Doctoral Dissertations

Date of Award

12-2023

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Economics

Major Professor

Don Bruce and Charles Sims

Committee Members

Don Bruce, Charles Sims, Scott Holladay, Daniel Bergstresser,

Abstract

This dissertation presents three essays on topics that characterize the challenges of the energy transition. The first two focus on mitigating the worst impacts of climate change while the final hones in on adapting to climate change.

The first essay estimates willingness-to-pay (WTP) of electricity customers for rooftop solar within the Tennessee Valley Authority. Applying a conditional logit model, the probability of adoption rises with utility rates and emissions-reductions and declines with costs. Evidence of social contagion exists with adoption probabilities increasing 55 − 57% when respondents know someone with panels. WTP also rises. Comparing aggregated to regional WTPs confirms the impact of social contagion. As residential rooftop solar adoption accelerates the energy transition while minimizing transmission investments, utility asset planners may want to incorporate this feedback loop on social contagion.

The second essay analyzes the negative impacts of carbon policy. While a carbon tax would reduce our reliance on fossil fuels, it may introduce a systemic risk to the economy by shortening the economic life of carbon assets. This essay investigates whether past policies promoting exploration increases the magnitude of stranded assets when policy changes. We find carbon taxes cause firms to leave more reserves undeveloped, but firms suffer 20% fewer stranded assets under inconsistent policy than BAU due to lower marginal production costs from larger stock effects though this yields minimal differences in profits. Policymakers hesitant to deploy carbon taxes may need to reconsider whether our current treatment of stranded assets is confusing them with sunk costs.

The third essay pivots towards the effort to adapt to climate change. We study growth and convergence across California cities after Proposition 13 normalized property tax rates and initiated a redistribution of wealth. I find strong evidence of convergence across cities as measured by per capita property values and little evidence that the transfer dampened the growth of household wealth in transfer cities. I find significant variation in line-item expenditure productivity. Investments boosting city functionality induce growth while spending on services better achieved by regional coordination reduces growth. Increasing revenues spur growth when they do not inhibit the public’s marginal propensity to consume.

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