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Emerging Environmental Markets: Improving the Competitiveness of Natural Gas

Janie M. Chermak

Year: 1994
Volume: Volume15
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-5
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Current U.S. regulations focus on market approaches to reduce SO2, NOx, and CO2 pollution, allowing affected firms to choose the least-cost compliance alternative. Natural gas, a relatively benign fuel from an environmental perspective, could realize a substantial increase in demand if it is competitive. The viability of gas as an alternative has been questioned due to high forecast price and unstable supply. This paper assesses potential efficiency gains in the completion and production of natural gas wells which may lower production costs and increase recoverable reserves. Coupled with the premium that can be paid for its environmentally desirable qualities, gas can potentially be a feasible alternative. However, the window of opportunity is limited, because many industries, such as electric power generation, require decisions involving up-front capital expenditures that lock the firm into a specific compliance mechanism and fuel.

Technological Advancement and the Recovery of Natural Gas: The Value of Information

Janie M. Chermak and Robert H. Patrick

Year: 1995
Volume: Volume16
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No1-7
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Accurate information on geology, petroleum engineering, and economics is essential for firms to make efficient decisions concerning if and, if so, how to produce natural gas wells. Improved information may not only help insure that wells are economic, but may also lead to reduced costs of production and an increased physically recoverable stock of the resource. This paper empirically applies the economic theory of exhaustible resources (extended to include necessary reservoir engineering) to evaluate the benefits obtainable from using an enhanced information technology developed by the Gas Research Institute. The wells analyzed indicate significant benefits are obtainable with appropriate use of the new technology. The magnitudes of these benefits vary across reservoir characteristics.

Consumer Preferences for Solar Energy: A Choice Experiment Study

Jamal Mamkhezri, Jennifer A. Thacher, and Janie M. Chermak

Year: 2020
Volume: Volume 41
Number: Number 5
DOI: 10.5547/01956574.41.5.jmam
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Electricity generation in the United States is rapidly moving towards integrating more renewables into the system due to several factors, including cost competitiveness, consumer preferences, and state and federal policies, such as production and income tax incentives, renewable portfolio standards (RPSs), and state level subsidies for solar energy. While these policies have been researched comprehensively, in this paper we investigate consumer preference and willingness to pay toward renewable energy. Consumer preferences may impact the type of renewable energy utilized, as well as state-determined RPS requirements. We implement a choice experiment survey to gain understanding of consumer preferences and their preference heterogeneity. We conduct the survey in New Mexico, a state with RPS and great potential for renewables, particularly in solar where it ranks third in the U.S. for that potential. Focusing on the consumers of the state�s major utility, our choice experiment considers an increase in renewable energy and preference for different types of solar energy (rooftop solar and solar farm). We control for location heterogeneity (i.e., rural vs. urban), as well as exposure to solar installations. Utilizing multinomial logit and random parameter logit our results suggest respondents support an increased RPS solar requirement and they have a positive marginal willingness to pay (MWTP) for rooftop solar and smart meter installation. These values are impacted by several factors, including location and exposure to solar. We also observe a distance decay effect on respondents� MWTP for different solar plans. For regulators considering additional RPS levels, or utilities considering solar installations, the results provide improved information on consumer preferences, heterogeneity of response, and MWTP for solar energy.

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