The Political Economy of Energy
Paper Session
Friday, Jan. 5, 2024 10:15 AM - 12:15 PM (CST)
- Chair: Nancy Qian, Northwestern University
Is Air Pollution Regulation Too Stringent?
Abstract
This paper describes a framework to estimate the marginal cost of air pollution regulation, then applies it to assess whether a large set of existing U.S. air pollution regulations have marginal costs exceeding their marginal benefits. The approach utilizes an important yet under-explored provision of the Clean Air Act requiring new or expanding plants to pay incumbents in the same or neighboring counties to reduce their pollution emissions. These ``offset'' regulations create several hundred decentralized, local markets for pollution that differ by pollutant and location. We show that these markets cover much of the US, experience search frictions, have rising prices, and reflect local regulatory stringency. We provide empirical and theoretical evidence consistent with the idea that offset transaction prices are close to the marginal cost of pollution abatement, and we compare offset prices to estimates of the marginal benefit of abatement from leading air quality models. We find that for most regions and pollutants, the marginal benefits of pollution abatement exceed mean offset prices more than ten-fold. In at least one market, however, estimated marginal benefits are below offset prices.The Political Economic Determinants of Nuclear Power: Evidence from Chernobyl
Abstract
This paper investigates the political-economic determinants of nuclear energy investment usingthe Chernobyl accident as a natural experiment. We document several facts. First, Chernobyl
reduced worldwide growth in the number of nuclear power plants. Second, the reduction is driven
by increased construction delays in democracies and results in the prolonged use of older and less
safe plants. Third, the nuclear growth slowdown in democracies is more pronounced in the presence
of large fossil fuel reserves. Finally, nuclear plant capacity reduces coal-fired power plants and air
pollution. The results provide evidence that political capture by energy groups is an important
driver of the reduction in nuclear energy investment in democracies, and this is likely to undermine
efforts to increase nuclear energy safety and moderate climate change.
Discussant(s)
Jaya Wen
,
Harvard University
Shaoda Wang
,
University of Chicago
Joseph S. Shapiro
,
University of California-Berkeley
JEL Classifications
- P1 - Capitalist Economies
- P2 - Socialist and Transition Economies