From the impacts of climate change and the human costs of air pollution to the effects of fuel economy regulations, EPIC faculty research has shed new light on some of the most crucial topics in energy this year. Often times, these insights are best illustrated through data presented in easy-to-digest charts. So, we’ve put together ten of our favorites from 2018.
Check them out!
It’s a chart. It’s a dynamic tool. It’s a new way to measure the impact of the deadliest threat to human health: particulate pollution. For these reasons and more, the Air Quality Life Index landed at the top of our list for the second straight year. Last year, we introduced a beta version. This year, we were proud to introduce the full Index, an interactive tool that allows users anywhere in the world to explore pollution where they live, map changes over time, and—most importantly—see its effect on their life expectancy. Because the AQLI presents data at a hyper-local level—the county level in the United States—this information can help to inform communities and policymakers about the importance of air pollution policies in very concrete terms.
The Index reveals just how deadly particulate pollution is—cutting global average life expectancy by nearly two years, with some of the most polluted regions of the world fairing much worse. India, for example, is one of the countries with the heaviest pollution. Particulate pollution is cutting the average Indian resident’s life expectancy by more than 4 years, up from 2 years just two decades ago as particulate pollution increased 69 percent in India. In fact, the impact of particulate pollution on life expectancy globally is greater than cigarette smoking, twice that of alcohol and drug use, three times that of unsafe water, five times that of HIV/AIDS, and 29 times that of conflict and terrorism.
With particulate air pollution being the single greatest threat to human health, cutting global life expectancy short by about 2 years, policymakers in the most polluted countries need efficient ways to reduce pollution. In order to ensure that industrial facilities comply with pollution limits, government regulators need access to plant emissions data. In the past, this data was captured strictly through predictable, manual inspections that were easy to game. In recent years, Continuous Emissions Monitoring Systems (CEMS) have significantly increased regulators’ ability to monitor plant activity in real time, making it harder to cheat.
India is one nation trailblazing this approach in developing countries. India’s central government mandated the installation of CEMS in highly polluting industries across the country in 2014. But only recently has the technology taken hold with the help of EPIC researchers, partner institutes and pollution regulators in India. Over the last couple years, the researchers and state officials have installed and tested the use of CEMS.
The data is in—and, it confirms the importance of transparent data collection as regulators begin to pinpoint where pollution is occurring and how to improve environmental regulation in developing countries. Here, a plant with CEMS monitors installed is shown to be operating well above legal pollution limits. When inspectors show up, the emissions drop rapidly in an attempt to show compliance. Without access to real-time monitoring, regulators might assume this plant is operating within legal limits. Now, they know better.
The day after Thanksgiving, the Trump administration released the Fourth National Climate Assessment (NCA4), which detailed the latest estimates of the impact climate change would have on the United States. Media coverage following the release zeroed in on one statistic, which showed that climate change would “knock as much as 10 percent off the size of America’s economy by century’s end.” Critics—the White House included—used the statistic to paint the report as “radical” and “extreme.”
What’s the truth behind the stat? The stat comes from a Science magazine study co-authored by Amir Jina, an assistant professor at the University of Chicago Harris School of Public Policy. As the chart shows, in one sense the 10 percent is an overestimate—representing the estimated damages for warming of 15°F above pre-industrial levels, which is unlikely. If the world adheres to the goals of the Paris Climate Accord, then a more moderate warming scenario would likely play out, with warming of between 2°F to 7°F. Under this outlook, the nation’s GDP would shrink by about one percent to four percent. At the same time, the chart shows how climate change will impact health, labor and agricultural productivity, energy demand, crime and coastal property. These are important, but leave out many other effects that could be as dramatically affected or worse, such as ecosystem loss, changes to water availability, wildfires, migration, and many others. Once all the impacts across the economy are tallied, 10 percent would likely be an underestimate.
When automakers like Ford and GM announced this year that they would eliminate several car models and focus on production of pickups and SUVs, they pointed to consumer preferences as driving their decision. But a study co-authored by Koichiro Ito, an assistant professor at the University of Chicago Harris School of Public Policy, finds policy may also be playing a substantial role.
U.S. fuel economy standards are ‘attribute-based.’ This means levels are set based on a specific vehicle characteristic—in this case, its footprint, the rectangle formed by the four points where a vehicle’s tires touch the ground. The attribute-based footprint standard is used to sort vehicles into bins with different compliance targets, with larger vehicles facing more modest requirements. What impact does this have?
The study by Ito and his co-authors evaluates a similar attribute-based regulation—weight-based fuel economy standards in Japan. The policy’s bins are shown in the chart. When plotting the weight density of the cars on the market, Ito and his co-authors find that the automakers increase car weight just enough to be able to reach the next weight category with a lower fuel economy target. So, the policy did indeed incentivize automakers to increase the weight of their vehicles.
When the global benchmark Brent oil price exceeded $85 a barrel earlier this year, Saudi Arabia rapidly increased its production to avoid further price increases. The oil price has since fallen rapidly, and Saudi Arabia is now considering a large production cut. But what about the United States? Can U.S. oil production quickly respond to changes in global oil prices, allowing the United States to play the role of a swing producer?
Ryan Kellogg, a professor at the University of Chicago Harris School of Public Policy, and his co-authors studied how production responds to crude oil price swings using detailed well data from Texas from 1990 to 2007. They found that production from existing wells declines smoothly as reservoir pressure declines, showing no response to prices.
