Research
energy, climate, development, networks, industrial organization, firms
2025
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Balancing Climate and Industrial Objectives when Pricing Dirty Upstream GoodsEugene Tan2025Most upstream goods are dirty, and most industrial emissions are upstream. A Pigouvian logic would tax dirty goods to internalize their negative externalities, whereas industrial economists have advocated for subsidies on upstream goods to fix accumulated quantity distortions in vertically integrated supply chains. Should we subsidize or tax dirty upstream goods? While ‘direct’ abatement and leakage occur through the adoption of green or abatement technologies and relocation, respectively, the ‘indirect’ effects of carbon pricing depend on the microeconomic responses of buyers exposed to regulated suppliers. Buyers can choose to substitute towards green suppliers (indirect abatement), source from foreign suppliers (indirect leakage), pass through costs down their supply chain, or exit. Pass-through and exit propagate the regulatory costs downstream, creating the same choice for downstream producers. If indirect abatement is minimal and pass-through dominates, carbon pricing may function as a de-facto negative industrial policy. Using novel production network data, I analyze the effects of EU-ETS price shocks on buyer substitution and cost pass-through. The behavior of buyers in a production network tends to raise the social costs and reduce the social benefits of regulation. In a second-best world, climate policy should be designed with market imperfections in mind.
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Connection Policy Design for Electricity Access: Lessons from Rwandan ElectrificationEugene Tan, Gabriel Gonzalez Sutil, and Joel Mugyenyi2025Sub-Saharan utilities and governments have employed policies to promote electricity access that differ from those of utilities elsewhere. First, instead of a flat-rate connection charge based on connection sizes, Sub-Saharan utilities have used distance-based connection charges based on a marginal cost logic. We show that distance-based connection charges create strategic incentives for electricity adoption, even with just two households. The first to connect pays more to extend the grid, while the second mover benefits from a lower cost after expansion. This positive externality slows adoption of electricity but also induces a cross-subsidy from the richer first mover to the poorer second mover, increasing electricity access because lower income households can then afford the connection cost. We find that the network is also more efficiently allocated over space in equilibrium. Second, we observe that credit is unusually often paid through consumption tariffs rather than fixed installments, inducing substitution away from electricity consumption. Even as the utility recoups less of the connection charge, it counterintuitively increases utility profits, as most Sub-Saharan utilities have consumption tariffs below marginal cost; this allows the utility to offer more generous credit. Finally, governments can choose to delineate spatial areas for on-grid and off-grid electricity. This diffuses the spatial extent of electricity coverage that off-grid private companies and the public utility can provide together, at the cost of consumer choice within areas where they would otherwise compete. We use a case study of Rwanda to examine these trade-offs in the context of policies that address all three. We find that distance-based connection charges increase equilibrium rural on-grid electricity access by 40%, and credit policies have been responsible for a .7x increase in electricity access since 2017.
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Measuring Embedded Emissions Without Direct Firm DisclosureEugene Tan2025Can we measure embedded emissions without direct firm disclosure? Firm disclosure of scope 3 emissions is difficult because firms typically know only a small fraction of the emissions of their indirect suppliers, as suppliers view their own suppliers and technologies as part of their comparative advantage. We develop an algorithm to estimate intra-facility production from firm inputs and outputs based on graphical matching to technology databases, drawing from an old literature on technology-based models of the firm. We estimate life-cycle emissions from production network data, and show implications for embedded carbon-based policies.
2014
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Energy Return on Investment (EROI) for Forty Global Oilfields Using a Detailed Engineering-Based Model of Oil ProductionAdam R. Brandt, Yuchi Sun, Sharad Bharadwaj, and 3 more authors2014Studies of the energy return on investment (EROI) for oil production generally rely on aggregated statistics for large regions or countries. In order to better understand the drivers of the energy productivity of oil production, we use a novel approach that applies a detailed field-level engineering model of oil and gas production to estimate energy requirements of drilling, producing, processing, and transporting crude oil. We examine 40 global oilfields, utilizing detailed data for each field from hundreds of technical and scientific data sources. Resulting net energy return (NER) ratios for studied oil fields range from ≈2 to ≈100 MJ crude oil produced per MJ of total fuels consumed. External energy return (EER) ratios, which compare energy produced to energy consumed from external sources, exceed 1000:1 for fields that are largely self-sufficient. The lowest energy returns are found to come from thermally-enhanced oil recovery technologies. Results are generally insensitive to reasonable ranges of assumptions explored in sensitivity analysis. Fields with very large associated gas production are sensitive to assumptions about surface fluids processing due to the shifts in energy consumed under different gas treatment configurations. This model does not currently include energy invested in building oilfield capital equipment (e.g., drilling rigs), nor does it include other indirect energy uses such as labor or services.