Research Commentary: Calls for an Electricity Market Reform in the EU: Don’t Shoot the Messenger

The ongoing energy crisis has severely hit energy consumers in Europe. Although it is a gas crisis, the existing electricity […]

Accelerating Electric Vehicle Charging Investments: A Real Options Approach to Policy Design

Replacing conventional cars and trucks with battery electric vehicles requires a rapid expansion of fast-charging infrastructure. However, private sector charging […]

Research Commentary: Economy-Wide Decarbonization Requires Fixing Retail Electricity Rates

Absent fundamental reform of retail electricity rates, economy-wide electrification will be substantially more difficult than necessary. In this Research Commentary, […]

The Macroeconomic Impact of Europe’s Carbon Taxes

We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on […]

How Much Are Electric Vehicles Driven? Depends on the EV

We use the 2017 National Household Travel Survey to investigate whether all-electric vehicles (EVs) are driven less than their counterfactual […]

Temperature and Cognitive Performance

I estimate the effect of temperature on cognitive performance in online brain training games. As this setting represents everyday cognitive […]

Natural Gas in the U.S. Southeast Power Sector under Deep Decarbonization: Modeling Technology and Policy Sensitivities

Concerns over climate change, along with falling costs of renewable energy technologies, have led to increased scrutiny over the role […]

Carbon Abatement Costs for Hydrogen Fuels in Hard-to-Abate Transport Sectors and Potential Climate Policy Mixes

Deep decarbonization targets require emission reductions in “hard-to-abate” sectors that have until recently received little attention, including freight trucking, shipping, […]

Five Myths About Carbon Pricing

While carbon pricing, in general, and carbon taxes, in particular, are popular with economists, they are subject to considerable misunderstanding […]

Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-Use and Critical Peak Pricing

Currently, U.S. residential and small commercial electricity consumers typically pay a constant price per kWh consumed that accounts for most […]

Rational Rationing: A Price-Control Mechanism for a Persistent Supply Shock

We propose a simple price-control mechanism correcting for a missing short-run response of demand to prices. It effectively implements an […]

The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption

We analyze the labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium […]

Long-term Equilibrium in Electricity Markets with Renewables and Energy Storage Only

In this paper, we study the optimal generation mix in power systems where only two technologies are available: variable renewable […]

Population, Productivity, and Sustainable Consumption

How does the sustainable level of consumption depend on productivity growth and the size and growth rate of the population? […]

Sustainable Hydrogen Fuels versus Fossil Fuels for Trucking, Shipping and Aviation: A Dynamic Cost Model

Potential decarbonization of the global trucking, shipping and aviation sectors by 2050 could be achieved by replacing fossil fuels with […]

When “Low-Hanging Fruit” Are Beyond Reach: Management Practices and Firm Energy Efficiency

We study whether structured management practices affect the uptake and impact of industrial energy efficiency measures, which are widely considered […]

Deregulation, Market Power, and Prices: Evidence from the Electricity Sector

When deciding whether to introduce market competition in a regulated industry, a regulator faces an important tradeoff. Market-based prices can […]

Electricity Sector Policy Reforms to Support Efficient Decarbonization

The final version of this paper will appear as Chapter 8 in the forthcoming MIT Energy Initiative study, The Future […]

Coping with National Fuel Subsidies in Regional Power Markets: Application to the Gulf Cooperation Council Interconnector

Transnational power market design and development are impacted by economic, social and political factors that must inevitably be addressed. One […]

Technology Neutral vs. Technology Specific Procurement

An imperfectly-informed regulator needs to procure multiple units of some good (e.g., green energy, market liquidity, pollution reduction, land conservation) […]

Power Price Crisis in the EU: Unveiling Current Policy Responses and Proposing a Balanced Regulatory Remedy

For several months, electricity prices in the European Union (EU) have been at sustained and unprecedentedly high levels. This situation […]

Properties of Deeply Decarbonized Electric Power Systems with Storage

The final version of this paper will appear as Chapter 6 in the forthcoming MIT Energy Initiative study, The Future […]

Electricity Pricing Problems in Future Renewables-Dominant Power Systems

Constraints on electric power system carbon emissions will make optimal increased reliance on variable renewable energy (VRE, mainly wind and […]

Colluding Against Environmental Regulation

We study collusion among firms under imperfectly monitored environmental regulation. We develop a model in which firms increase variable profits […]

Why Do Firms Issue Green Bonds?

Green bonds allow firms to commit to climate-friendly projects. Equity investors react positively to their announcement. Based on prior empirical […]

Large Scale Wind Power Investment’s Impact on Wholesale Electricity Markets

Renewable subsidies are an influential device for wind power investment. These policies help lower emissions by offsetting high-emitting electricity generation […]

Global Externalities, Local Policies, and Firm Selection

How to fight global problems with local tools? When only firms know what externality-producing activities can be relocated, policies shape […]

The Value of Nuclear Microreactors in Providing Heat and Electricity to Alaskan Communities

We evaluated the system cost of providing electricity and heat to serve the load profiles of two types of Alaskan […]

Advancing International Cooperation under the Paris Agreement: Issues and Options for Article 6

Article 6 of the Paris Agreement allows Parties to cooperate by transferring mitigation outcomes, promising significant reductions in the cost […]

Technology Adoption and Early Network Infrastructure Provision in the Market for Electric Vehicles

We document non-linear stock effects in the relationship linking emerging technology adoption and network infrastructure increments. We exploit 2010-2017 data […]

Creating a Smarter U.S. Electricity Grid

This paper focuses on efforts to build what policymakers call the “smart grid,” involving 1) improved remote monitoring and automatic […]

Reducing Petroleum Consumption from Transportation

The United States consumed more petroleum-based liquid fuel per capita than any other OECD- high-income country- 30 percent more than […]

