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The Environmental Impacts of Fuel Switching Power Plants

Author

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  • J. Scott Holladay

    (Department of Economics, University of Tennessee)

  • Steven Soloway

    (School of Law, New York University)

Abstract

We examine the environmental and policy impacts of switching from oil-fired to natural gas-fired generation in New York City (NYC). We create an hourly panel of the fuel use of NYC’s generators and use a semi-parametric approach to identify the fuel price spread that induces the switch from oil to gas. We find that NYC’s pollution emissions decrease significantly after switching to natural gas. Around two-thirds of these emission reductions come from reduced emission intensity within plants, while the remaining third comes from less intense dispatch of oil fired generators. To illustrate the policy impact, we simulate the introduction of a real time pricing (RTP) program in NYC. The results suggest that the environmental benefits of the RTP decreased by nearly 30% due largely to fuel switching. While we focus on RTP, these results can be used to evaluate any energy policy that has a heterogeneous impact across time or the demand profile.

Suggested Citation

  • J. Scott Holladay & Steven Soloway, 2015. "The Environmental Impacts of Fuel Switching Power Plants," Working Papers 2015-05, University of Tennessee, Department of Economics.
    • Handle: RePEc:ten:wpaper:2015-05
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    File URL: http://web.utk.edu/~jhollad3/Fuel_Switching.pdf
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    References listed on IDEAS

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    Cited by:

    1. J. Scott Holladay & Jacob LaRiviere, 2015. "The Impact of Cheap Natural Gas on Marginal Emissions from Electricity Generation and Implications for Energy," Working Papers 2015-07, University of Tennessee, Department of Economics.
    2. Matthew Doyle & Harrison Fell, 2016. "Fuel Prices, Restructuring, and Natural Gas Plant Operations," Working Papers 2016-03, Colorado School of Mines, Division of Economics and Business.

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    More about this item

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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