Environmental Consequences of Hydrocarbon Infrastructure Policy

Thomas R. Covert and Ryan Kellogg

No 23855, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study policies that aim to “keep carbon in the ground” by blocking fossil fuel infrastructure investment. Our analysis relies on a model of hydrocarbon production and transportation, incorporating substitution between pipeline infrastructure and flexible alternatives, like crude-by-rail. We apply the model to the Dakota Access Pipeline (DAPL), which moves oil from North Dakota to Texas and was controversially completed in 2017. Had DAPL’s construction been enjoined, we estimate that 81% of the blocked pipeline flows would move by rail instead. This substitution induces both private costs and local environmental damage, since rail transport imposes greater local externalities than pipelines.

JEL-codes: L13 L71 L95 Q35 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tre
Note: EEE IO
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