Improving Regulatory Performance: Lessons from the United Kingdom

Testimony of Michael Greenstone before the Senate Budget Committee Task Force on Government Performance November 16, 2011 I appreciate the […]

An Approximate Dynamic Programming Framework for Modeling Global Climate

Analyses of global climate policy as a sequential decision under uncertainty have been severely restricted by dimensionality and computational burdens. […]

Fuel Prices and New Vehicle Fuel Economy in Europe

This paper evaluates the effect of fuel prices on new vehicle fuel economy in the eight largest European markets. The […]

Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies

Instead of efficiently pricing greenhouse gases, policy makers have favored measures that implicitly or explicitly subsidize low carbon fuels. We […]

Environmental Regulations, Air and Water Pollution, and Infant Mortality in India

Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a […]

Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health

Since the Clean Air Act Amendments of 1990 (CAAA), atmospheric concentration of local pollutants has fallen drastically. A natural question […]

The Importance of Research and Development (R&D) for U.S. Competitiveness and a Clean Energy Future

I am grateful for the opportunity to speak today about two interrelated challenges that our country faces. The first is […]

Liability and Financial Responsibility for Oil Spills under the Oil Pollution Act of 1990 and Related Statutes

Testimony of Michael Greenstone before the U.S. House Committee on Transportation and Infrastructure June 9, 2010 I appreciate the opportunity […]

Evaluating Policies to Increase the Generation of Electricity from Renewable Energy

Focusing on the U.S. and the E.U., this essay seeks to advance four main propositions. First, the incidence of the […]

The Dynamic Effects of Hurricanes in the US: The Role of Non-Disaster Transfer Payments

We know little about the dynamic economic impacts of natural disasters. I examine the effect of hurricanes on US counties’ […]

Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation

The United States Government recently concluded a year-long process to develop a range of values representing the monetized damages associated […]

Superfund Cleanups and Infant Health

We are the first to examine the effect of Superfund cleanups on infant health rather than focusing on proximity to […]

Subglobal Climate Agreements and Energy-Intensive Activities: Is there a Carbon Haven for Copper?

Subglobal climate policies induce changes in international competitiveness and favor a relocation of carbon-emitting activities. We argue that many energy-intensive […]

Stocks & Shocks: A Clarification in the Debate Over Price vs. Quantity Controls for Greenhouse Gases

We construct two simple examples that help to clarify the role of a key assumption in the analysis of price […]

Review of Support Schemes for Renewable Energy Sources in South America

This article reviews the current experiences implemented to date in the South American region to promote non-conventional renewable energy sources. […]

Local and Seasonal Effects in the U.S. of Global Climate Change

Though the facts of global climate change are beyond doubt, there has been relatively limited information about its local consequences. […]

CO2 Abatement from Renewable Energy Injections in the German Electricity

The overlapping impact of the Emission Trading System (ETS) and renewable energy (RE) deployment targets creates a classic case of […]

Paying Too Much for Energy? The True Costs of Our Energy Choices

Energy consumption is critical to economic growth and quality of life. America’s energy system, however, is malfunctioning. The status quo […]

The Future of Nuclear Power After Fukushima

This paper analyzes the impact of the Fukushima accident on the future of nuclear power around the world. We begin […]

Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden

France, Germany, and Sweden link vehicle taxes to the carbon dioxide (CO2) emissions rates of passenger vehicles. Based on new […]

The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: […]

Do Housing Prices Reflect Environmental Health Risks? Evidence from More than 1600 Toxic Plant Openings and Closings

A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. […]

Hit or Miss: Regulating Derivative Markets to Reduce Hedging Costs at Non-Financial Companies

Derivative markets are an important tool enabling non-financial companies to reduce their risk and manage their financing. Effective regulation of […]

Market-Based Emissions Regulation and Industry Dynamics

We assess the long-run dynamic implications of market-based regulation of carbon dioxide emissions in the US Portland cement industry. We […]

The Cost of Abating CO2 Emissions by Renewable Energy Incentives in Germany

Incentives for the development of renewable energy have increasingly become an instrument of climate policy, that is, as a means […]

Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships

Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this […]

Mapping and Measuring the Channels of Oil Price Exposure in the Economy and the Role of Oil Derivatives in Reshaping Them

This paper provides a framework for understanding how the trade in oil derivatives relates to the physical production and use […]

Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India

In many regulated markets, private, third-party auditors are chosen and paid by the firms that they audit, potentially creating a […]

Explaining the Adoption of Diesel Fuel Passenger Cars in Europe

Compared with gasoline engines, diesel fuel engines significantly reduce fuel consumption and greenhouse gas emissions from passenger vehicles, but they […]

Risk Sharing in CO2 Delivery Contracts for the CCS-EOR Value Chain

A key reason for poor performance in large capital projects is the weak incentives facing the involved entities to deliver […]

Early Nuclear Retirements in Deregulated U.S. Markets: Causes, Consequences and Policy Options

Electricity prices have fallen significantly since 2008, putting commercial nuclear reactors in the United States under substantial financial pressure. In […]

Joint Allocation of Climate Control Mechanisms is the Cheapest Way to Reduce Global Climate Damage

Coupling the modes of action of four different climate control mechanisms: emission reduction, CO2 removal, adaptation, and geoengineering can greatly […]

Policies for Electrifying the Light-Duty Vehicle Fleet in the United States

The decarbonization of the light-duty vehicle (LDV) fleet in the United States is an important policy priority for the coming […]

Intermittent versus Dispatchable Power Sources: An Integrated Competitive Assessment

The cost and revenue earnings potential of alternative power generation sources has shifted considerably in recent years. Here we introduce […]

Water for a Warming Climate: A Feasibility Study of Repurposing Diablo Canyon Nuclear Power Plant for Desalination

We consider the techno-economic feasibility of constructing a large-scale reverse osmosis desalination plant at the Diablo Canyon Nuclear Power Plant […]

