Browsing by Author "Fellows, G. Kent"

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Open Access
Carbon Pricing Costs for Households and the Progressivity of Revenue Recycling Options in Canada
(University of Toronto Press Inc. (UTPress), 2023-03-01) Winter, Jennifer; Dolter, Brett; Fellows, G. Kent
Canadian federal policy mandates a floor price on greenhouse gas emissions in all provinces and territories or an equivalent quantity instrument. Provinces that implement a system consistent with the federal benchmark maintain control of revenues. Provinces that do not implement a carbon price are subject to a federally administered pricing system, with revenue recycling via lump-sum household rebates. Using rich synthetic household microdata, we quantify the direct and indirect tax burden on households and carbon pricing revenues in each province. We also calculate carbon pricing revenue available to each province. Using these data, we measure the net cost to households and the overall progressivity of carbon pricing under four revenue recycling scenarios: (a) a means-tested sales tax credit increase, (b) a lump-sum dividend, (c) a sales tax rate reduction, and (d) a personal income tax basic exemption increase. We find that the carbon tax is generally progressive even without revenue recycling, the sales tax credit and lump-sum rebate are progressive, the sales tax rate reduction is mostly regressive, and the income tax change is regressive. We also show that Canada’s output based pricing system for large emitters helps to mitigate indirect carbon pricing costs with a notable effect in reducing household costs.
Open Access
The cost effectiveness of new reservoir hydroelectricity: British Columbia’s Site C project
(Elsevier, 2022-09) Dolter, Brett; Fellows, G. Kent; Rivers, Nicholas
Large-scale, reservoir hydroelectric facilities can play an important role in decarbonizing the electricity sector. However, new hydroelectric facilities are costly, and several recent projects in Canada have been subject to cost over-runs. In this paper, we develop a methodology for evaluating the cost-effectiveness of new reservoir hydroelectric projects. We apply this methodology to a case study of the Site C hydroelectric project currently under construction in British Columbia, Canada. Our approach makes use of a purpose-built linear programming capacity expansion and dispatch model, resolved at an hourly frequency and incorporating detailed treatment of balancing area requirements, available wind and solar resources, watershed constraints on hydroelectric potential, and endogenous electricity trade. Our simulations reveal that the value of the Site C project is unlikely to exceed its total cost, and only exceeds the avoidable cost of project cancellation in scenarios where BC and Alberta build additional inter-provincial transmission capacity and aim for 100% decarbonization of their electricity systems. Site C provides a cautionary tale for policymakers and planners pursuing large hydro-electric projects. Potential cost over-runs can render large hydroelectric projects uneconomic relative to alternatives. The decision to complete the Site C project is only justified by its high sunk costs.