Wind power has the potential to reduce emissions associated with conventional electricity generation. Using detailed, systemic hourly data of wind generation and emissions from plants in ERCOT (Texas), we empirically estimate the SO2, NOx and CO2 emissions offset by wind generation. Our estimation strategy implicitly captures both the marginal unit of generation displaced by wind on the electrical grid, and the marginal emissions reduction from that displaced unit. Our results also reveal substantial variation in emissions reductions, which appear to be strongly driven by differences in the generation mix. The environmental benefits from emissions reductions in ERCOT fail to cover government subsidies for wind generation.

Previous empirical work has shown that real natural gas prices have a small to negligible impact on total U.S. industrial production and most of its sub-indices. We first show that these results still hold with a sample that runs through mid-2012 and uses a different natural gas price. Concerns about the joint determination of the real natural gas price and U.S. economic activity lead us to reassess these results using a multivariate framework. Our model shows that natural gas does affect U.S. economic activity, but primarily through changes in natural gas production. We also show that natural gas supply, inventory demand, and responses to events in the oil market have been the most important contributors to the real natural gas price since 2000. In terms of approximate point estimates, our results indicate that increases in natural gas supply can raise total U.S. industrial production by 0.1 to 0.5 percent under plausible scenarios.JEL Classification: E37, F47, Q43.

Previous empirical work has shown that real natural gas prices have a small to negligible impact on total U.S. industrial production and most of its sub-indices. We first show that these results still hold with a sample that runs through mid-2012 and uses a different natural gas price. Concerns about the joint determination of the real natural gas price and U.S. economic activity lead us to reassess these results using a multivariate framework. Our model shows that natural gas does affect U.S. economic activity, but primarily through changes in natural gas production. We also show that natural gas supply, inventory demand, and responses to events in the oil market have been the most important contributors to the real natural gas price since 2000. In terms of approximate point estimates, our results indicate that increases in natural gas supply can raise total U.S. industrial production by 0.1 to 0.5 percent under plausible scenarios.JEL Classification: E37, F47, Q43.

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