Challenges and Opportunities for Decarbonizing Power Systems in the US Midcontinent

As a central element of its climate policy agenda, the Biden Administration has declared a goal to decarbonize the national […]

A Domestic Content Rule for Electric Vehicle Lithium-Ion Batteries Will Protect U.S. Jobs

The International Energy Agency projects on the basis of national government expressed intentions, that global electric vehicle, EV, deployments are […]

Facilitating Transmission Expansion to Support Efficient Decarbonization of the Electricity Sector

Many governments, electric utilities, and large electricity consumers have committed to deep decarbonization of the electricity sector by 2050 or […]

From Hierarchies to Markets and Partially Back Again in Electricity: Responding to Deep Decarbonization Commitments and Security of Supply Criteria

Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization […]

Energy Conversion and Storage: The Value of Reversible Power-to-Gas Systems

Power-to-Gas technology has recently experienced lower acquisition costs and lower conversion efficiency losses. At the same time, wholesale power markets […]

Policy Options to Enable an Equitable Energy Transition

As the United States undergoes an unprecedented shift away from carbon-intensive energy sources and towards a clean energy future, federal […]

Are “Complementary Policies” Substitutes? Evidence from R&D Subsidies in the UK

Governments often subsidize private R&D using both direct subsidies and tax incentives. In this paper, I develop a framework for […]

Economics of Grid-Scale Energy Storage in Wholesale Electricity Markets

The transition to a low-carbon electricity system is likely to require grid-scale energy storage to smooth the variability and intermittency […]

Resilient Decarbonization for the United States: Lessons for Electric Systems from a Decade of Extreme Weather

The past decade has seen an unprecedented surge of climate change-driven extreme weather events that have wrought over $800 billion […]

Grid Impacts of Highway Electric Vehicle Charging and the Role for Mitigation via Energy Storage

Highway fast-charging (HFC) stations for electric vehicles (EVs) are necessary to address range anxiety concerns and thus to support economy-wide […]

Learning from Supply Shocks in the Energy Market: Evidence from Local and Global Impacts of the Shale Revolution

In this paper, we carry out three studies of the local and global impacts of supply shocks in energy markets, […]

Energy Storage Investment and Operation in Efficient Electric Power Systems

We consider welfare-optimal investment in and operation of electric power systems with constant returns to scale in multiple available generation […]

A Machine Learning Approach to Evaluating Renewable Energy Technology: An Alternative LACE Study on Solar Photo-Voltaic (PV)

Currently, renewable technologies are often evaluated using the Levelized cost of electricity (LCOE), which is a measure of building and […]

Trade-offs in Climate Policy: Combining Low-Carbon Standards with Modest Carbon Pricing

To design climate policy decision makers must choose from a variety of policy options such as carbon pricing and low-carbon […]

Going Beyond Default Intensities in an EU Carbon Border Adjustment Mechanism

As part of its Green Deal, the European Union is currently preparing a “Carbon Border Adjustment Mechanism” (CBAM). A CBAM […]

Distributional Effects of Net Metering Policies and Residential Solar Plus Behind-the-meter Storage Adoption

Net metering schemes (NEM), typically implemented to incentivize investment on distributed energy resources (DER), could be regressive, given that DER […]

The Roosevelt Project: A New Deal for Employment, Energy and Environment

Advocates for addressing climate change point to the urgency of accelerating a low-carbon energy transition and the benefits that can […]

Assessing the Role of Public Policy in Industrial Transitions: How Distinct Regional Contexts Inform Comprehensive Planning

Major industrial transitions in the United States led to highly divergent community outcomes. As the nation transitions to a deeply […]

Social Impacts of Energy Transition

What happens to people and places as communities transition from one form of energy production and consumption to another? How […]

Distributed Effects of Climate Policy: A Machine Learning Approach

We employ machine learning techniques to estimate household carbon footprints (HCFs) for the average household in each Census tract—geographic areas […]

Building the Energy Infrastructure Necessary for Deep Decarbonization throughout the United States

The world must rapidly shift to clean energy sources in order to avoid causing additional, catastrophic damage to the climate. […]

Public Attitudes on Energy and the Climate

Government actions to counteract climate change must take into account how Americans view the climate crisis and what they believe […]

Just Institutions for Deep Decarbonization? Essential Lessons from 20th Century Regional Economic and Industrial Transitions in the United States

Deep decarbonization of existing economies may still avert the worst of catastrophic global climatic disruption. As political discourse in the […]

Energy Workforce Development in the 21st Century

Solutions to climate change will require the mass deployment of new energy technologies and infrastructure. Two fundamental questions emerge from […]

Energy and Manufacturing in the United States

The Energy sector is critical to the economic vitality of the United States, but has been undergoing significant change in […]

Fostering Innovative Growth in Regions Exposed to Low Carbon Transition

Sources of innovative growth have the potential to mitigate the localized adverse impacts of a low-carbon energy transition. Transitions themselves […]

Quantifying the Distributional Impacts of Rooftop Solar PV Adoption Under Net Energy Metering

We show that residential rooftop solar photovoltaics (PV) adoption under typical electricity tariffs that inefficiently recover residual costs through volumetric […]

State Ownership and Technology Adoption: The Case of Electric Utilities and Renewable Energy

Technological change in industries that are characterized by large technical systems often occurs incrementally along given technological trajectories. Given pressing […]

The Short-run and Long-run Effects of COVID-19 on Energy and the Environment

In this commentary, we explore how the short-run effects of Covid-19 in reducing CO2 and local air pollutant emissions can […]

Competitive Energy Storage and the Duck Curve

Power systems with high penetrations of solar generation need to replace solar output when it falls rapidly in the late […]

Evolving Bidding Formats and Pricing Schemes in US and Europe Day-Ahead Electricity Markets

The ability of power system participants to trade in short-term power markets is not only limited by grid constraints, but […]

