Association Webinars: US Carbon Pricing and Coal Power Plant Productivity



  

Do producers innovate in response to a carbon price? Innovation importantly brings down the cost of compliance with environmental policy over time. Economic theory suggests firms will innovate to reduce the cost of carbon-intensive inputs when they face a carbon price. However, I find that coal power plants in the US Regional Greenhouse Gas Initiative (RGGI) have become significantly less efficient since the beginning of the cap-and-trade program, reflecting a deficit of innovative improvements to plants expected by academic and industry sources. Using econometric decomposition and harnessing the data on the US electricity sector in a new way to craft important operational variables, I find that RGGI coal plant owners accepted the efficiency penalty that mechanically comes with operating at low output rates. This is novel microeconomic evidence that firms may substitute non-innovative for innovative means of reducing costs when faced with an input price shock. I also provide evidence that RGGI coal plant owners have not made investments in efficiency-improving capital as expected; analytical results suggest this may be due to plant owners foreseeing a decline in production. Regarding policy, I find a 4.56% carbon emissions rebound effect among RGGI plants, as their decline in efficiency constrained their ability to reduce emissions through output. This implies a needed adjustment to emissions reductions expected from a given carbon tax. Results also indicate that climate policy focused on efficiency improvements from coal-fired power plants may impose a particularly costly form of emissions abatement on the electricity sector.

Seats are limited, sign up to ensure a spot!

Speaker:

Megan Bailey is an economist, and her research is focused on climate change policy, energy markets, and innovation. Dr. Bailey joined the Haskayne School of Business and the School of Public Policy at the University of Calgary in 2020 after completing her Ph.D. from Harvard University. She is the recipient of a US National Science Foundation Graduate Research Fellowship. Dr. Bailey also holds a M.A. in International Relations from California State University, Fresno.


Register in advance for this webinar: (Registration Link)

After registering, you will receive a confirmation email containing information about joining the webinar.

To pre-install the Zoom software used to view this webinar, please install the software at this link: https://zoom.us/client/latest/ZoomInstaller.exe

If you are not already a member of IAEE, we welcome you to learn the many benefits of members by visiting: https://www.iaee.org/en/membership/benefits.aspx.


Register →

Event Date: Jan 6, 2021

Event Time: 10:00 AM Eastern Time

Topic: US Carbon Pricing and Coal Power Plant Productivity

Price: FREE

Speaker: Megan Bailey


More Webinars →

 

© 2024 International Association for Energy Economics | Privacy Policy | Return Policy