Essays in mineral and energy policy

Abstract

The chapters in this dissertation focus on mineral and energy policy but vary in the type of their contribution to current mineral and energy economic knowledge. In the second chapter, we present an applied policy analysis of rare earth markets. Specifically, we develop a Stackelberg game of coproduction and model the production responses of the three major rare earth producers to several different Chinese rare earth policies. We find that the response of each actor depends on the revenue share of each rare earth for each producer. In the third chapter, we present a method of calibrating constant elasticity of substitution functions which are commonly employed in partial and general equilibrium models. The exemplary application of the calibration technique focuses on fitting models' implicit abatement cost functions to bottom-up, engineering estimates. A key benefit of this calibration method is that the elasticities are optimized over an entire relevant range of marginal abatement costs whereas other techniques are local approximations. The fourth and final chapter develops and simulates theoretical propositions on the interaction of electricity storage and tradable performance standards imposed on carbon emitted in the electricity sector. We find that the introducing electricity storage under a tradable performance standard reduces societal benefits relative to when storage is not available. The combination of the inherent inefficiency of the tradable performance standard’s implicitly-subsidized low carbon generation and the increased supply elasticity of low carbon generation through the introduction of storage leads to decreased social surplus. Summarizing the three chapters’ contributions: the second presents an applied policy analysis with a unique Stackelberg game of coproduction, the third develops a new method that calibrates policy costs in equilibrium models, and the fourth develops new theory in energy policy and then presents simulation results that support the theoretical propositions.