Association for Public Policy Analysis & Management

Industries are increasingly concerned about resiliency on energy supply. Combined heat and power (CHP) has been considered as a mature and innovative technology promising efficient production of energy on their site. While a U.S. government sets a national goal of 40 GW of new industrial CHP by 2020, the CHP deployment is challenged by financial, regulatory, and workforce barriers. To fill the gap between private and public interests, federal, state, and local policy-makers have implemented incentive-based and/or regulatory policies, which aim to promote energy-based economic development (EBED).

This research aims to find a relationship between state governments’ activities on clean energy policy entrepreneurship and firms’ adoption of CHP technology, which contribute to grow relevant employment opportunities. I develop an empirical method for tracking historical changes on CHP deployment and examining the relationship between those changes and clean energy policies that support CHP generation. I first identify types of state CHP policy instruments, and score states by the intensity of policy implementations. Second, I investigate regional differentiations of CHP generation by state. Third, I find a relationship between two. Fixed-effect (FE) regression models are employed to explain how state entrepreneurship for clean energy generation affects to CHP technology adoption and job creation within or between each state. The FE model allows to analyze cross-sectional time-series data by controlling for all time-invariant differences between states, such as geographic location. A panel data set for the 50 states and Washington D.C. with a time period from 1980 to 2015 is collected for the FE regression analysis.

I assume that industries are more likely to adopt CHP where the state government provides a number of clean energy policy instruments. I extend the existing literature by developing a theoretical framework to converge two fields—economic development planning and energy planning. Within this framework, I demonstrate how EBED is embedded in reality, how firms act along with clean energy policies, and why energy efficiency could be a source of economic development.