PJM’s new white paper weighs regional carbon pricing in wholesale markets
The paper PJM published last week is the latest in a series of analyses that seek to align competitive markets with public policies that might show a preference for cleaner generation, or seek to keep a legacy power plant online.
“A uniform footprint-wide carbon price is the most efficient and cost-effective approach because it would continue to capitalize on the economies of scale of PJM’s footprint-wide economic dispatch and the region’s resource diversity,” the grid operator said in a blog post. However, because states in the PJM footprint do not share the same perspective on carbon, the operator also believes a “coordinated carbon policy could be advanced through the PJM markets by a subregion of states prepared to adopt a common set of business rules.”
The paper examines how regional and subregional carbon pricing could be implemented within the PJM system. According to the paper, the carbon price would: apply to carbon-emitting suppliers on a per-ton basis and be reflected in offers; be revealed in wholesale market prices in the participating region or subregion; and would align with economic dispatch