Climate Change and the Environment
Paper Session
Friday, Jan. 5, 2024 2:30 PM - 4:30 PM (CST)
- Chair: Shaun McRae, Mexico Autonomous Institute of Technology
The Benefits and Costs of Small Food Waste Tax and Implications for Climate Change Mitigation
Abstract
Given that life-cycle greenhouse gas (GHG) emissions from wasted food is comparable to that of road transport, managing excessive food demand is essential for climate change mitigation. A textbook solution is levying a corrective tax on food waste, but limited evidence exists on the benefits and costs of such a policy. By exploiting plausibly exogenous expansions in a small food waste tax—on average 6 cents per kg—in South Korea, I report three main findings. First, the tax reduces annual food waste by 20% (53kg) and grocery purchases by 5.4% (46kg), worth $172. These estimates suggest that the avoided GHG emissions is equivalent to that from 595,000 passenger vehicles. Second, building on the household production model, I investigate abatement strategies and find that households increase time spent on meal production by 7% (60 hours), valued at $240. Finally, the tax seems to affect behavior primarily through non-pecuniary channels such as information provision or imposing a moral tax.Rapid Increases in Methane Concentrations Following August 2020 Suspension of the U.S. Methane Rule
Abstract
Major climate policies may now be assessed with improved satellite instruments. In August 2020, the Trump Administration removed Obama-era federal requirements that oil and gas firms detect and repair methane leaks. We merge GIS coordinates of 1,193,575 wells, 478 natural gas processing facilities, and 1,367 compressor stations to geo-identified methane concentrations from the European TROPOMI (satellite instrument). Using a difference-in-differences design, we find a large, prompt increase in US methane emissions at oil and gas infrastructure sites following the summer 2020 rollback relative to areas without such infrastructure. Average methane concentrations increased by 5 ppb, or fully one quarter of a standard deviation. The number of high-methane emission events from the oil and gas sector more than doubled relative to the coal sector, which did not experience the rollback. Gas producers and distributors have argued they face an overriding incentive to minimize fugitive methane emissions and venting without regulation -- so as to recover and sell a valuable commercial product. The large and nimble response to federal policy we find -- together with basic microeconomic theory -- indicate otherwise and provides empirical support for policy's central role in curbing global methane concentrations.The Climate Implications of U.S. LNG Exports
Abstract
The permitting of new U.S. LNG export facilities is often framed as aiding European partners by replacing Russian natural gas but threatening climate goals. We examine the climate consequences of U.S. LNG capacity through the lens of natural gas prices. Prior to the hydraulic fracturing revolution, the Henry Hub benchmark U.S. gas price tracked oil prices, in part because of substitution between oil and gas in electricity generation. From roughly 2010-2016, with the advent of hydraulic fracturing combined with highly constrained export capacity, oil ceased to be used for substantial power generation and the Henry Hub price disconnected from oil prices. With the development of new U.S. ING export facilities starting in 2016, however, the U.S. became a net gas exporter and now exports 20% of production. These ING exports raise the possibility of U.S. natural gas prices reconnecting with world energy prices Empirically, we find evidence of three regimes - pre-fracking, fracking, and LNG exports - and that, now, U.S. gas prices have reconnected with world oil prices (oil is still used for electricity generation in Asia, and Asian gas contracts tend to be indexed to oil). Moreover, in the U.S. there is significant coal-gas substitution in power generation, and U.S. coal prices have also (sluggishly) tracked gas prices. Over the post-2016 period, cointegrating coefficients between gas and oil prices and between gas and coal prices align with these margins of substitution. From the U.S. perspective, this reconnection of LNG prices to oil prices links all domestic primary energy prices to oil prices and portends higher domestic coal and oil prices as the U.S. continues to expand ING export facilities. We estimate that these higher domestic gas and coal prices will be a major factor driving U.S. renewable generation.Discussant(s)
Ori Heffetz
,
Cornell University
Michael Price
,
University of Alabama
Benjamin Gilbert
,
Colorado School of Mines
Shaun McRae
,
Mexico Autonomous Institute of Technology
JEL Classifications
- Q5 - Environmental Economics
- Q2 - Renewable Resources and Conservation