Association for Public Policy Analysis & Management

Regulation of energy generation and pollution standards can have a substantial impact on human health. While the connection between air pollution and health is well established, there has been far less work examining the causal effect of energy and pollution related policy on health. We evaluate a policy that is ideal to examine this link, the Renewable Portfolio Standard (RPS). An RPS is a state-level policy that requires a certain percentage of a state's electricity be sourced from approved renewable sources. To meet an RPS, an electricity provider must retire Renewable Energy Credits (RECs), where one REC represents one MWh of renewable generation. RPSs and generation decisions across states are interlinked by REC markets, allowing an RPS in one state to influence generation in another.

We link changes in a state's RPS to reductions in coal generation in outside states, who alter their generation profile to supply RECs. We then estimate where the avoided pollution from the reduced coal generation would have traveled using the APEEP integrated assessment model. This provides us with a predicted decrease in pollution concentrations that is a function of out-of-state policy changes. We use these exogenous predicted changes as an instrumental variable for actual pollution levels at the county level to examine changes in the health of the residents in that county. Our identification strategy exploits REC markets and prevailing wind patterns and allows us to circumvent the typical problems in the environmental health literature of selection, avoidance, and sorting. Thus we are able to isolate the causal effect of a change in one state RPS on the respiratory health in outside states.

Preliminary results using Healthcare Cost and Utilization Project (HCUP) data on emergency department (ED) visits in Florida and New Jersey suggest that reductions in coal generation due to RPS are responsible for a 7.5% reduction in the number of influenza ED visits per 1000 and a 3.83% reduction in the number of COPD ED visits per 1000. Our results are robust across several specifications, including dropping counties that have or are near to coal plants. In addition, our findings are further strengthened by the use of placebo illness to test the model. We are currently in the process of obtaining data on mortality and additional state level ED from HCUP. We expect that the additional data will strengthen our existing findings. We also expect to find that RPS induced emission reductions have reduced the death rate of the most susceptible in the population, particularly infants and the elderly. Importantly, our results show how energy policies that reduce coal usage causally improve human health. Our findings will be useful when evaluating the potential benefits of other energy policies, such as the Clean Power Plan, that are designed to reduce coal usage.