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  3. American Economic Journal: Economic Policy
  4. May 2021
  5. Emissions, Transmission, and the Environmental Value of Renewable Energy

American Economic Journal:
Economic Policy

ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)

Emissions, Transmission, and the Environmental Value of Renewable Energy

  • Harrison Fell
  • Daniel T. Kaffine
  • Kevin Novan
American Economic Journal: Economic Policy
vol. 13, no. 2, May 2021
(pp. 241–72)
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Abstract

We examine how transmission congestion alters the environmental benefits provided by renewable generation. Using hourly data from the Texas and midcontinent electricity markets, we find that relaxing transmission constraints between the wind-rich areas and the demand centers of the respective markets conservatively increases the nonmarket value of wind by 30 percent for Texas and 17 percent for midcontinent markets. Much of this increase in the nonmarket value arises from a redistribution in where air quality improvements occur—when transmission is not constrained, wind offsets much more pollution from fossil fuel units located near highly populated demand centers.

Citation

Fell, Harrison, Daniel T. Kaffine, and Kevin Novan. 2021. "Emissions, Transmission, and the Environmental Value of Renewable Energy." American Economic Journal: Economic Policy, 13 (2): 241–72. DOI: 10.1257/pol.20190258

Additional Materials

JEL Classification

  • L94 Electric Utilities
  • Q42 Alternative Energy Sources
  • Q51 Valuation of Environmental Effects
  • Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
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