A Multi-control Climate Policy Process for a Designated Decision Maker

Persistent greenhouse gas (GHG) emissions threaten global climate goals and have prompted consideration of climate controls supplementary to emissions mitigation. […]

Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market

This paper studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998-2011, I […]

What We Know and Don’t Know About Climate Change, and Implications for Policy

There is a lot we know about climate change, but there is also a lot we don’t know. Even if […]

What Does and Does Not Correlate with COVID-19 Death Rates

We correlate county-level COVID-19 death rates with key variables using both linear regression and negative binomial mixed models, although we […]

Electrifying Transportation: Issues and Opportunities

In this chapter of the forthcoming Handbook on the Economics of Electricity, we examine the global implications of electrifying the […]

The Value of Pumped Hydro Storage for Deep Decarbonization of the Spanish Grid

This paper addresses the role of pumped hydro storage (PHS) to decarbonization of the electricity sector using Spain’s power system […]

Welfare Costs of Catastrophes: Lost Consumption and Lost Lives

Most of the literature on the economics of catastrophes assumes that such events cause a reduction in the stream of […]

Optimality Conditions and Cost Recovery in Electricity Markets with Variable Renewable Energy and Energy Storage

We formulate generation capacity portfolio planning in the power grid as a least-cost optimization problem and derive analytical expressions for […]

Climate Policy Without a Price Signal: Evidence on the Implicit Carbon Price of Energy Efficiency in Buildings

Based on data for a portfolio of 548 multi-unit buildings observed over 16 years, we quantify the impacts of more […]

Two-Way Trade in Green Electrons: Deep Decarbonization of the Northeastern U.S. and the Role of Canadian Hydropower

Meeting climate policy targets in the U.S. Northeast will likely require the nearly complete decarbonization of electricity generation. To that […]

Designing Effective Auctions for Renewable Energy Support

Governments use procurement auctions for renewable energy support to stimulate investment in renewable energy. The main challenge in auction design […]

Using Machine Learning to Target Treatment: The Case of Household Energy Use

We use causal forests to evaluate the heterogeneous treatment effects (TEs) of repeated behavioral nudges towards household energy conservation. The […]

Social Comparison and Energy Conservation in a Collective Action Context: A Field Experiment

This field experiment quantifies the impact of social norm information on the demand for indoor temperature. Based on high-frequency data […]

Machine Learning for Solar Accessibility: Implications for Low-Income Solar Expansion and Profitability

The solar industry in the United States typically uses a credit score such as the FICO score as an indicator […]

Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data

We use novel microdata on on-road fuel consumption and prices paid for fuel in Japan to estimate short-run elasticities of […]

Strengths and Weaknesses of Traditional Arrangements for Electricity Supply

This essay provides a broad-brush comparison of performance under traditional arrangements for electricity supply with those that emerged after the […]

Investigating the Necessity of Demand Characterization and Stimulation for Geospatial Electrification Planning in Developing Countries

Despite substantial progress in recent years, the global community is projected to fall short in its goal to achieve universal […]

Crackdowns in Hierarchies: Evidence from China’s Environmental Inspections

We study how state-led crackdowns under conditions of urgency effect firm behavior. By linking the timing of centralized dispatch of […]

Estimating the Costs and Benefits of Fuel-Economy Standards

Fuel-economy standards for new vehicles are a primary policy instrument in many countries to reduce the carbon footprint of the […]

Providing the Spark: Impact of Financial Incentives on Battery Electric Vehicle Adoption

To overcome adoption barriers and promote battery electric vehicles (BEVs) as an energy efficient consumer transportation option, a number of […]

Diary of a Wimpy Carbon Tax: Carbon Taxes as Federal Climate Policy

In this short note, I use MIT’s Emissions Prediction and Policy Analysis (EPPA) Model to calculate the carbon tax required […]

Spatial and Temporal Variation in the Value of Solar Power across United States Electricity Markets

The cost of utility-scale photovoltaics (PV) has declined rapidly over the past decade. Yet increased renewable electricity generation, decreased natural […]

Decentralized Economic Dispatch for Radial Electric Distribution Systems

Electricity power systems, typically a very slow-moving and traditional industry, is in a state of flux as technological innovations, such […]

On the Efficiency of Competitive Energy Storage

When energy storage is employed to facilitate large-scale integration of intermittent renewable electricity generation, do competitive bulk power markets continue […]

Optimal Commodity Taxation with a Non-Renewable Resource

We obtain a formula for how non-renewable resources should be taxed when governments need to collect commodity tax revenues: This […]

Generational Trends in Vehicle Ownership and Use: Are Millennials Any Different?

Anecdotes that Millennials fundamentally differ from prior generations are numerous in the popular press. One claim is that Millennials, happy […]

Shared Capacity and Levelized Cost with Application to Power-to-Gas Technology

Ambiguity in calculating unit cost continues to spur debate on how to account for operating assets in managerial decisions, especially […]

Competition for Electric Transmission Projects in the U.S.: FERC Order 1000

Historically, high voltage electric transmission facilities in the U.S. have been owned and operated primarily by incumbent utilities subject to […]

Fuel-switching and Deep Decarbonization

Fuel-switching is inevitable to achieve deep decarbonization. Humanity has used approximately two-thirds of the carbon budget compatible with the goal […]

Machine Learning from Schools about Energy Efficiency

In the United States, consumers invest billions of dollars annually in energy efficiency, often on the assumption that these investments […]

The Efficiency and Distributional Effects of Alternative Residential Electricity Rate Designs

Electricity tariffs typically charge residential users a volumetric rate that covers the bulk of energy, transmission, and distribution costs. The […]

Challenges for Wholesale Electricity Markets with Intermittent Renewable Generation at Scale: The U.S. Experience

The supply of intermittent wind and solar generation with zero marginal operating cost is increasingly rapidly in the U.S. These […]

