Comments by Christos Makridis Subscribe

On Climate Change Policy and the Importance of Getting it Right in California

Excellent contributions as always Dr. Stavins -- thank you for taking the time to write this assessment of the current state,

August 3, 2013    View Comment    

On India, Coal Imports, And Energy Security

An issue we should be aware of when examining these issues is that LCOE is not a relevant proxy for cost effectiveness when distinguishing between baseload and intermittant energies. Readers should see both Paul Joskow (MIT) and Frank Wolak (Stanford) on electricity markets, intermittancy, and pricing. The other cautionary note we should be aware of is that these industry think tank studies rarely account for changing conditions -- that is, suppose more wind energy is used, how does that change the going wage, rate of return on capital, how do households and firms adapt, etc. Unfortunately energy issues are never so simple -- if indeed wind was much less expensive than solar, it is straightforward to fathom an arbitrage opportunity, if not from domestic investors, at least by international ones.

July 31, 2013    View Comment    

On British Columbia's Carbon Tax After Five Years

Thank you for the contribution Mark!


@Bob: Arguing that the EU ETS failed to draw inferences about the theory of a permit scheme is tricky because it was not implemented according to theory. Many issues that are outside the scope of the discussion, but two relevant ones are: (1) grandfathering of permits and (2) ambiguity about price emissions levels. First, grandfathering and exemptions led to large transfers in endowments -- going all the way back to Larry Kaplow's Harvard Law Review article, grandfathering tends to be a political solution for expediency, not economic efficiency. Second, there was great uncertainty about emissions levels at early stages -- when emissions were announced to be lower than expected, the price of permits collapsed. With better monitoring -- or at least more transparency -- and firm rules, this need not happen. Unfortunately, it seems all proposed plans lack the transparency that is desired.

July 30, 2013    View Comment    

On Washington Heading for Another Round of Devastating Cuts to Energy Innovation

Thank you Matt for the contribution and raising these issues.

It is important for us all to remember that innovation is not a linear process -- R&D does not directly produce innovation, so funding R&D is not always the answer. This is an entire field of research in the economics literature -- one that is still intensely scrutinized. My caution is for us to recognize that the desire to not increase funding -- or cut it in some circumstances -- can be the prudent decision; the situation is very multifaceted an the study of economic growth is much more complicated than we tend to assume it to be.

July 24, 2013    View Comment    

On Systems-Level Thinking: Distinguishing Potential and Profitability

Appreciate the replies Willem and Michael. 

@ Willem: thank you for clarifying on the construction of the first offshore turbine. The papers that I had read on the topic stated that 1990 was the construction of the first turbine. Fortunately it is not intrinsic to the analysis, but an important fact nonetheless. Regarding your more substantive concern, I think we agree in principle -- environmental policies, like RPS, can make it profitable to pursue these sorts of projects. The fundamental problem with many of them is, what economists call, "general equilibirum" interactions. RPS and similar policies have been subject to great economic analysis; the general consensus is that they create large distortions, etc -- but this is beyond the scope of the current paper/article. The main message that I am trying to convey in the article -- and I think you agree on -- is that we need to look at these issues in terms of a system: institutions and policies (like RPS) can make certain investments fruitful. Yet, the normative implications I allude to are very complex and undoubtedly controversial -- I think it would be tough to provide evidence indicating that expansion of offshore wind would occur on a non-trivial scale given the current investment climate, lack of dynamic pricing, lack of price on clean air, lack of net metering and interconnection throughout the electricity grid, among other issues.

@ Michael: agree -- this is part of the paper I published, namely that social attitudes (whether it's from high or low income earners) can have large effects on the expansion of certain energies.

July 24, 2013    View Comment    

On Now Hiring: 210,000 People to Cut Carbon Pollution

Thank you for your article contribution and service Peter. An element that seems missing here is the full characterization of costs and benefits -- or what economists call "general equilibrium reactions". Jobs are more of a mechanism -- not an end -- the government could pay everyone currently unemployed to break windows, which would cause the demand for windows to go up to replace the ones that have been broken. Growing economics research shows that energy efficiency and certification programs can have positive effects, but they can also have negative effects that outweigh because they do not target the real externality -- unpriced carbon. Readers interested in learning more about this literature can see RFF's and references therein. 

July 23, 2013    View Comment    

On Electricity Prices Soar Past $200 per Megawatt-hour as Heat Wave Hits Eastern United States

Thank you for the contribution Jesse and would be curious to hear your remarks about the following too. The real issue is on the structure of wholesale and retail electricity markets -- no dynamic pricing (i.e. price doesn't adjust continuously throughout the day) and retail markets don't have marginal cost pricing (in contrast, the tariff pricing as you mentioned). Adding additional electricity to the grid doesn't solve the problem -- this escalates costs because it creates excess capacity when demand is low 99% the rest of the time.

Thus, it's a market design problem -- not an energy mix problem. The two overlap, but in terms of the source of the high prices, literature suggests it is the former that's the real culprit.

July 18, 2013    View Comment    

On Nobel Laureates Speak Out Against Keystone XL Pipeline

The fundamental issue is whether the authors of this letter are adding new value to the analysis of the issue. Their expertise is neither in climate science nor economics -- the two focal issues. While their contributions to society are laudable, we need to understand the reality of specialization; indeed, they have not built models and examined the results surrounding the costs/benefits of the proposed project, nor do they know the effect the project would have on marginal damages due to the so-called higher emissions. We all must be cognizant of the reality that there is no wand we can wave to reduce emissions -- if we agree on reducing emissions, natural gas, and other low(er) emissions technologies must be largely included in the mix. 

July 17, 2013    View Comment