Energy is an essential input into the lives of individuals and the production of firms. While energy use has numerous private benefits, it imposes an external social cost as the combustion of fossil fuels increases the concentration of greenhouse gases and accelerates the climate crisis. A central role of the public sector is to reduce such externalities. Governments can intervene by creating financial incentives such as taxes or subsidies, by investing into public goods such as research and development of green technologies or infrastructure that decreases aggregate fossil fuel energy demand, or by directly regulating emissions through caps or bans. The aggregate and distributional impact of such policies depends on baseline energy use patterns and available alternatives. My dissertation examines heterogeneity in energy use and carbon emissions — documenting it, exploring its drivers, and discussing its implications for the impact of different public sector interventions.
In Chapter 1, I examine place-based differences in individual energy use and carbon emissions. There is substantial spatial heterogeneity in household carbon emissions across the US, and a strong association between emissions and local amenities such as density, transportation infrastructure, and housing characteristics. I estimate what share of heterogeneity in carbon emissions is attributable to places themselves, and what share reflects individual characteristics and sorting. To do this, I construct a longitudinal panel of residential energy use and commute characteristics for over a million individuals from two decades of administrative Decennial Census and American Community Survey data. I use movers in my data to estimate place effects – the amount by which carbon emissions change for the same individual living in different places –for almost 1,000 cities and roughly 60,500 neighborhoods across the US. I find that place effects explain more than half of differences between places, and about 15-25% of overall variation in carbon emissions. My estimates suggest that decreasing neighborhood-level place effects from one standard deviation above the mean to one standard deviation below the mean would decrease household carbon emissions from residential energy use and commuting by about 40%.
In Chapter 2, I examine racial differences in individual energy expenditures. Using publicly available data from the American Community Survey from 2010-2017, I show that Black households have higher residential energy expenditures than white households in the US. This residential energy expenditure gap persists after controlling for income, household size, home-owner status, and city of residence. It decreased but did not disappear between 2010 and 2017, and it is fairly stable in levels across the income distribution, except at the top. Controlling for home type or vintage does not eliminate the gap, but survey evidence on housing characteristics and available appliances is consistent with the gap being driven at least in part by differences in housing stock and related energy efficiency investments.
In Chapter 3, which is co-authored with Joe Shapiro and Reed Walker, we examine firm-level variation in carbon emissions. We provide the first estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three findings emerge. First, within narrowly defined industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments.
