In this paper we argue that an oil price change is likely to have greater impact on real GNP in an environment where oil prices have been stable, than in an environment where oil price movement has been frequent and erratic. We find that positive normalized shocks have a powerful effect on growth while negative normalized shocks do not. State public utility commissions in the United States have implemented incentive regulations to promote the operating efficiency of nuclear power plants. This paper surveys these incentive programs, focusing on the performance-based pricing approach. Our findings suggest that the performance-based price should be set between the electric utility's avoided cost and the marginal cost of generating electricity at the nuclear power plant.
Options range from renewable technologies to carbon taxes and transportation sector initiatives.
We find that setting electricity prices to reflect long-run marginal cost has a significant beneficial impact on the environment, and the expected benefits predicted on theoretical grounds are confirmed by the empirical results. Pricing reform also has a much broader impact than physical approaches to demand side management, although several options such as compact fluorescent lighting appear to have great potential. Options to reduce GHG emissions are limited as Sri Lanka lacks natural gas, and nuclear power is not practical until the system reaches a much larger size. Building the few remaining large hydro facilities would significantly reduce GHG emissions, but these would require costly resettlement programs. Given the inevitability for fossil fuel baseload generation, both clean coal technologies such as pressurized fluidized bed combustion, as well as steam cycle residual oil fueled plants merit consideration as alternatives to the conventional pulverized coal-fired plants currently being considered.