Promoting Clean Energy in the American Power Sector: A Proposal for a National Clean Energy Standard

Joseph E. Aldy, Harvard University

Abstract

The difficulty of coming to agreement on comprehensive energy and climate change legislation highlights the need for a more targeted and incremental approach. One promising intermediate step would be a technology-neutral national clean energy standard for the power sector. I propose a standard that would lower carbon dioxide emissions by as much as 60 percent relative to 2005 levels over twenty years, streamline the fragmented regulatory system, generate fiscal benefits, and finance energy innovation. Through a simple design and transparent implementation, the national clean energy standard would provide certainty about the economic returns to clean energy that would facilitate investment and lower the emission intensity of the power sector. It would also serve as an ambitious bridge to economy-wide energy and climate policy.