(E3 ) Working Papers Series
E3 Working Paper WP-027 Abstract
WP-027: Kevin Novan, "Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided" (November 2011) Full Paper
This paper estimates the variation over time in the quantity of pollution avoided by renewable electricity. Taking advantage of the natural experiment presented by changes in hourly wind speeds, I identify the amount of CO2, NOx, and SO2 reduced by electricity supplied from wind turbines in the Texas electricity market. The results provide clear evidence that renewable generation in the region offsets significant amounts of each of the pollutants examined. However, because different conventional generators are on the margin at different levels of demand, I find the amount of pollution avoided by a unit of renewable electricity varies substantially with the quantity of electricity demanded. As a result, renewable generators in separate locations, producing electricity at varying points in time, will provide very different reductions in pollution. By failing to account for these differences in the emissions avoided, policies equally subsidizing each unit of renewable electricity will not ensure efficient investment decisions are made.