Essays on sustainable development: renewable energy, regional growth, environment, and welfare

Abstract

Given the growing concerns about the consequences of climate change, development of renewable energy has attracted significant attention as a creditable alternative to fossil fuels. As a result, renewable energy has experienced significant growth in the U.S. as receiving government subsidies and support in the past decades. In order to confirm the efficiency and effectiveness of renewable support policies, this dissertation explores the role of renewable energy on regional economic growth, environmental quality, and residential electricity price in the U.S. Chapter 1 examines the effects of electricity generation from both types of energy sources on sustainable state economic growth. For the analysis, I extend the theoretical framework which incorporating the environmental externalities from energy use. Based on the theoretical model, I use the panel data set for 47 U.S. states from 1999 to 2017 by employing the two-step Generalized Methods of Moments (GMM) model. The results show that renewable energy generation has a positive impact on state economic growth whereas non-renewable energy generation hampers economic growth. Furthermore, this paper finds that the effects of renew- able energy generation on economic growth are different at a level of development stage: at an early stage, electricity generation from renewable energy resources hampers economic growth while at an advanced-stage, renewable energy helps to grow the economy. The results imply that the very low operating costs for renewable energy could offset the huge financial burden of high initial investment costs in the long run. Chapter 2 demonstrates the linkages between energy-related CO2 emissions, economic growth, and renewable energy consumption for the 48 U.S. states over the period 1997-2017 by employing panel fixed-effects and the Method of Moments Quantile Regression with fixed effects developed by Machado and Silva (2019). The results provide strong evidence of an inverted U-shaped relationship between economic growth and environmental degradation, consistent with what is known as the Environmental Kuznets Curve from fixed-effect estimation. Furthermore, this paper confirms that renewable energy consumption, electricity prices, and primary energy prices have negative impact on emissions whereas Heating Degree Days have a positive impact on emissions. Moreover, the panel quantile regression models confirm that the effects of all explanatory variables on CO2 emissions are heterogeneous at different quantiles. The main purpose of Chapter 3 is investigating the effect of renewable energy generation on retail residential prices while confirming the policy influences from Renewable Portfolio Standard (RPS) on the prices by using a sample of 48 U.S. states during the period 2001-2018. The empirical results of the feasible generalized least squares, and the two-step GMM models provide evidence that renewable energy generation leads to a reduction in residential electricity prices. Also, the renewable support policy, RPS, tends to increase residential electricity prices. The results imply that implementation of RPS requires additional fixed costs in the short-run however, these costs would be offset by very low operating costs of renewable energy generation in the long-run.