Three essays on energy economics: Policy options and evaluation

Ta, Chi Lan

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Description

Title

Three essays on energy economics: Policy options and evaluation

Author(s)

Ta, Chi Lan

Issue Date

2021-05-05

Director of Research (if dissertation) or Advisor (if thesis)

Fullerton, Don

Doctoral Committee Chair(s)

Fullerton, Don

Committee Member(s)

• Deryugina, Tatyana
• Khanna , Madhu
• Myers, Erica

Department of Study

Agr & Consumer Economics

Discipline

Agricultural & Applied Econ

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Energy Rebates
• Energy Efficiency Standards
• Renewable Portfolio Standards
• Policy Evaluation
• Energy Conservation

Abstract

My dissertation evaluates the effectiveness of energy policies designed to mitigate emissions from energy production and to promote renewable energy. It also explains key factors that determine both the magnitude and the direction of each policy's effects on various economic and environmental outcomes. It consists of three chapters with studies in the context of both developed and developing countries. Rebates that reward economic agents if they meet a minimum conservation threshold are a popular policy to encourage energy conservation. However, most threshold-based rebates are structured such that they do not encourage reduction beyond the threshold. In the first chapter of my dissertation, I show theoretically that programs with the additional feature that households compete to win rebates can effectively encourage further conservation among those who can meet the threshold reduction. The theory also identifies factors that determine the effectiveness of the program. I then exploit a unique confidential dataset of monthly residential electricity use with over 45 million observations to estimate the overall effect of a Vietnamese electricity rebate program with this competitive element. Next, I empirically test the model's predictions. I find that the program reduces electricity consumption by 18%, nearly double the threshold level of 10%. Interestingly, the program's effect persists for at least twelve months after it ends, which has important implications for the cost-effectiveness of such interventions. The second chapter of my dissertation studies the effects of tightening renewable energy standards on carbon dioxide emissions and renewable generation. My co-author and I first use an analytical general equilibrium model to explain why tightening a state's Renewable Portfolio Standard (RPS) unambiguously reduces carbon dioxide emissions but has ambiguous effects on renewable energy development. Second, it shows how the direction and magnitude of the effects of tightening the RPS on both carbon emissions and renewable deployment depend on key factors such as the state's endowment of intermittent resources like wind and solar potential as well as non-intermittent resources like geothermal or hydropower potential. Results also depend on actual renewable energy intermittency, transmission constraints, the pre-existing renewable energy requirement, each cost share parameter, and each elasticity of substitution. We use the model to generate testable hypotheses, and we use U.S. state-level data from 1990 to 2015 to test these hypotheses. My third dissertation chapter examines the rebound effect, an important concept in conservation and energy economics that measures the reduction in energy savings from energy efficiency improvements. My co-author and I construct a new general equilibrium model to derive analytical expressions that allow us to compare rebound effects from a costless technology shock (CTS) to those from a costly energy efficiency standard (EES). We decompose each total effect on the use of energy into a direct efficiency effect, direct rebound effect, and indirect rebound effect. We show which factors determine the sign and magnitude of each. Rebound from a CTS is generally positive, as in prior literature, but we also show how a pre-existing EES can negate the direct energy savings from the CTS – leaving only the positive rebound effect on energy use. Then we analyze increased stringency of an EES, and we show exactly when the increased costs reverse the sign of rebound. Using plausible parameter values in this model, we find that indirect effects can outweigh the direct effects captured in partial equilibrium models, and that the total rebound from a costly EES can be negative.

Graduation Semester

2021-08

Type of Resource

Thesis

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Copyright 2021 Chi Ta

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