December 13, 2010

Low Carbon Electricity Investment: The Limitations of Traditional Approaches and a Radical Alternative

by Tim Laing and Michael Grubb

- This working paper identifies four key difficulties with the current mainstream approach of relying on the impact of a carbon price in the present liberalised electricity market, supplemented with additional incentive mechanisms like renewable obligation certificates and feed-in tariffs. We then summarise alternate mechanisms and propose a new approach, aimed at harnessing the potential interest and capital of electricity consumers, large and small, directly in funding low carbon electricity investments, in the form of longterm ‘Green Power’ contracts that operate in a separate, differentiated contract market.

Laing, T. and M. Grubb (2010). "Low Carbon Electricity Investment: The Limitations of Traditional Approaches and a Radical Alternative." EPRG Working Paper 1032, Sept 2010.