The basic features of an efficient short-term wholesale market design do not need to change to accommodate a significantly larger share of zero marginal cost intermittent renewable energy from wind and solar resources. A large share of controllable zero marginal cost generation does not create any additional market design challenge relative to a market with a large share of controllable positive marginal cost generation. In both instances, generation unit owners must recover their fixed costs from sales of energy, ancillary services, and long-term resource adequacy products.

In response to the important benefits forests provide, there is a growing effort to reforest the world. Past policies and current commitments indicate that many of these forests will be plantations. Since plantations often replace more carbon-rich or biodiverse land covers, this approach to forest expansion may undermine objectives of increased carbon storage and biodiversity. We use an econometric land use change model to simulate the carbon and biodiversity impacts of subsidy driven plantation expansion in Chile between 1986 and 2011. A comparison of simulations with and without subsidies indicates that payments for afforestation increased tree cover through expansion of plantations of exotic species but decreased the area of native forests. Chile’s forest subsidies probably decreased biodiversity without increasing total carbon stored in aboveground biomass. Carefully enforced safeguards on the conversion of natural ecosystems can improve both the carbon and biodiversity outcomes of reforestation policies.

Recent dramatic and deadly increases in global wildfire activity have increased attention on the causes of wildfires, their consequences, and how risk from fire might be mitigated. Here we bring together data on the changing risk and societal burden of wildfire in the US. We estimate that nearly 50 million homes are currently in the wildland-urban interface in the US, a number increasing by 1 million houses every 3 years. Using a statistical model that links satellite-based fire and smoke data to pollution monitoring stations, we estimate that wildfires have accounted for up to 25% of PM_2.5 in recent years across the US, and up to half in some Western regions. We then show that ambient exposure to smoke-based PM_2.5 does not follow traditional socioeconomic exposure gradients. Finally, using stylized scenarios, we show that fuels management interventions have large but uncertain impacts on health outcomes, and that future health impacts from climate-change-induced wildfire smoke could approach projected overall increases in temperature-related mortality from climate change. We draw lessons for research and policy.

We report on an economic experiment that compares outcomes in electricity markets subject to carbon-tax and cap-and-trade policies. Under conditions of uncertainty, price-based and quantity-based policy instruments cannot be truly equivalent, so we compared three matched carbon-tax/cap-and-trade pairs with equivalent emissions targets, mean emissions, and mean carbon prices, respectively. Across these matched pairs, the cap-and-trade mechanism produced much higher wholesale electricity prices (38.5% to 52.6% higher) and lower total electricity production (2.5% to 4.0% lower) than the \equivalent" carbon tax, without any lower carbon emissions. Market participants who forecast a lower price of carbon in the cap-and-trade games ran their units more than those who forecast a higher price of carbon, which caused emissions from the dirtiest generating units (Coal and Gas Peakers) to be signicantly higher (15.2% to 33.0%) than in the carbon tax games. These merit order \mistakes" in the cap-and-trade games suggest an important advantage of the carbon tax as policy: namely, that the cost of carbon can treated by rms as a known input to production.

Any mention of climate policy was noticeably missing from President Obama's recent state of the union address. This is unfortunate because every day of inaction on climate policy by the United States government is another day that American consumers must pay substantially higher prices for products derived from crude oil, such as gasoline and diesel fuel. Moreover, a substantial fraction of the revenues from these higher prices goes to governments of countries that the US would prefer not to support.