER will provide modeling services to NESCAUM • REMI will prepare a 12-state/region 53-sector model with input/output for each state and full region • REMI Modeling Plan integrated with IPM Modeling • I/O data linkage • Policy Simulations follow IPM scenarios

  4. Output Population & Labor Supply Market Shares Labor & Capital Demand Wages, Prices, & Profits Basic Economic Blocksin REMI Structure

  5. Sample Output from REMI • Personal Income • Gross State Product • Employment, by sectors • Imports/Exports – between RGGI states, and between RGGI region and outside • Demographic changes • Industry sector consumption/production • Health Expenditures

  6. Integration ofEnergy and Economic Modeling Electricity Prices Fuel Use Air Emissions New Plant Location & Investment Air Quality Analysis Existing Power Plants Transmission Constraints Demand Projections Fuel Price Projections New Plant Costs Economic Model REMI Policy Insight Energy Model IPM* Model Gross State Products Personal Income Employment Industry Sector Prod/Cons Health Costs * Integrated Planning Model, ICF Consulting, Inc.

  7. REMI Input Interface w/ IPM Key Energy Sector Outputs Electric Energy Prices wholesale (IPM) to retail (REMI) New Capacity Construction / Investment Fuel Consumption

  8. REMI Modeling Key Scenarios • Scenarios follow IPM Model Scenarios • Benchmark and Reference Scenarios • CO2 Cap Level • Policy, Structure, Flexibility Scenarios • Model Rule Scenarios

  9. Benchmark/Reference Scenarios • Establish REMI Benchmark Scenario (economic projections w/o policies) • Compare/Calibrate REMI Results w/ IPM Energy/capacity growth ↔ economic growth Wholesale energy prices ↔ retail energy prices • Establish Reference Policy Scenarios • Use output from IPM Reference Policy Scenarios

  10. Policy Scenarios • Economic projections with outputs from IPM Scenarios (compare economic impacts relative to reference scenario) • Cap Size • Flexibility Mechanisms • Model Rule • Allocation Strategies

  11. Schedule for REMI Scenarios

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