WASHINGTON (Jan. 24, 2016) – Over the past two decades, some states have transitioned their electricity markets away from the traditional regulated monopoly model and toward competitive markets in which customers are empowered to choose their electricity supplier. Those experiments have proven successful and should be considered a model for the rest of the country, according to a new policy study by R Street Electricity Policy Manager Devin Hartman.

“The rise of competitive electricity markets has had positive environmental implications and should serve as a domestic and global foundation to achieve a low-emissions future,” Hartman writes. “Markets create pathways to voluntary, low-cost emissions reductions. The competitive platform spurs innovation and facilitates transitions to breakthrough technologies far more effectively than the regulated monopoly model. These effects amplify when combined with emissions pricing, which is far more effective in competitive markets where participants have incentives to follow price signals.”

While more research into the long-term environmental impact of restructured electricity markets is warranted, the available data nonetheless points to dramatic improvements when compared to monopoly-based markets. Hartman concludes:

“The competitive electricity model has upside to usher in enormous innovation and rapid technological change with profound environmental benefits. Simultaneously achieving economic and environmental objectives provides an ideal recipe for global emissions reductions. The competitive electricity model is a key ingredient to a wealthier, healthier world.”

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