A new report by the Regulatory Assistance Project (RAP) identifies regulatory strategies to cut carbon emissions and reduce coal consumption. Low-Carbon Power Sector Regulation: International Experience from Brazil, Europe, and the United States surveys power sector regulation and highlights five best practice areas for impacting emissions from the sector. These include designing an effective regulatory model, utilizing energy efficiency as a power sector resource, managing variable renewables, evolving generator dispatch, and integrating carbon-pricing policies with other emissions-reduction policies. The paper emphasizes certain issues that should be of particular interest to a Chinese audience—particularly power system operations—but also offers a broad overview of regulation in the three regions.

“The most important characteristic we found across a variety of power sector models is the need for careful attention to how regulatory decisions can help decrease emissions,” said Max Dupuy, senior associate at RAP. “The focus should be on taking advantage of international best practices to design a regulatory and market model suited to China’s needs, that meets China’s long-term emissions and environmental goals at lowest-cost and least-risk.”

The paper recognizes China’s progress in advancing energy efficiency and renewable energy, while also recommending opportunities to increase the impact of these resources. The authors suggest that integrating China’s long-standing commitment to energy conservation into a well-designed power sector plan that considers all costs and benefits of various resource options, including energy efficiency, will highlight further opportunities to displace coal plants and reduce emissions.

Integrating renewable energy into the grid is a challenge that each country examined is still struggling to overcome. Drawing from international experience, the authors include a series of steps that China could take to integrate greater amounts of renewable resources into its power grid.

“China’s ‘equal shares’ approach to generator dispatch is unusual,” added Mr. Dupuy. “Moving toward a dispatch model based on variable generation costs will also help reduce power sector emissions.”

Low Carbon Power Sector Regulation: International Experience from Brazil, Europe, and the United States is a consultant’s report commissioned by the World Bank and financed by the Energy Sector Management Assistance Program (ESMAP). The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. They are entirely those of the Regulatory Assistance Project.