Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation

Using integrated assessment models, we calculate the economic value of the extraordinary decline in emissions from US power plants. Annual local and global air pollution damages fell from $245 to $133 billion over 2010–2017. Decomposition shows changes in emission rates and generation shares among coal and gas plants account for more of this decline than changes in renewable generation, electricity consumption, and damage valuations. Econometrically estimated marginal damages declined in the East from 8.6 to 6 cents per kWh. Marginal damages increased slightly in the West and Texas. These estimates indicate electric vehicles are now cleaner on average than gasoline vehicles. (JEL H23, L94, Q53, Q58)