In my last post, I discussed the dilemma of how to allocate the avoided greenhouse gas (GHG) emission between policies that policies to increase renewable electricity and reduce electricity consumption. Estimating the effects of increased renewable first will artificially increase the avoided emissions from that policy and decrease the emissions from efficiency. The opposite is also true. The post provided an illustrative example to demonstrate the challenge and to show that there is an overlapping amount of emissions that must be allocated – or split – between the two policies. It also shows the possible perverse outcomes if care is not taken with this issue. In this post, I will summarize our solution to this problem – our approach to “splitting the electric emissions baby.”
Splitting the Electric Emissions Baby
There is no standard protocol in the sequencing of calculation to prevent the allocation problem. Any assumption to put one measure before another is arbitrary. For example, California has a preferred order for serving incremental energy needs: efficiency first, then renewables, and then traditional sources. Using this order as a guide would overestimate the emissions from efficiency and underestimate the emissions from renewable energy. Our approach to overcome this problem is to allocate emissions between the quantity and rate policies based on the relative contribution to the combined reduction (rate plus quantity).
