Analyzing Impacts of Climate Change on Energy Market using Bottom-up and Top-down Models
2020
Author(s): Zhang, Duan | Advisor(s): Chen, Yihsu | Abstract: With the growing concern about the effects of climate change, various policies have been proposed or implemented in the United States to limit its greenhouse gas emissions. For example, in 2015, the Obama government has proposed Clean Power Plan (CPP), aiming to reduce carbon pollution by shifting the electric power sector toward cleaner energy sources. This is coupled with increased attention by research communities, government, and the power sector on exploring resilience options and adaptation measures to climate change impacts. In order to implement cost-effective resilience options, it is important for the regional planner and policymakers to understand not only the local economic impacts of climate-change-induced hazards, but also the spillover effect to other sectors and regions.The thesis focuses on two main themes. The first theme involves examining two types of emission trading programs considered under the CPP: a mass-based cap-and-trade (CaT) program and a performance-based trading program. While a mass-based program sets a total emission cap for a region, a performance-based program under the CPP relies on trading the emission rate credits (ERCs), which represent an equivalent MWh of energy generated from or saved by zero associated CO2 emissions, to reduce emission costs. The proposed research examines the theoretical properties of the performance-based policy and compares its market performance to a traditional mass-based CaT program using bottom-up simulation models that account for transmission and technology heterogeneity. The second theme entails developing a top-down computable general equilibrium (CGE) model with bilateral commodity trade flow to investigate the regional economic impacts of climate-change-induced extreme weather events, such as sea-level rise, with a focus on natural gas sector in the northern California region.
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