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Technological Modifications in the Nitrogen Oxides Tradable Permit Program

Joshua Linn

Year: 2008
Volume: Volume 29
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No3-8
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Abstract:
Tradable permit programs allow firms greater flexibility in reducing emissions than command-and-control regulations and encourage firms to use low cost abatement options, including small-scale modifications to capital equipment. This paper shows that firms have extensively modified capital equipment in the Nitrogen Oxides Budget Trading Program, which covers power plants in the eastern United States. The empirical strategy uses geographic and temporal features of the program to estimate counterfactual emissions, finding that modifications have reduced emission rates by approximately 10-15 percent. The modifications would not have occurred under command-and-control regulation and have reduced regulatory costs.



Technology Diffusion and Environmental Regulation: The Adoption of Scrubbers by Coal-Fired Power Plants

Elaine F. Frey

Year: 2013
Volume: Volume 34
Number: Number 1
DOI: 10.5547/01956574.34.1.8
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Abstract:
Title IV of the 1990 Clean Air Act Amendments implemented a pollution permit system for sulfur dioxide (SO2) emissions that departs from state commandand-control regulations that were in place prior to and during its implementation. This paper develops a technology diffusion model, relying on rank effects or firm heterogeneity, to explain the adoption of scrubbers, a SO2 abatement technology. Using survival analysis, empirical results show that generating units regulated under Phase I of Title IV, units facing more stringent state regulations, and units with low expected installation costs are much more likely to install a scrubber. In addition, there is evidence of positive scale effects of adoption, meaning larger units are more likely to adopt because expected installation costs are lower. Tradable permit systems should give firms more flexibility in choosing abatement technologies, but results show that when command-and-control regulations overlap with a market-based system, the technology choice is restricted.



Investment in Renewables under Uncertainty: Fitting a Feed-in Scheme into ETS

Federico Boffa, Stefano Clò, and Alessio D'Amato

Year: 2016
Volume: Volume 37
Number: Bollino-Madlener Special Issue
DOI: 10.5547/01956574.37.SI2.fbof
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Abstract:
We analyze incentives to invest in renewable energy technologies induced by the overlap of two types of policies: feed-in schemes and carbon mitigation instruments. We find that results differ markedly depending on the specific types of policies in place, reflecting different impacts of uncertainty. As a result, the recent reform to the EU-ETS system that has established the Market Stability Reserve (MSR), effective in 2019, requires to appropriately fine-tune the direct RES-E support schemes. We show that this may involve moving away from feed-in tariffs towards feed-in premia. Our results suggest that the schemes currently adopted in Germany and in Italy, broadly based on feed-in premia for large generators and on feed-in tariffs for the small ones, could well fit also the post-MSR EU carbon mitigation policy. To the contrary, other countries (e.g. France and the U.K.) may have to modify their support schemes as the MSR will become operational.



Vintage Capital, Technology Adoption and Electricity Demand-Side Management

Wenbiao Cai, Hugh Grant, and Manish Pandey

Year: 2018
Volume: Volume 39
Number: Number 2
DOI: 10.5547/01956574.39.2.wcai
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Abstract:
Demand-side Management (DSM) programs by electricity utilities report substantial energy savings that often receive little support from empirical studies. We argue that this discrepancy results from an inherently static view of technology adoption by utilities when estimating future energy savings. We illustrate this through a simple model of technology adoption, in which households operate different vintages of appliances and have heterogenous forecasts about the rate of future technological progress. An "energy efficiency gap" arises when households under-estimate the true rate of technological progress. We parameterize the model using data on refrigerators and show that a DSM program that subsidizes adoption of energy-efficient refrigerators yields small energy saving that, in most cases, do not justify the cost of the subsidy.



Asymmetric Information on the Market for Energy Efficiency: Insights from the Credence Goods Literature

Bruno Lanz and Evert Reins

Year: 2021
Volume: Volume 42
Number: Number 4
DOI: 10.5547/01956574.42.4.blan
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Abstract:
Asymmetric information is an important barrier to the adoption of energy efficient technologies. In this paper, we study supply-side implications of the associated incentive structure. We build on existing evidence that, in some settings, energy efficiency owns a credence component, whereby the supply side of the market has more information about what technology is best for consumers. The literature on credence goods markets suggests that an information advantage by expert-sellers leads to market inefficiencies, including low trade volume. We start by developing a simple framework to study supply-side incentives related to the provision of energy efficient technologies. We then document inefficiencies and potential remedies by discussing linkages between an empirical literature on credence goods and that on the market for energy efficiency. Doing so, we identify implications for the design of policies promoting the adoption of energy-efficient technologies.



Coal-Biomass Co-firing within Renewable Portfolio Standards: Strategic Adoption by Heterogeneous Firms and Emissions Implications

Brayam Valqui, Mort D. Webster, Shanxia Sun, and Thomas W. Hertel

Year: 2023
Volume: Volume 44
Number: Number 5
DOI: 10.5547/01956574.44.4.bval
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Abstract:
As electricity from coal declines, co-firing coal plants with biomass has been proposed to extend coal unit life, increase production, and reduce carbon emissions. Previous studies reach conflicting conclusions on whether coal biomass co-firing would result in a net increase or decrease in carbon emissions. We explore whether biomass co-firing would decrease emissions using a novel framework that includes two critical features of electricity markets: strategic adoption decisions by firms and intertemporal constraints on power plant operations. We apply this framework to a case study based on the Midwestern U.S. electricity market and show that profit maximizing firms will retrofit mid-efficiency coal units, rather than the most or least efficient units. We demonstrate that, contrary to expectations, this strategy leads to a net increase in system-wide carbon emissions under high carbon prices because of the other generators displaced by co-firing units.



The Effects of Fuel-Efficient Cookstoves on Fuel Use, Particulate Matter, and Cooking Practices: Results from a Randomized Trial in Rural Uganda

Theresa Beltramo, Garrick Blalock, Stephen Harrell, David I. Levine, and Andrew M. Simons

Year: 2023
Volume: Volume 44
Number: Number 6
DOI: 10.5547/01956574.44.6.tbel
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Abstract:
Smoky cookfires contribute to global climate change and kill approximately four million people annually. While many studies have examined the effects of fuel-efficient cookstoves, this study does so while selling stoves at market prices. After introducing a fuel-efficient cookstove, fuelwood use and household air particulates declined by 12% and by smaller percentages after adjusting for observer-induced bias, or the Hawthorne effect. These reductions were less than laboratory predictions and fell well short of World Health Organization pollution targets. Even when introducing a second stove, most households continued to use their traditional stoves for most cooking. Future research should focus on improving the usability of fuel-efficient cookstoves and/or policies that assist consumers to shift to safer fuels like gas or electricity coupled with mechanisms to disable the existing smoky cookfire.





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