I have conducted research in three topics:
- Measuring policy uncertainty using coal-fired electric generating units' investment and retirement decisions (Job Market Paper)
- Exploring the underlying mechanism of polluting behavior as coal-fired power plants approach retirement
- Identifying whether it is selection or substitution effect that households are not driving Electric Vehicles as much as expected
Uncertainty in regulatory policies may reduce durable good investment, thereby leading to poor regulatory outcomes. Mercury and Air Toxics Standards (MATS) is an environmental policy regulating mercury and other air toxics from coal-fired power plants. The policy went through several legal challenges and was subject to high uncertainty before its compliance date. I measure the subjective belief regarding the MATS remaining in place using a modified single-agent investment and exit model. The dynamic structural model incorporates a difference-in-differences design to use the coal-fired power plants’ investment and exit decisions to reveal the subjective probability of the MATS policy relative to local mercury rules. I estimate that plants believed that the probability of MATS being enforced in 2016 as announced was around 74% before the compliance year. This uncertainty surrounding the enforcement of MATS delayed plant compliance with the regulation and increased the total amount of Mercury released during the period.
The coal-fired power plant industry is a major polluting source of var- ious emissions, including greenhouse gas (CO2), sulfur dioxide (SO2) and nitrogen oxides (NOx). Beginning in around 2012, many coal-fired power plants in the U.S. have started to retire, which creates a chance for evalu- ating their end-of-business-cycle polluting behavior. This paper examined the emission patterns of the coal-fired electric generating units (EGUs) when they approach retirement. I found a 4% efficiency drop in the last year of operation. The emission rates increase as EGUs approach retirement. As a result, in their final year of operation, each EGU on average emits 78.88 million lbs CO2 (1.6%), 0.88 million lbs NOx (10.1%) and 5.01 million lbs SO2(16.9%) more than the baseline level in 2012. Controlling for the start- up and shutdown frequency can explain about 43% of the eficiency lost. The efficiency lost explains almost all CO2 emission rate increase but only 20% of the increase in the NOx and SO2 emission rates. EGUs under fee-for-service regulation exhibit a sudden efficiency drop in the final year of operation, while their counterpart, the not regulated ones, show lower efficiency in the last three years of operation.
Electric Vehicles (EVs) are advocated as an environmentally friendly substitute for traditional gasoline cars. The benefit of the subsidies in promoting EVs depends not only on the cost-effectiveness of the policy on adoption but also on how much mileage can be substituted away from traditional vehicles. Davis (2019) shows that EVs are driven much less than traditional cars nationwide, which suggests much smaller environmental benefits than expected. However, little is known about the underlying mechanism. It is unclear who select into owning EVs, how much they expect to use it before the purchase, as well as the relized mileage after their purchase decision. To provide more support for policy implication, this paper explores the underlying mechanism of EVs being less driven. For average households purchasing an EV, there is no significant change of mileage in the other cars. Households incentivized to adopt EVs substitute certain mileage away from other cars in their portfolio but not as much as when they buy another gasoline-powered vehicle.