Friday, December 28, 2012

Wind Power Fail

Measuring the Environmental Benefits of Wind Power

Joseph Cullen
American Economic Journal: Economic Policy, forthcoming

Abstract: Production subsidies for renewable energy, such as solar or wind power, are rationalized due to their perceived environmental benefits. Subsidizing these projects allows clean, renewable technologies to produce electricity that otherwise would have been produced by dirtier, fossil-fuel power plants. In this paper, I quantify the emissions offset by wind power for a large electricity grid in Texas using the randomness inherent in wind power availability. The results indicate that one MWh of wind power offsets negligible quantities of SO2, less than one lb of NOx, and less than half a ton of CO2.  Only for high estimates of the social costs of pollution do I find that the value of emissions offset by wind power are greater than the renewable energy subsidies used to induce investment in wind farms.

Nod to Kevin Lewis

1 comment:

J Scheppers said...

This article is not nearly as favarable to wind power fail as the abstract indicates. Cullen's middle estimate for offset values puts the value at $18.29. He concludes that subsidies are between $25 and $70.

IPCC regulatory marketers are suggesting $20 to $30 per Ton prices which is above Cullen's high price.

I don't support IPCC prices, but realize many will take this to justify $20 to $30 subsidies.

His method seemed interesting. The marginal cost calculation did not bring out any red flags for me. However, Cullen repeatedly states that Wind Energy has no or zero emissions. A careful analysis should take into account both marginal emmission and annualized emmissions from the capital investment. It is my guess that steel in the wind towers and transmission lines to remote wind farms may be significantly more emission intensive than conventional power generation.