The Carbon Footprint of Bitcoin

Blockchain began with Bitcoin, which was the first successful attempt to validate transactions via a decentralized data protocol. Participation in […]

Governing Cooperative Approaches Under the Paris Agreement

Parties to the Paris Agreement can engage in voluntary cooperation and use internationally transferred mitigation outcomes towards their national climate […]

The Climate and Economic Rationale for Investment in Life Extension of Spanish Nuclear Power Plants

Spain’s seven operating nuclear plants currently provide more than 20% of its electricity. Each of these began operation in the […]

Dynamic Competition and Arbitrage in Electricity Markets: The Role of Financial Players

I study the role of purely financial players in electricity markets, where they trade alongside physical buyers and sellers. Using […]

Energy Efficiency, Information, and the Acceptability of Rent Increases: A Multiple Price List Experiment with Tenants

This paper studies the role of imperfect information and attentional biases in the context of energy efficiency investments in rented […]

Does the U.S. Export Global Warming? Coal Trade and the Shale Gas Boom

We examine the effect of the U.S. Shale Gas Boom on global trade and consumption of coal and CO2 emissions. […]

Fair, Equitable, and Efficient Tariffs in the Presence of Distributed Energy Resources

Distributed energy resources (DERs) hold the potential to deliver substantial benefits to the power system. However, under traditional tariff schemes, […]

Coordinating Separate Markets for Externalities

We show that inefficiencies from having separate markets to correct an environmental externality are significantly mitigated when firms participate in […]

Ownership and Collusive Exit: Theory and a Case of Nuclear Phase-out

In a declining market each firm hopes others will exit first. Collusive cross-ownership removes this war of attrition: it achieves […]

Evaluating the Energy Efficiency Gap & Measuring Savings from Fault Detection Diagnostics

According to the International Energy Agency, energy efficiency programs make up 72% of global greenhouse gas abatement strategies. However, there […]

Resource Adequacy with Increasing Shares of Wind and Solar Power: A Comparison of European and U.S. Electricity Market Designs

We raise the question if improvements to current energy-only markets are sufficient to maintain resource adequacy in electricity markets or […]

Restructuring Revisited: Competition and Coordination in Electricity Distribution Systems

This paper addresses the implications of the emergence of distributed energy resources (DERs) for industry structure in the electric power […]

Sector Reforms and Institutional Corruption: Evidence from Electricity Industry in Sub-Saharan Africa

We analyse the impact of corruption and two key aspects of electricity sector reforms, such as the creation of independent […]

The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes (under revision)

UK Electricity Market Reform and the Energy Transition: Emerging Lessons

The UK was widely seen as one of the world’s leaders on electricity deregulation in the early 1990s. Though the […]

Subsidizing Fuel Efficient Cars: Evidence from China’s Automobile Industry

We examine the response of vehicle purchase behavior to China’s largest national subsidy program for fuel efficient vehicles during 2010 […]

The Use of Regression Statistics to Analyze Imperfect Pricing Policies

Corrective taxes can completely solve a variety of market failures, but actual policies are commonly forced to deviate from the […]

What’s Killing Nuclear Power in US Electricity Markets? Drivers of Wholesale Price Declines at Nuclear Generators in the PJM Interconnection

Electricity market prices across organized wholesale electricity markets in the United States have declined significantly in recent years, prompting several […]

Learning, Adaptation, and Climate Uncertainty: Evidence from Indian Agriculture

The profitability of many agricultural decisions depends on farmers’ abilities to predict the weather. Since climate change implies (possibly unknown) […]

Finding Itself in the Post-Paris World: Russia in the New Global Energy Landscape

The Russian budget relies heavily on exports of fossil fuels, which are the major source of greenhouse gas (GHG) emissions. […]

Linking Heterogeneous Climate Policies (Consistent with the Paris Agreement)

The Paris Agreement has achieved one of two key necessary conditions for ultimate success—a broad base of participation among the […]

Vintage-specific Driving Restrictions

Local air pollution problems have led authorities in many cities around the world to impose limits on car use, increasingly […]

The Light and the Heat: Productivity Co-benefits of Energy-saving Technology

Measurement of the full costs and benefits of energy-saving technologies is often difficult, confounding adoption decisions. We study consequences of […]

Cost Pass-Through to Higher Ethanol Blends at the Pump: Evidence from Minnesota Gas Station Data

We examine the pass-through of wholesale prices to retail prices in the market for E85, which contains 51%–83% ethanol, and […]

TSO/DSO Coordination in a Context of Distributed Energy Resource Penetration

With respect to electrical grids and power systems there is a trend towards a greater penetration and subsequent utilization of […]

Output-based Allocations in Pollution Markets With Uncertainty and Self-Selection

We study pollution permit markets in which a fraction of permits are allocated to firms based on their output. Output-based […]

Using Output-based Allocations to Manage Volatility and Leakage in Pollution Markets

Output-based allocations (OBAs) are typically used in emission trading systems (ETS) with a fixed cap to mitigate leakage in sectors […]

Attribute Substitution in Household Vehicle Portfolios

Household preferences for goods with a bundle of attributes may have complex substitution patterns when one attribute is changed. For […]

More Gas, Less Coal, and Less CO2? Unilateral CO2 Reduction Policy with More than One Carbon Energy Source

We examine an open economy’s strategy to reduce its carbon emissions by replacing its consumption of coal (very carbon intensive) […]

Black Carbon Problems in Transportation: Technological Solutions and Governmental Policy Solutions

The adverse effects of black carbon (BC) emissions from diverse sources are significant in human and economic terms. BC emissions […]

The Behavioral Effect of Pigovian Regulation: Evidence from a Field Experiment

Pigovian regulation provides monetary penalties/rewards to incentivize prosocial behavior, and may thereby trigger behavioral effects beyond a more standard response […]

Modeling Unit Commitment in Political Context: Case of China’s Partially Restructured Electricity Sector

