Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided
American Economic Journal: Economic Policy
vol. 7,
no. 3, August 2015
(pp. 291-326)
Abstract
Exploiting variation in the hourly production from wind turbines, this paper quantifies the heterogeneity in the marginal impact of renewable electricity on pollution. The results reveal that output from competing renewable capacity additions—e.g., wind turbines versus solar panels—provide different marginal external benefits. This finding suggests that, if governments continue to subsidize renewables, an emphasis should be placed on designing policies that internalize the heterogeneous benefits. More generally, my results highlight that, by incorrectly assuming renewable electricity is a homogenous good, we will understate the relative efficiency of the first-best pollution prices. (JEL L94, L98, Q42, Q48, Q51, Q53, Q58)Citation
Novan, Kevin. 2015. "Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided." American Economic Journal: Economic Policy, 7 (3): 291-326. DOI: 10.1257/pol.20130268Additional Materials
JEL Classification
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- Q42 Alternative Energy Sources
- Q48 Energy: Government Policy
- Q51 Valuation of Environmental Effects
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q58 Environmental Economics: Government Policy
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