In collaboration with Dr. Chan, my job market paper investigates whether the regional CO2 market inadvertently causes environmental injustice by exacerbating existing disparities in emission exposure, based on race and income. Focusing on the Regional Greenhouse Gas Initiative (RGGI), a regional CO2 cap-and-trade program introduced in US electricity in 2009, we analyze emission data from 1999-2018. Our study observes how emissions evolved in both regulated states (i.e., states directly affected by the policy) and in unregulated affected states (i.e., states that might experience “leakage” from the policy). We use a reduced complexity air quality model to track CO2 co-pollutants from sources to receptor counties. Using a difference-in-difference design with heterogeneous treatment effects, we find counties with a higher share of the black population and lower median household income received higher emissions from electricity production. Importantly, with the introduction of the regional CO2 market, this disparity has grown in regulated and affected-unregulated regions, compared to unaffected-unregulated regions.
In the second chapter of my dissertation, in collaboration with Dr. Stranlund, we contribute theoretical insights into CO2 pricing within the context of environmental justice (EJ) constraints that limit inequities in the distribution of the ambient concentrations of CO2 co-pollutants. Traditionally, CO2 controls are often implemented using uniform prices without considering their impact on co-pollutant distribution among communities. We address the concern that such pricing could lead to environmental inequities and provide theoretical insights into optimal CO2 prices that do not exacerbate pre-existing disparities in ambient co-pollutant concentrations. Our model considers the joint control of CO2 and a single non-uniformly mixed co-pollutant with constraints that limit the inequitable distribution of the ambient concentrations of the co-pollutant among communities. Assuming co-pollutants are regulated separately through prices, we show that setting the CO2 prices equal to the marginal damage of CO2 emissions is efficient if and only if the co-pollutant is regulated efficiently given the satisfaction of the environmental justice constraints. However, in more realistic cases in which the co-pollutant prices are not efficient or the control of the co-pollutant fails to satisfy the EJ constraints, the optimal price of CO2 differs from the marginal damage from CO2 emissions and likely varies across firms. Additionally, we show that traditional CO2 markets, implemented using uniform prices for CO2 emissions, are cost-effective if and only if the co-pollutant is cost-effective, given the satisfaction of the environmental justice constraints. If not, then cost-effective CO2 prices vary across firms.
Carbon dioxide (CO₂) markets increase the cost of fossil-fuel electricity generation, theoretically incentivizing a shift toward renewable energy. In this chapter, I empirically examine whether subnational carbon markets induce structural change in the electricity sector by promoting clean energy deployment. Focusing on the regional CO₂ cap-and-trade program RGGI, I analyze its impact on both electricity generation and installed capacity from renewable and non-renewable sources. Using state-level panel data from 1999 to 2019 and a difference-in-differences framework with economic, policy, and climate controls, I estimate how regulated states adjusted their energy mix following the introduction of the carbon market. The results show that RGGI led to a significant decline in non-renewable electricity generation and generating capacity, driven primarily by reductions in coal-fired infrastructure. In contrast, although renewable generation and capacity increased modestly, these effects are not statistically significant. Overall, the findings suggest that RGGI contributed to decarbonization primarily by accelerating the phaseout of fossil-based infrastructure rather than by inducing substantial expansion of renewable generation capacity within participating states. These results highlight an important distinction between fossil displacement and renewable buildout, with implications for evaluating the long-run structural effects of regional carbon markets.
Incomplete CO2 Markets and Co-Pollutant Leakage?
Does a Regional CO2 Market Worsen EJ in the Participating States?
Timmons, D., Lema-Driscoll, A., & Uddin, G. (2017). The Economics of Biochar Carbon Sequestration in Massachusetts. UMass Clean Energy Extension, University of Massachusetts.
Bhattacharya, D., Khan, T. I., Salma, U., & Uddin, G. J. (2013). Attaining the MDGs How Successful are the LDCs? (No. 5). Centre for Policy Dialogue (CPD).
BHATTACHARYA, D., & KHAN, T. I. (2013). Lessons from the Least Developed Countries for a Development Agenda Post-2015.