November 4, 2016

Overlapping Environmental Policies and the Impact on Pollution

Time

1:40 pm - 3:00 pm

Location

1605 Tilia, Room 1103, West Village

Speaker(s)

Kevin Novan, Assistant Professor, Agricultural and Resource Economics, UC Davis

Abstract

In an effort to reduce pollution from the electricity sector, governments are heavily subsidizing production from clean, renewable energy sources. However, the subsidies for renewable electricity are not being used in isolation. Instead, it has become the norm for governments to support renewables in regions where some pollutants are already regulated. In this paper, I examine how increases in renewable generation interact with market-based environmental regulations to affect the emissions of both regulated and unregulated pollutants. Using a simple analytical model, I first demonstrate that, when combined with a cap-and- trade program, expansions in renewable generation have the potential to cause an undesirable outcome — they can increase emissions of unregulated pollutants. To explore whether this unintended increase in unregulated pollution could occur in practice, I look back at a NOx cap-and- trade program that was in place in the eastern U.S.~ from 2009 through 2014 — the EPA's Clean Air Interstate Rule. Using hourly generation and emissions data, I estimate how unregulated emissions of CO2 and SO2 would have been affected by adding new wind turbines and solar panels to the regulated region. I show that, once the interaction with the NOx cap is taken into consideration, renewable capacity additions would have offset much less CO2 than was previously thought. Moreover, I find that the renewable additions would have increased SO2 emissions.

Biographical Sketch

Kevin Novan joined the Agricultural and Resource Economics Department at UC Davis in 2012. His research interests are in the fields of energy and environmental economics, focusing primarily on questions surrounding the design and implementation of policies targeted towards the electricity sector. Recent work quantifies the impact of renewable electricity on pollution, examines the social costs and benefits of storing electricity, and evaluates the energy and pollution savings provided by residential energy efficiency investments. He holds a B.A. in economics and mathematics from Western Washington University and a Ph.D. in economics from UC San Diego.