Restructuring an electricity sector entails a complex realignment of political and economic institutions, which may both delay and distort the […]

Are Consumers Poorly-Informed about Fuel Economy? Evidence from Two Experiments

It has long been argued that people are poorly-informed about and inattentive to fuel economy when buying cars, and that […]

Tropical Forests, Tipping Points, and the Social Cost of Deforestation

Recent work has suggested that tropical forest and savanna represent alternative stable states, which are subject to drastic switches at […]

When Do States Disrupt Industries? Electric Cars in Germany and the United States

The literature on the developmental state suggests that state structure determines the ability of governments to drive technological change. This […]

A Green Bargain? The Impact of an Energy Saving Program on Productivity Growth in China’s Iron and Steel Industry

The impact of environmental regulation on firm productivity has been long been debated, however, mainly for western economies and with […]

Anticipation and Environmental Regulation

When agents expect a regulation to change the relative price of new equipment, they may shift purchases forward to avoid […]

Limits to Arbitrage in Electricity Markets: A Case Study of MISO

As in most commodities markets, deregulated electricity markets allow the participation of purely financial traders to enhance informational and productive […]

Wind Capacity Investments: Inefficient Drivers and Long-Term Impacts

A pure energy-only market has been shown, under certain conditions, to create the optimal incentives for market entry and exit. […]

Estimating The Future Supply of Shale Oil: A Bakken Case Study

We propose a new way to estimate the remaining volume of recoverable shale oil resources in the U.S. Our method […]

Are Fuel Economy Standards Regressive?

Despite widespread agreement that a carbon tax would be more efficient, many countries use fuel economy standards to reduce transportation-related […]

Lower Oil Prices and the U.S. Economy: Is This Time Different?

We explore the effect on U.S. real GDP growth of the sharp and sustained decline in the global price of […]

Socialism for Red States in the Electric Utility Industry

TVA and the other federal electric utilities were created under Democratic administrations, and their service territories were initially bluer than […]

Carbon Market Stabilisation Measures: Implications for Linking

The persistently low allowance prices in the EU emissions trading scheme (EU ETS)—oscillating between €5/tCO2 and €17/tCO2 since 2008/9—has reignited […]

Tight Oil Development Economics: Benchmarks, Breakeven Points, and Inelasticities

When comparing oil and gas projects – their relative attractiveness, robustness, and contribution to markets – various dollar per barrel […]

A Theory of NGO Activism

Now more than ever, activist NGOs oppose industrial projects/practices that have nevertheless been approved by public regulators. These NGOs are […]

Running Randomized Field Experiments for Energy Efficiency Programs: A Practitioner’s Guide

Researchers and professional evaluators are increasingly turning to randomized field experiments to evaluate energy efficiency programs and policies. This article […]

Multilateral Linking of Emissions Trading Systems

All things being equal, integration of emissions trading systems though linking increases their economic efficiency. With several greenhouse gas emissions […]

Energy Scenarios: The Value and Limits of Scenario Analysis

A need for a low-carbon world has added a new challenging dimension for the long-term energy scenarios development. In addition […]

Absolute vs. Intensity-based Caps for Carbon Emissions Target Setting: An Obstacle to Linking the EU ETS to a Chinese National ETS?

Linking the European Union Emissions Trading System (EU ETS) to the Chinese national ETS promises considerable economic and political benefits. […]

Electricity Services in a More Distributed Energy System

The integration of significant volumes of intermittent renewable generation and distributed energy resources in electric power systems is forcing a […]

OPEC vs US shale: Analyzing the Shift to a Market-share Strategy

In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an […]

The Local Economic and Welfare Consequences of Hydraulic Fracturing

Exploiting geological variation within shale deposits and timing in the initiation of hydraulic fracturing, this paper finds that allowing fracing […]

Will We Ever Stop Using Fossil Fuels?

Scientists believe significant climate change is unavoidable without a drastic reduction in the emissions of greenhouse gases from the combustion […]

The Impact of Uncertainty on the Need and Design of Capacity Remuneration Mechanisms in Low-Carbon Power Systems

The case for or against capacity remuneration mechanisms (CRMs) is often made in a simple framework that takes the structure […]

The Value of Aggregators in Electricity Systems

Distributed energy resources (“DERs”) are being adopted throughout the world. These technologies, if properly integrated, have the potential to not […]

Lessons Learned from Three Decades of Experience with Cap-and-Trade

Thirty years ago, the notion of a government allocating tradable rights to emit pollution was controversial. Many environmental advocates felt […]

A Global Carbon Market?

This paper explores the prospects for a global carbon market as the centrepiece of any serious attempt to reach the […]

The Geoeconomics of Russian-EU Gas Trade: Drawing Lessons from the South Stream Pipeline Project

Energy trade has developed into one of the most contentious and divisive issues between Russia and EU in the post-Cold […]

Financing a National Transmission Grid: What Are the Issues?

Gilbert E. Metcalf, October 2010 The United States requires a substantial investment in transmission capacity over the next several decades. […]

Fat Tails, Thin Tails, and Climate Change Policy

Robert S. Pindyck, September 2010 Climate policy is complicated by the considerable compounded uncertainties over the costs and benefits of […]

Electricity Network Tariff Architectures: A Comparison of Four OECD Countries

Vivek Sakhrani and John E. Parsons, July 2010 The study is motivated by the question “what is the optimal tariff […]

Taxation and the Extraction of Exhaustible Resources: Evidence From California Oil Production

Nirupama S. Rao, April 2010 Rapid increases in oil prices in 2008 led some to call for special taxes on […]

Uncertainty and Energy Saving Investments

Matti Liski and Pauli Murto, March 2010 Energy costs are notoriously uncertain but what is the effect of this on […]

Speculation without Oil Stockpiling as a Signature: A Dynamic Perspective

Axel Pierru and Denis Babusiaux, April 2010 According to the standard analysis of commodity prices, stockpiling is a necessary signature […]

Modeling the Impact of Warming in Climate Change Economics

Robert S. Pindyck, January 2010 Any economic analysis of climate change policy requires some model that describes the impact of […]

Natural Gas Prices and Coal Displacement: Evidence from Electricity Markets

We examine the environmental impact of the post-2005 natural gas glut in the United States due to the shale gas […]

How do Carbon Emissions Respond to Business-Cycle Shocks?

