Competitive electricity markets: Design, implementation, performance

The warming of the atmosphere and the oceans has been attributed to the release of carbon dioxide (CO2) and other greenhouse gasses (GHG) to the atmosphere. CO2 is the principal greenhouse gas, and the generation of electric power accounts for an important share of the CO2 emissions. Scientists and policy makers are calling for major reductions in CO2 emissions, and they are debating a variety of policis to achieve the reductions. The policy options include a combination of targets, regulations and financial incentives to “put a price on carbon. ” That price could come from either a carbon tax or a carbon market, but policy makers are inclined to use carbon markets. The electricity sector is expected to play a leading role in cutting emissions when nations put a price on carbon. This chapter describes the problem of global climate change and the pivotal role of the electric power industry. The description of climate change extends to the end of the century because of the long-lived effect of CO2 emissions. The description of the electricity sector concentrates on the next two decades, a period in which the electricity sector could lead the way in reducing emissions. 1