Planning of the electricity transmission system generally focuses on the pros and cons of providing generation close to the source of the power demand versus remote generation linked via the transmission system. Recent electricity supply problems in the western United States have renewed...

Paradoxically, owners of existing generation assets may be better off paying for carbon dioxide emission allowances than having them distributed for free. This analysis shows that it takes just 7.5% of the revenue raised under an auction to preserve the asset values of existing generators.