Positive Spillovers from Infrastructure Investment: How Pipeline Expansions Encourage Fuel Switching

Jonathan B. Scott
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Jonathan B. Scott: University of Texas, Dallas

The Review of Economics and Statistics, 2023, vol. 105, issue 6, 1448-1464

Abstract: This paper studies the role of the U.S. pipeline infrastructure in the country's transition from coal to natural gas energy. I leverage the Environmental Protection Agency's Mercury and Air Toxics Standards as a plausibly exogenous intervention, which encouraged many coal plants to convert to natural gas. Combining this quasi-experimental variation with a plant's preexisting proximity to the pipeline network, I isolate implied pipeline connection costs within a dynamic discrete choice model of plant conversions. Key model results indicate that infrastructure-related costs prevent $9 billion in emissions reductions from taking place, suggesting a $2.4 million per mile external benefit of pipeline expansions.

Date: 2023
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