Three Essays on Renewable Energy and Sustainability

Nhu Nguyen, Purdue University

Abstract

This study investigates the economic rents of the wind energy industry in the U.S. and their economic impacts on local economies, using Benton and White counties in Indiana as study regions. By calibrating a partial equilibrium model using 2007-2010 data of the industry, we find a resource rent of $9.72/MWh. We then use a general equilibrium model with Dutch Disease features to study the optimal tax levied on this rent, and the economic impacts of redistributing the tax revenues back to the county residents. An exhaustive rent tax increases real county personal income by as high as 9.1% and as low as 2%, depending on the county’s features. Applying an incentive compatible resource rent tax rate and redistributing the revenues to the county’s laborers leads to an increase of 3.5% and 16% in their income in White and Benton counties, respectively. We also perform robustness checks by allowing labor mobility between counties to examine the impacts of resource rents on the county economy under endogenous labor growth. All data acquired comes from the U.S. Census Bureau, county Quarterly Census of Employment and Wages, the National Renewable Energy Laboratory reports, the Lawrence Berkeley Laboratory, Indeed.com, news articles, and wind developers websites.Using the Regional Energy Deployment System (ReEDS) model, we estimate the deadweight loss imposed by county-level wind power development restrictions in the form of increased electricity costs due to suboptimal siting. This is accomplished by optimizing the power system of the United States' Midcontinent Independent System Operator (MISO) from 2020 to 2050. We perform the optimization with and without land-use constraints arising from simulated potential local ordinances restricting wind power development, and under multiple scenarios reflecting different renewable portfolio standards (RPS). We find that local restrictions on wind power increase the total system cost by 0.15%-0.3% and the wholesale electricity price by 1.8%-2.7%, depending on the RPS scenario. Changes in the generation and installed capacity mixes are more substantial and depend on both the level of county restrictions on wind power, and RPS requirements, thus indicating an interaction between RPS requirements and local wind power restrictions. We also find that plausible restrictions on wind development do not pose major barriers to meeting renewable energy targets in a cost-effective manner. All data is embedded inside the Regional Energy Deployment System (ReEDS) model of the National Renewable Energy Laboratory.The USDA promotes adoption of conservation practices beneficial for soil health and environment through agricultural cost-share payment programs such as EQIP or CSP. Although the efficiency of these programs has been evaluated through additionality estimates, which represent the percentage of farmers who would adopt a practice only with payments, the potential complementarities between certain combinations of practices have often been overlooked. Unaccounted for, these complementarities may impact additionality estimates. This paper provides a thorough investigation of additionality estimates of common practices, including no-till, nutrient management and cover crops, accounting for potential complementarities between them. We find no significant differences between traditional additionality estimates and estimates accounted for potential complementarities between the three practices.

Degree

Ph.D.

Advisors

Wilcox, Purdue University.

Subject Area

Economics|Energy|Labor relations|Sustainability

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