Pathways Study: Evaluation of Pathways to a Future Grid
White Paper, April 2022
Analysis Group was retained by ISO New England (ISO-NE) to conduct a study analyzing the relative merits, as well as trade-offs, of different policy and regulatory approaches (or “pathways”) to achieving reduced greenhouse gas (GHG) emissions in New England. The study is part of ISO-NE’s broader work plan, as the operator for the New England region’s wholesale electricity markets, to assess the evolving needs of the region’s grid as the individual states pursue ambitious climate and energy goals.
The research team evaluated environmental, economic, and market impacts of four pathways to reducing GHG emissions, including a continuation of current unilateral state policies (Status Quo), a Forward Clean Energy Market, Net Carbon Pricing, and a Hybrid Approach combining carbon pricing with a forward clean energy market for new resources. The assessment builds on an analytic economic evaluation of each approach and simulates the economic and market outcomes anticipated if reducing the New England system’s carbon emissions to 80% below 1990 levels by 2040.
The simulations measure economic outcomes for each policy, including impacts on social costs, customer payments, and prices, and identified system challenges arising with certain policy approaches to decarbonization, such as frequent, large-magnitude negative prices. Other factors differentiating the approaches include regional considerations (such as the extent of coordination among the six New England states required by each pathway) and implementation issues. The Analysis Group team was led by Principal Todd Schatzki and included Vice President Christopher Llop.