Carbon dioxide emissions are highly correlated with cyclical fluctuations in the U.S. economy; they increase during booms and fall during […]

The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard

The U.S. Renewable Fuel Standard (RFS) requires blending increasing quantities of biofuels into the U.S. surface vehicle fuel supply. In […]

Progress and Problems in Reforming the Swaps Marketplace

US derivative markets, including commodity derivatives used in industries like energy, are undergoing dramatic reform following the financial crisis. This […]

The Simple Economics of Asymmetric Cost Pass-Through

In response to cost changes, prices often rise more strongly or quickly than they fall. This phenomenon has attracted attention […]

Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don’t Increase Household Driving

A major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy, rather than increasing fuel taxes, […]

Competition and Externalities in Green Technology Adoption

In this paper, we study the effects of competition among multiple suppliers who sell green technology products, such as electric […]

Consumer Subsidies with a Strategic Supplier: Commitment vs. Flexibility

Governments use consumer incentives to promote green technologies (e.g., solar panels and electric vehicles). Our goal in this paper is […]

The Use and Misuse of Models for Climate Policy

In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as […]

Limit Pricing and the (In)Effectiveness of the Carbon Tax

The conventional analysis of policy-induced changes in resource extraction is inconsistent with the actual way OPEC is exerting its market […]

Cash for Corollas: When Stimulus Reduces Spending

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate […]

Soft Cooperation in the Shadow of Distributional Conflict? A Model-Based Assessment of the Two-Level Game between International Climate Change Negotiations and Domestic Politics

In climate negotiations, negotiators frequently reject soft forms of cooperation that require no hard commitments and at best simple coordination. […]

Financial Arbitrage and Efficient Dispatch in Wholesale Electricity Markets

Virtual bidding is a type of transaction introduced into wholesale electricity markets to improve competition and pricing. This paper analyzes […]

The Performance of U.S. Wind and Solar Generators: An Update

Using data on hourly outputs and spot prices for a sample 25 wind and nine solar generating plants covering all […]

Strategic Policy Choice in State-Level Regulation: The EPA’s Clean Power Plan

Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if […]

A Framework for Redesigning Distribution Network Use of System Charges Under High Penetration of Distributed Energy Resources: New Principles for New Problems

The growing potential for widespread integration of distributed energy resources (DER) presents the electric power sector with significant changes to […]

Why is Spot Carbon so Cheap and Future Carbon so Dear? The Term Structure of Carbon Prices

This study examines carbon spot and futures price relationships and the dynamics of the carbon term structure in the European […]

The Remuneration Challenge: New Solutions for the Regulation of Electricity Distribution Utilities Under High Penetrations of Distributed Energy Resources and Smart Grid Technologies

Ongoing changes in the delivery of electricity services and the use and management of electricity distribution systems—including the proliferation of […]

Modeling Intermittent Renewable Energy: Can We Trust Top-Down Equilibrium Approaches?

Economy-wide top-down equilibrium (TD) models have traditionally proved to be valuable tools for assessing energy and climate policies. New modeling […]

Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards

Many countries are tightening passenger vehicle fuel economy standards. In assessing the welfare effects of standards, the literature has not […]

Melting-pots and Salad Bowls: The Current Debate on Electricity Market Design for RES Integration

This paper discusses a series of issues regarding the economic integration of intermittent renewables into European electricity markets. This debate […]

Investment Model for Renewable Electricity Systems (IMRES): an Electricity Generation Capacity Expansion Formulation with Unit Commitment Constraints

This paper describes the formulation of IMRES: an electricity generation capacity expansion model with unit commitment constraints in which decisions […]

The Performance of U.S. Wind and Solar Generating Plants

Government subsidies have driven rapid growth in U.S. wind and solar generation. Using data on hourly outputs and prices for […]

Climate Change Policy: What do the Models Tell Us?

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of […]

The Simple Economics of Commodity Price Speculation

The price of crude oil in the U.S. had never exceeded $40 per barrel until mid-2004. By 2006 it reached […]

The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation

A basic tenet of economics posits that when consumers or firms don’t face the true social cost of their actions, […]

Adapting to Climate Change: The Remarkable Decline in the U.S. Temperature-Mortality Relationship over the 20th Century

Adaptation is the only strategy that is guaranteed to be part of the world’s climate strategy. Using the most comprehensive […]

The Origin of US Transportation Policy: Was There Ever Support for Gasoline Taxes?

From 1864 to 1972, the real price of oil fell by, on average, over one percent per year. This trend […]

Did “Cash for Clunkers” Deliver? The Effects of the Car Allowance Rebate System

In this paper we analyze whether the 2009 “Cash for Clunkers” program was indeed, as U.S. Transportation Secretary Ray LaHood […]

The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than […]

Risk and Return in Environmental Economics

I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a policy to reduce carbon […]

The Climate Policy Dilemma

Climate policy poses a dilemma for environmental economists. The economic argument for stringent GHG abatement is far from clear. There […]

Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves

It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease […]

Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions

Willingness to pay for air quality is a function of health and the costly defensive investments that contribute to health, […]

Ethanol Production and Gasoline Prices: A Spurious Correlation

Ethanol made from corn comprises 10% of US gasoline, up from 3% in 2003. This dramatic increase was spurred by […]

