Determinants of Carbon Intensity in the US Electric Power Sector: A State Level Empirical Analysis.
Abstract: The U.S. Environmental Protection Agency recently announced the Clean Power Plan, a plan to reduce carbon dioxide emissions from existing electric power plants. The proposal will require states to reduce their carbon intensity (carbon emissions per megawatt hour of generation) below fixed caps. My thesis analyzes the drivers of carbon intensity in the electric power sector using a ... read morestate-level data set from 1990-2012. I decompose the carbon intensity with a generalized Fisher index approach and the decomposition results show that recent reduction in carbon intensity mainly came from switching from coal to natural gas. The decomposition motivates the hypothesis that higher natural gas price would result in higher carbon intensity. I first construct an analytical model to show intuitively under what conditions the hypothesis holds. Second, I empirically test the hypothesis with the state level data and the empirical results support the hypothesis. I further prove that a coal tax would be more effective at reducing the carbon intensity in the power sector than a carbon tax. The results implicitly support the design of the EPA's Clean Power Plan.
Thesis (M.S.)--Tufts University, 2015.
Submitted to the Dept. of Economics.
Advisor: Gilbert Metcalf.
Committee: Jeffrey Zabel.
Keyword: Economics.read less