Economics ETDs

Publication Date

Fall 12-17-2018

Abstract

This dissertation contains three distinct empirical chapters in applied energy and environmental economics. Each chapter focuses on a unique set of research questions, methods, and data. The unifying motivation therein concerns the development of renewable or alternative low-carbon energy sources as a policy response to the challenges of climate change mitigation, local and regional environmental quality issues, and energy security concerns. Economic and environmental evaluation of the energy policies coupled with understanding energy use patterns is of paramount importance. Together, the empirical chapters focus on demand, supply, and policy aspects of energy markets in the United States (US).

First, Chapter 2 evaluates the impacts of the Renewable Portfolio Standard (RPS) on renewable electricity capacity. RPS is a state-level policy that requires electricity suppliers to include a certain proportion (or quantity) of renewable electricity in their total electricity sales over a specified time period. The chapter employs a fixed-effects panel regression model and a spatial econometric methodology using panel data spanning 47 states between 1990 and 2014. Thus, and importantly, the analyses incorporate salient spatial and temporal heterogeneities of RPS (i.e., varying RPS features across states and years). The results illustrate that the RPS has driven a 194 MW increase in overall renewable capacity (representing more than one third of the average electricity capacity developed between 1990 and 2014 in 47 states). The results also suggest that the impacts of RPS, while exhibiting spatial dependencies, vary depending on the renewable energy source. RPS positively impacts renewable electricity capacity, the share of renewable electricity capacity in total electricity capacity, as well as the shares of solar and wind capacity in total electricity capacity (the impacts become 1.3 times larger for solar and about two thirds fold larger for wind with reference to their average counterparts). However, the impacts of RPS are not statistically significant for biomass or geothermal resources. With the consistent patterns of the impacts of RPS across modeling scenarios, RPS adoption or lack thereof in different states, policy age, provision of renewable energy certificates (REC), and annually mandated obligations for renewable electricity in the overall electricity mix are among the critical factors which determine the efficacy of RPS. The positive impacts of RPS on solar and wind capacity are consistent with the relatively emphasized focus of RPS legislation across states which serves to prioritize these two renewable energy sources. Notwithstanding limitations in the available data (and the possibility that improvements in this respect over time would enable a more nuanced and higher-resolution investigation), the current findings provide guidance on how RPS is performing. The significantly positive impact of flexible REC provisions (allowing REC to be generated in any state), coupled with spatial spillover effects indicate the interstate marketing possibilities of renewable energy (and energy credits). The results (with respect to the significant contribution of different RPS attributes) suggest that the critical role the state level policies can make to meet national level goals about climate change and energy mix. More specifically, the results imply that scaling up RPS proliferation across the states (guided by policy treatment effects, coupled with spatial dependencies of both the RPS and renewable electricity) and specifying RPS mandates by renewable energy sources (guided by significantly positive impacts for solar and wind), at least up to the point where renewable energy sector obtains efficiency gains (economies of scales and allocative efficiency) or to the situation where better alternative to the RPS becomes available (e.g., market based carbon pricing policy, which can be least-cost carbon mitigation mechanism), can play an important role in generating transformative advances in renewable electricity sector.

Next, Chapter 3 reports on an economic and environmental assessment to determine the optimal manure management strategy for large dairies. More specifically, a cost-benefit analysis and a life cycle assessment are carried out based on publicly available secondary data, motivated by the fact that improper management of dairy manure can result in adverse environmental and public health impacts. The results illustrate the comparatively high economic and environmental benefits associated with an integrated framework of bioenergy production as an alternative approach to manure management. Analyses are conducted under several scenarios (exploring the potential market for nutrients and greenhouse gases), all of which confirm that co-producing bioenergy in this context is more profitable than traditional on-site management approaches. The results imply that the livestock sector can maximize economic and environmental gains by integrating nutrient recovery and bioenergy production in alternative manure management considerations (rather than simply considering dairy manure as a waste disposal problem).

The final empirical investigation, Chapter 4, explores the temporal and spatial variation of sectoral natural gas demand in the US. A fixed-effects panel regression model is configured to analyze monthly data between 2001 and 2015. The results demonstrate the inelastic price responses at state, regional, and national levels across natural gas consumption sectors in the US, reflecting the importance of natural gas in contemporary energy systems. The implication is that price based policies, such as energy efficiency standards or energy saving targets in building codes, in the natural gas sector may not be effective (but, since the magnitudes of price elasticity vary across economic sectors, states and regions, efficacy of such price based policies will vary across these different dimensions). On the other hand, the inelastic price responses may reveal resiliency (i.e., stable market) of natural gas market to the changes in natural gas prices that may be driven by policy changes in other segment of the energy market (e.g., renewable energy supporting policies may increase natural gas prices). The resulting implication can be that natural gas that holds critical significance in the contemporary energy system from both environmental and economic perspectives can also serve as a transition fuel. The statistically significant weather impacts in terms of heating degree days (HDD) and cooling degree days (CDD) revealed in this analysis are consistent with the extant energy demand literature, where higher HDD stimulates greater consumption of natural gas in the residential sector while CDD appears to increase natural gas consumption for electricity production. The impacts with regard to weather attributes (HDD and CDD) also help to design informed policies to achieve various energy management goals (e.g., attaining energy efficiency or promoting alternative clean energy by quantifying the repercussions of changes in consumers’ responses to natural gas demand across climatic seasons in the energy market stability).

Collectively, these empirical chapters offer novel and important implications concerning energy market structures (supply and demand aspects), the environmental and economic assessment for renewable energy production potentials, and the policy responses, which have been or should be designed, to ensure the multi-dimensional sustainability of complex energy systems.

Degree Name

Economics

Level of Degree

Doctoral

Department Name

Department of Economics

First Committee Member (Chair)

Janie Chermak

Second Committee Member

Jingjing Wang

Third Committee Member

Jennifer Thacher

Fourth Committee Member

Bruce Thompson

Language

English

Keywords

Energy Market, Renewable Energy, Natural Gas, Water Resources, Food Resources, Environmental Policies

Document Type

Dissertation

Download

Share

COinS