The Impact of Environmental Policies and Innovation on the Investment in and Use of Natural Gas-Fired Combined Cycle Generators in the US Electricity Sector
Date of Award
Doctor of Philosophy (PhD)
Peter J. Wilcoxen
environmental policy, innovation, natural gas, NGCC
Social and Behavioral Sciences
Developments over the past thirty years have contributed to increased natural gas generation in the US electricity sector. As a result, natural gas generation surpassed coal for the first time in history in 2016. In addition to low natural gas prices, developments with the natural gas-fired combined cycle generator (NGCC) have contributed to the rise of natural gas. In the 1990s, technological innovations led to substantial efficiency gains for NGCC, rendering these generators cleaner and more efficient than other widely available sources of power generation during that period. In the early 2000s, the US experienced the largest short-term increase in generation capacity in history, with over 70% of this new capacity installed as NGCC. Initially, much of the new NGCC capacity only provided power when energy demand was at its highest. Since 2003, NGCC utilization has nearly doubled, and NGCC is increasingly used to provide baseload power. The purpose of this dissertation is to scrutinize these developments with NGCC to better understand how energy and environmental policies influenced the time and location of capacity changes, how this capacity has been used, and the role of technology on both.
The first essay in this dissertation evaluates the impact of a government-sponsored research program on NGCC innovations in the 1990s. From 1992-2000, the Department of Energy partnered with two US turbine manufacturers, General Electric (GE) and Siemens Westinghouse Power Corporation (SWPC), in a cost-sharing program called the Advanced Turbine System to stimulate efficiency innovations for NGCC technology. Using data from the European Patent Office’s worldwide patent database (PATSTAT), I evaluate innovative activity in advanced turbine technology by the program participants and their competitors. Using a negative binomial model, I find GE increased the volume of their patents towards the end of the program and afterwards, while SWPC had higher patent citations for patents filed during the program relative to competitors. These observed changes in patenting activity merit further investigation into why these changes took place, and how the resulting patents translated into commercialized technologies in the US and abroad.
The second essay evaluates the impact of policy anticipation on natural gas capacity growth during a time in which substantial natural gas capacity came online. I hypothesize that areas expecting nonattainment designations resulting from changes in the ozone and particulate matter National Ambient Air Quality Standards (NAAQS) rushed to complete installations before new environmental regulations took place in 2004 and 2005. I use EIA and EPA data from 1997-2009 to evaluate the role of policy anticipation on capacity investment with difference-in-difference models. My results show areas expecting nonattainment designations had more natural gas capacity growth than areas not facing nonattainment, on the order of 10% for ozone and 13% for particulate matter, per year. This study thus finds that substantial investment in environmental technology may take place in anticipation of policy changes.
The third essay considers how this new natural gas capacity is being used. Recent climate regulations aim to increase utilization of NGCC generators to offset coal generation and, consequently, reduce carbon emissions. There have been substantial increases in utilization for some NGCC generators in the last ten years, but most remain below baseload levels. This paper examines the factors that have driven NGCC utilization to date. I use a random-effects model to evaluate the relationships between environmental policies and natural gas prices on NGCC utilization. I find that both low natural gas prices and cross-state air pollution policies drive increases in utilization; however, the size of the impact by the environmental policies depends on the age of the plant. I use the estimates from this model for a counterfactual analysis which reveals the cross-state air pollution policies have had nearly three times the impact of low natural gas prices on utilization from 2003-2014.
Stevens, Kelly Ann, "The Impact of Environmental Policies and Innovation on the Investment in and Use of Natural Gas-Fired Combined Cycle Generators in the US Electricity Sector" (2017). Dissertations - ALL. 751.