While bumping up production of existing wells is not an option, new wells could be drilled. As the chart shows, the drilling of these new wells follows oil prices very closely, with a lag of a few months as the new drilling takes place. Oil production from these new wells then follows, but gradually rather than instantaneously.
In recent years, slated nuclear plant retirements grab headlines. 2018 was no different, with several announced plant closures. All told, 35 percent of the country’s nuclear power plants are at risk of early closure or slated to retire. Faced with competition from cheap natural gas and increasingly from renewables, nuclear energy is having a hard time competing. And, without a price on carbon, that will likely continue into the future.
EPIC’s Director Michael Greenstone, the Milton Friedman Professor in Economics, laid out the numbers at a conference in Washington, DC jointly hosted by EPIC and the Center for Strategic and International Studies (CSIS) this past May. He calculated the cost per megawatt hour of electricity for a natural gas plant with and without a price on carbon in the year 2040. He then compared that to the projected cost of several emerging nuclear technologies. While the nuclear technologies have a strong chance at competing when a carbon price is in place, they will require significant cost reductions to be competitive in the absence of such a price.
This was another year of record hot temperatures—including in places you wouldn’t expect. Belfast, Ireland; Montreal, Canada; Burlington, Vermont; and Mount Washington, New Hampshire reached temperatures normally experienced in the Middle East or Africa. In the last few years, economists have uncovered an interesting phenomenon: In hotter years, the economic output of countries goes down. Developing countries located in tropical regions get hit the hardest, but everyone suffers. Climate change will exacerbate this effect. Scientists estimate that if nothing is done to reduce greenhouse gas emissions, hotter temperatures could reduce global incomes by an average of 23 percent by 2100.
Why is there such a strong correlation between heat and economic loss? In a study by Anant Sudarshan, an assistant professor at the University of Chicago Harris School of Public Policy, he and his coauthors analyzed the productivity of workers in India, the world’s third largest economy. They found that the productivity of workers engaged in garment manufacturing dropped by as much as 4 percent per degree as temperatures rose above 27° Celsius (80.6° Fahrenheit). Less productive workers mean a less productive business and a less productive economy. However, there are steps businesses and countries can take to blunt the effects. With the plants installed climate control measures, productivity increased.
This summer, the Trump administration laid out its plan to roll back fuel efficiency standards for passenger vehicles sold between 2021 and 2025. In short, the administration is proposing to freeze the standards at 2020 levels instead of maintaining the more ambitious schedule of improvements through 2025 set forth by the Obama Administration. But EPIC Executive Director Sam Ori argues in Forbes that the administration should also consider improvements to the credit trading system as a way to reduce compliance costs.
When automakers produce vehicles whose performance exceeds fuel economy standards, they generate credits that can be sold or used to cover future shortfalls. Until recently, automakers were largely banking credits. But with low gasoline prices driving up sales of trucks and SUVs, several automakers became major credit consumers in 2016. Significantly, the big three U.S. auto companies led the industry in consuming credits, with GM, Ford, and Chrysler accounting for 75 percent of the total. Moreover, some of the big three will soon likely be out of banked credits. Not all companies are the same though–some of the most efficient, like Honda and Nissan, are still generating credits.
In theory, this should create the ideal conditions for trading. But without some key reforms to the system, that may not happen.
This year, China marked its four-year anniversary of declaring “war against pollution.” To coincide with the anniversary, EPIC’s Director Michael Greenstone, the Milton Friedman Professor in Economics, conducted an analysis using data from more than 200 government air quality monitors throughout the country. He and his co-author, Patrick Schwarz, found that air pollution decreased across the board in China’s most populated areas. Cities on average have cut particulate pollution by 21 to 42 percent in just four years.
The most populated cities saw some of the greatest declines: Beijing cut air pollution by 35 percent; Shijiazhuang, the Hebei Province’s capital city, cut pollution by 39 percent; and Baoding, China’s most polluted city as of 2015, cut pollution by 38 percent. If China sustains these reductions, Greenstone finds that residents would see their lifespans extended by 2.3 years on average. The roughly 20 million residents in Beijing would live 3.1 years longer, while those in Shijiazhuang and Baoding would add 5.1 years and 4.3 years onto their lives, respectively. These improvements in life expectancy would be experienced by people of all ages, not just the young and old.
Notably, while China has seen a marked improvement in air pollution, their levels in many parts of China still exceed global and national standards. Bringing the entire country into compliance with its own standards would increase average life expectancies by another 1.6 years, in the areas where data is available. Complying with WHO standards instead would yield 3.9 years.
READ MORE: Is China Winning its War on Pollution?
As utilities try to reduce peak load, they may encourage consumers to conserve energy. What’s the best way to do this? A study by Koichiro Ito, an assistant professor at the University of Chicago Harris School of Public Policy, finds that “dynamic” pricing is more effective than moral suasion on its own for changing customer behaviors in the long run.
He and his coauthors conducted a random assignment field experiment across 700 households in Kyoto, Japan. Households were assigned to one of three groups: (1) a control group; (2) a treatment group that received monthly messages requesting them to voluntarily conserve energy during peak-demand hours; and (3) a second treatment group that was instead charged higher prices for electricity use during the same peak hours.
Households that received the messages encouraging conservation reduced their electricity use by 8 percent in the short term, but they quickly resorted back to their usual habits. Those who experienced a hike in the price of electricity during peak hours reduced their electricity use by as much as 17 percent, and the effect is much more sustained over time. So while non-price incentives deliver useful, moderate changes in energy use over a short run, financial incentives are what get people to change their habits and develop new ones.