Margins, Liquidity and the Cost of Hedging

Recent financial reforms, such as the Dodd-Frank Act in the U.S. and the European Market Infrastructure Regulation, encourage greater use […]

Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation

Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable […]

Russia’s Natural Gas Export Potential up to 2050

Recent increases in natural gas reserve estimates and advances in shale gas technology make natural gas a fuel with good […]

Regulatory Design for RES-E Support Mechanisms: Learning Curves, Market Structure, and Burden-Sharing

Drawing from relevant experiences in power systems around the world, this paper offers a critical review of existing policy support […]

Effects of the Uncertainty about Global Economic Recovery on Energy Transition and CO2 Price

This paper examines the impact that uncertainty over economic growth may have on global energy transition and CO2 prices. We […]

Capacity Factor Risk At Nuclear Power Plants

Yangbo Du and John E. Parsons, November 2010 We develop a model of the dynamic structure of capacity factor risk. […]

Gas Balancing Rules Must Take into account the Trade-off between Offering Pipeline Transport and Pipeline Flexibility in Liberalized Gas Markets

Nico Keyaerts, Michelle Hallack, Jean-Michel Glachant and William D’haeseleer, September 2010 This paper analyses the value and cost of line-pack […]

Modelling the Effects of Nuclear Fuel Reservoir Operation in a Competitive Electricity Market

Maria Lykidi, Jean-Michel Glachant and Pascal Gourdel, July 2010 In many countries, the electricity systems are quitting the vertically integrated […]

Risk and Responsibility Sharing in Nuclear Spent Fuel Management

Guillaume De Roo, June 2010 With the Nuclear Waste Policy Act of 1982, the responsibility of American utilities in the […]

Why and How the European Union Can Get a (Near To) Carbon-Free Energy System in 2050?

Christopher Jones and Jean-Michel Glachant, March 2010 Reducing the European Union GHG emissions by at least 80% by 2050 will […]

Cap-and-Trade Properties under Different Scheme Designs

Georg Grüll and Luca Taschini, November 2009 This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. […]

A Comparison of Reduced-Form Permit Price Models and their Empirical Performances

Georg Grüll and Luca Taschini, September 2009 Equilibrium models have been proposed in literature with the aim of describing the […]

Nuclear Fuel Recycling – the Value of the Separated Transuranics and the Levelized Cost of Electricity

Guillaume De Roo and John E. Parsons, September 2009 We analyze the levelized cost of electricity (LCOE) for three different […]

Comparison of the Evolution of Energy Intensity in Spain and in the EU15. Why is Spain Different?

Maria Mendiluce, Ignacio Perez-Arriaga and Carlos Ocana, August 2009 Energy intensity in Spain has increased since 1990, while the opposite […]

A Comprehensive Approach for Computation and Implementation of Efficient Electricity Transmission Network Charges

Luis Olmos and Ignacio J. Perez-Arriaga, July 2009 This paper presents a comprehensive design of electricity transmission charges that are […]

Regulatory Instruments for Deployment of Clean Energy Technologies

Ignacio J. Pérez-Arriaga, July 2009 Answering to the formidable challenge of climate change calls for a quick transition to a […]

Update on the Cost of Nuclear Power

Yangbo Du and John E. Parsons, May 2009 We update the cost of nuclear power as calculated in the MIT […]

Public Attitudes Toward America’s Energy Options – Report of the 2007 MIT Energy Survey

Stephen Ansolabehere, March 2007 The prospects of global warming and potential shortages of oil have brought energy back to the […]

An Institutional Frame to Compare Alternative Market Designs in EU Electricity Balancing

Jean Michel Glachant and Marcelo Saguan, January 2007 The so-called “electricity wholesale market” is, in fact, a sequence of several […]

The Future of Nuclear Power in the United States: Economic and Regulatory Challenges

Paul L. Joskow, December 2006 This paper examines the economic and regulatory challenges that must be faced by potential investors […]

Infrastructure Investments and Resource Adequacy in the Restructured US Natural Gas Market – Is Supply Security at Risk?

Christian von Hirschhausen, December 2006 The objective of this paper is to analyze the development of US natural gas infrastructure […]

Long-Term contracts and Asset Specificity Revisited – An Empirical Analysis of Producer-Importer Relations in the Natural Gas Industry

Anne Neumann and Christian von Hirschhausen, May 2006 In this paper, we analyze structural changes in long-term contracts in the […]

Short & Long Run Transmission Incentives for Generation Location

Ralph Turvey, March 2006 This paper is about one aspect of Britain’s electricity trading system, its advantages and its weaknesses […]

The Portfolio of Generation Facilities in Japan’s Electric Power Sector, Past and Future

Naoto Nishimura, June 1999 Japan consumes a considerable amount of the world’s energy, and it occupies an even more important […]

The Effects of Hazardous Waste Taxes on Generation and Disposal of Chlorinated Solvent Waste

Hilary Sigman, October 1992 In 1989, 30 states levied taxes on e generation or management of hazardous waste. These taxes […]

Energy and Environmental Policy and Electric Utilities’ Choice under Uncertain Global Warming

Masaki Takahashi, August 1992 The paper reviews and discusses uncertainty about global warming science, impact on society. It also discusses […]

Organizational Learning at Nuclear Power Plants

John S. Carroll, Constance Perin, and Alfred A. Marcus, December 1991 The Nuclear Power Plant Advisory Panel on Organizational Learning […]

The Potential Role of New Technology for Enhanced Safety and Performance of Nuclear Power Plants Through Improved Service Maintenance

Ted Glen Achorn, May 1991 Refinements in the safety and performance of nuclear power plants must be made to maintain […]

The Organization and Management of Nuclear Power Plants

John S. Carroll and Peter B. Cebon, February 1990 Nuclear power plants are a controversial technology. The future of the […]

Western Europe Natural Gas Trade

East Asia/Pacific Natural Gas Trade

Canadian-U.S. Natural Gas Trade