Project Incentive Design Toward an Integrated Sector in a Carbon Constrained World
The Intergovernmental Panel on Climate Change (IPCC) has concluded that average global temperatures are expected to increase by 2F to 11.5F by 2100, highlighting the emergency and importance of adopting greenhouse gas (GHG) emission regulations. Within the US, transportation sector produces approximately 33% of total U.S. emissions, and the electricity generation contributes 40%. What is more, these two sectors are even more closely relatedly today by the progress of electrification of vehicles. It is an unarguabe fact that promising technologies do exist in the two sectors to achieve a certain GHG emission reduction target, thanks to the development of green vehicles such as electric vehicles and green energies such as nuclear and renewable. However, the availability of a carbon-neutral technology says little about its economics and the probability of this technology diffusing on its own into today's markets. Therefore, the first question our research wants to answer are, for automakers and electricity generators respectively, what is the most cost efficient new capacity investment strategy to satisfy the emission regulation through a long planning horizon, say up to 2050. And, what follows is that, in order to implement this minimum cost investment plan, what are the most effective instruments and incentives to guarantee this plan operationally feasible in terms of macro economics and marketing. The second layer question of our research is to find out what is the minimum cost if we allow the transportation sector and electricity sector to operate under a common GHG emission constraint (instead of requesting them to act independently with separate emission constraints), explore possible cooperation between the two sectors arising in the optimal solution, and study how economically beneficial this cooperation is. This research is of great commercial interest, since when working together, both sectors can avoid unnecessary spending on urgent investment in new capacity and new technologies, while achieving the same emission reduction target as a whole society, and implementing such joint strategies maximizes social welfare.
$40,000 grant from the Ford Foundation
Published in IEEE Transactions on Energy Conversion, 2014
Published in Technometrics, 2015
Published in IEEE Transactions on Automations Science and Engineering, 2016
$325,000 grant from the National Science Foundation