From S&P Global:

“The power markets are not solving for, and were not designed for, the accomplishment of environmental objectives,” Travis Kavulla, director of energy and environmental policy at free market think tank R Street Institute, said at the New England Power Pool’s Summer Meeting in Newport, Rhode Island, on June 26.

“Likewise, markets have allowed more economic, cleaner natural gas to replace less efficient and less clean coal. But there is no objective function to the markets to solve for the variable of carbon-dioxide emissions,” Kavulla said.

And while the markets could be adapted to value environmental externalities, Kavulla argued, political will is lacking.

The New York Independent System Operator, a single-state ISO where both legislative chambers and the governor’s mansion are controlled by Democrats, is working to price carbon emissions into its wholesale markets. If successful, the NYISO’s approach — or aspects of it — could be applied in other markets.

However, in the absence of such market-based approaches to effectuate policy, “we may end up on a path where legislators simply write laws that decree the construction of particular power projects by particular parties,” Kavulla said, which would be an “earmarking policy” even worse than “integrated resource planning.”