Project Report:
The Red and the Black: Countering Green-Power Cost Creep with Carbon Pricing
Purpose
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.

Summary

Decarbonization of electricity supply is a cornerstone of U.S. and, hence, global efforts to phase out fossil fuels and eliminate their carbon emissions. Key to this endeavor is rapid deployment of large-scale wind and solar farms and nuclear power stations. However, expectations that these technologies would scale broadly and easily are being called into question by cancellations of notable projects including a giant wind farm off the coast of New Jersey and a highly touted "small modular reactor" facility in Idaho. Our project will determine and quantify the key "cost drivers" behind these and other green-power cancellations and evaluate which are likely to be permanent and which will be transitory. We will also assess the extent to which robust carbon-emissions pricing could return these green projects to profitability by strengthening their revenue stream and helping the developers rout the "NIMBYs" who are hamstringing project schedules and eroding their bottom lines.

Purpose

Economic imbalances: "The Red and the Black: Countering Green-Power Cost Creep with Carbon Pricing" will determine why ambitious clean-energy projects are succumbing to cost pressures while the fossil fuel supplies they would supplant are largely unscathed.


Destroying or impairing the free-market system: Notwithstanding the profusion of subsidies available under the 2022 Inflation Reduction Act, the U.S. economic system is failing to reward clean-energy projects to the full extent of their carbon reductions. Our project will determine the extent of that failing and the magnitude of carbon reductions that could be achieved by solving it.


Market-based solutions: As noted, monetizing the value of clean-energy projects' carbon reductions will improve their profitability. But by how much? No one has quantified that impact. "The Red and the Black: Countering Green-Power Cost Creep with Carbon Pricing" will develop a methodology for doing so and will estimate its magnitude.

Scope

Our project, "The Red and the Black: Countering Green-Power Cost Creep with Carbon Pricing," will untangle the cost increases that are putting ambitious carbon-free energy ventures into the red and triggering their cancellation, and will assess the capacity of carbon pricing to put them back in the black.


These causes -- higher interest rates, schedule delays, supply-chain issues, materials inflation, along with technology-specific problems like too-rapid scale-up (wind farms) or regulatory bottlenecks (new reactor designs) -- cry out for systematic evaluation. We will determine which factors are most deleterious and likely to persist.


We will also determine the extent to which carbon pricing can improve green-energy profitability by letting green developers drive harder bargains with electricity retailers while also conferring economic benefits on local communities now being held hostage by NIMBYs.


Address
11 Hanover Square, 21st floor
New York, NY 10005
New York, NY 10005

Directions
Southeast corner of Beaver & Hanover Streets, one block south of Wall Street, lower Manhattan (Financial District)

Phone
(212) 260-5237
(212) 260-5237

Contacts


Charles Komanoff
Co-director

Posted 11/28/2023 5:55 PM
Updated   1/16/2024 10:31 AM

  • Nonprofit

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