UC Davis Agricultural and Resource Economics

Catie Hausman, University of Michigan

The Non-Abatement of Methane Leaks

Date and Location

Wednesday, October 12, 2016, 4:10 PM - 5:30 PM
ARE Library, 4101 Social Sciences and Humanities

Abstract

We provide a novel approach to estimate how much money natural gas utilities spend to abate product leaks. We show that firms exert less eff ort than what is theoretically optimal for a typical private rm; expenditure on abatement is below the cost of lost gas. This is consistent with the fact that many of these price-regulated natural monopolies are allowed to pass the cost of lost gas on to their customers. Importantly, natural gas, primarily composed of methane, is both explosive and a potent greenhouse gas. As such, abatement incentives are far lower than safety and climate costs warrant.

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