Natural gas prices, electric generation investment, and greenhouse gas emissions

Paul Brehm

Resource and Energy Economics, 2019, vol. 58, issue C

Abstract: Between 2007 and 2013 the natural gas price dramatically declined, in large part due to hydraulic fracturing. These lower natural gas prices induced switching from coal generation to natural gas generation. I find that switching caused 2013 carbon emissions to fall by 14,700 tons/h. Lower gas prices also incentivized new investment in natural gas capacity. This less carbon-intensive capital stock led to an additional decrease of 2,100 tons/h in 2013. Using three approaches, I estimate that 65–85% of new capacity was constructed because of lower gas prices. A social cost of carbon of $35/ton values the estimated total decrease in 2013 emissions at roughly $5.1 billion.

Keywords: Carbon emissions; Climate change; Electricity; Fracking; Capital investment (search for similar items in EconPapers)
JEL-codes: L94 O33 Q31 Q35 Q51 Q54 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:58:y:2019:i:c:s0928765518303270

DOI: 10.1016/j.reseneeco.2019.06.003

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