Buying Down Our Carbon Footprint: An Econometric Analysis of the Impact of Green Pricing Programs on Electricity Consumption in the U.S. Residential Sector
Lising, Anna Javellana
BUYING DOWN OUR CARBON FOOTPRINT:AN ECONOMETRIC ANALYSIS OF THE IMPACT OF GREEN PRICING PROGRAMS ON ELECTRICITY CONSUMPTION IN THE U.S. RESIDENTIAL SECTORAnna J. Lising, B.A.Thesis Advisor: Adam Thomas, Ph.D.ABSTRACTRising global temperatures caused by carbon dioxide emissions have created a multitude of environmental and health risks worldwide. Many state governments have rallied around green pricing programs for their potential to incentivize energy conservation and reduce CO2 emissions by requiring utilities to make green pricing programs available to their customers. Green pricing programs (GPP) have the potential to reduce energy consumption in the residential sector, which accounts for approximately 21 percent of the total energy consumption in the United States. GPPs also could potentially reduce building-related energy consumption, which is associated with approximately one-third of global energy consumption and one-third of total energy-related carbon emissions. This begs the question of whether Congress should pass legislation mandating that all utilities offer green pricing programs.Employing state- and time-fixed effects regression, the results of this analysis show that participation in green pricing programs has a statistically significant negative correlation with residential electricity consumption rates. This indicates a potential for green pricing programs to reduce electricity consumption, thereby decreasing the negative environmental impacts associated with generating electricity. However, results also indicate that a substantial jump in GPP participation rates is needed to realize even relatively small reductions in electricity consumption. Although the level of effort required to achieve energy savings through GPPs may deter public officials from mandating the availability of green pricing programs for all utility customers, GPPs should not be excluded outright when considering viable policy options for reducing electricity consumption. Further research and analysis can identify program features to improve GPP participation rates, as well as finding ways to strengthen program efficacy in delivering greater energy savings.
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