PJM Offers Ideas on Carbon Pricing

PJM released its most recent working paper addressing carbon pricing approaches, Advancing Zero Emissions Objectives through PJM’s Energy Markets: A Review of Carbon-Pricing Frameworks.

PJM produced this working paper in order to provide more detail on how state carbon policies could be advanced through the PJM energy markets. PJM does not, however, advocate for any particular carbon policy.

PJM prefers a regional approach to carbon pricing in the energy market and this paper provides a closer look at how regional and subregional carbon pricing could be implemented within the PJM footprint.

The latest, in a series of working papers, presents PJM’s view that market design can accommodate state carbon-reduction policy initiatives and adapt to changing electric industry conditions while maintaining the benefits of competitive markets.

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.

PJM recognizes, however, that member states do not share the same perspective on carbon. Accordingly, PJM 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.