Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation
We determine the change in air pollution damages from U.S. power plant emissions over 2010 to 2017. Annual damages fell from $245 billion to $133 billion over this period, with most of the decline occurring in the East. Decomposition shows that changes in emissions rates reduced damages by $63 billion, changes in generation shares reduced damages by $60 billion, and a reduction in fossil generation reduced damages by $25 billion. However, changes in damage valuations per ton of emissions increased damages by $35 billion. We estimate that marginal damages declined in the East from about 9¢ per kWh in 2010 to 6¢ in 2017. This decrease is slower than the decrease in total damages. Despite little or no change in total damages in the West and Texas, marginal damages increased. The environmental benefit of electric vehicles increased so that they are now cleaner than gasoline vehicles on average, though substantial heterogeneity remains. The environmental benefit of solar panels decreased in the East but increased elsewhere.
We would like to thank Emily Blanchard and Matthew Kotchen and seminar participants at Energy Institute at Haas, TREE, and the EPRI electrification conference for helpful comments, as well as Samuel Krumholz for providing data on New Source Review start dates and litigation. Kenneth Walsh provided research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Andrew J. Yates
In the last three years, my research has been funded by the National Science Foundation, although this funding was for topics that are unrelated to the subject of this paper.
I declare that I have no other relevant or material financial interests that relate to the research described in this paper.
- Environmental Rules, Cheaper Natural Gas, and More Renewables Have Reduced Damages Annual damages from air...
Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2020. "Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation," American Economic Journal: Economic Policy, vol 12(4), pages 244-274. citation courtesy of