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Decompositions and Policy Consequences of an Extraordinary Decline in
Air Pollution from Electricity Generation
Stephen P. Holland—University of North Carolina Greensboro & NBER
Erin Mansur—Dartmouth College & NBERNicholas Z. Muller—Carnegie Mellon University & NBER
Andrew J. Yates—University of North Carolina
1
Environmental benefit of an EV (TE3 2015!!)
Methods: GV v. EV Damages from AP3 Estimated EV emissions
using 2010-12 data
Mean Damages: EV: 2.50 cents per mile GV: 2.00 cents per mile
Benefit of EV Los Angeles 3.3 cent/mile Grand Forks -3.0 cnt/mle
2Electric v. Gasoline 2014 Ford Focus
The extraordinary decline
3
CO2
PM2.5
NOX
SO2
Notes: Total CEMS power plant hourly emissions in 48 states normalized to 100 in 2010.
Describing the decline in damages: by pollutant
4
Notes: Damages in billions of 2014 aggregated across all CEMS power plants using AP3 damage estimates & social cost of carbon.
Damages fall from $245 billion in 2010 to $133 billion in 2017.-- 45% decline -- Benefit of $350 per capita.
Describing the decline in damages: by fuel
5
Notes: Damages in billions of 2014 aggregated across all CEMS power plants using AP3 damage estimates & social cost of carbon.
Damages fall from $245 billion in 2010 to $133 billion in 2017.-- 45% decline -- Benefit of $350 per capita.
What does cleaner electricity imply about electrification policy?
Policy depends on marginal damages, e.g., damages from driving the EV
6 Cleaner grid →EV’s are cleaner Cleaner grid →EV’s not cleaner
Local polynomial estimates of damage functions
7
Notes: Local polynomial regressions of hourly damages (millions of 2014$) on hourly load (GW) by interconnection. Load & damage means: 339 & 21 (East); 85 & 2.2 (West); 39 & 1.8 (Texas).
East West
Texas
Estimating marginal damages
Main regression equation:
𝐷𝐷𝐷𝐷𝑚𝑚𝑡𝑡 = 𝛽𝛽𝛽𝛽𝛽𝛽𝐷𝐷𝑑𝑑𝑡𝑡 + 𝛾𝛾𝛽𝛽𝛽𝛽𝐷𝐷𝑑𝑑𝑡𝑡𝑌𝑌𝑌𝑌𝐷𝐷𝑟𝑟𝑡𝑡 + 𝛼𝛼𝑚𝑚𝑚 + 𝜖𝜖𝑡𝑡
𝛽𝛽 and 𝛾𝛾 are coefficients of interest 𝛼𝛼𝑚𝑚𝑚 is month of sample*hour fixed effect (=8*12*24 FEs) N=70,128 (=8 years * 365 days * 24 hours) Newey-West standard errors (24 hour lag)
Estimated at interconnection level Also estimate 𝛽𝛽 by year
8
Marginal damage estimates over time
9
Notes: Marginal damages measured in dollars per kWh. Lines show predicted trends from regressions on full sample. Point estimates with 95% CI are from annual regressions.
Annual Growth Rates
Margin Average
East -5.1% -9.3%
West +5.1% -2.7%
Texas +3.5% -1.3%
Annual environmental benefit of electric vehicle
10Notes: Environmental benefit is difference between damages from a gasoline and from an electric Ford Focus over 15,000 annual miles. EPRI charging profile.
2010 damages 2017 damages
National average: -$81Range: -$390 to +$781
National average: +$72Range: -$186 to +$939
Conclusion & summary
Extraordinary decline in electricity damages from 2010-17 $245 billion to $133 billion; 45% drop Mainly SO2; mainly coal
Decomposition Scale: renewables (-$25 billion) Technique: scrubbers (-$63 billion) Composition: fuel-switching
(-$60 billion) Valuation: (+$35 billion)
Implications for electrification policies EV benefits increased on average
Substantial heterogeneity remains
11