Student Name: Chris Blackburn

Title of Thesis: Networks and Energy Transitions

Location: March 27, 2019 in Old CE Room 204

Committee members:

1. Dr. Juan Moreno-Cruz (chair) (ECON)
2. Dr. Tibor Besedes (ECON)
3. Dr. Matthew Oliver (ECON)
4. Dr. Laura Taylor (ECON)
5. Dr. Daniel Matisoff (PP)

Abstract: This thesis explores how networks can be used to guide the transition to a low-carbon energy system. Networks are the basis for a variety of social and economic activities within society. Social networks, for instance, have important implications for the way information flows between individuals, firms, and institutions. Economic networks, for example, shape the organization of production and the transmission of shocks between firms and sectors in the economy. Given the ubiquitous nature of networks, understanding how behavior changes within a networked setting is critical for designing, implementing, and evaluating policies promoting the transition to a low-carbon energy system. Transitioning to a low-carbon energy system can be achieved through either the adoption of low-carbon energy technologies or by reducing consumption of carbon-intensive fossil fuel resources. In this dissertation, we explore how networks can be incorporated in both of these strategies to facilitate the low-carbon energy transition. 

The transition to a low-carbon economy is hindered by market and institutional barriers that limit the diffusion of low-carbon technological alternatives. Traditional policy interventions either rely on research subsidies or tax incentives to overcome these barriers to commercialization. However, the uncertainty with respect to a technology’s performance or reliability is not addressed by these traditional policy instruments. In cases where uncertainty acts as a barrier, both public and private actors may implement pilot and demonstration (P&D) projects, deploying the technology at reduced scale, to remediate this uncertainty. We investigate the impact of P&D projects on adoption of green building technology and unpack the mechanisms driving the observed impacts. We find P&D projects for a popular green building standard increased local green building adoption rates between 5-12 percent, and additional tests reveals that organizations exposed to P&D projects experience a 12 percent reduction in construction times after exposure. Our findings suggest that P&D projects are most successful when they contribute to the formation of contractor networks, where learning from the P&D project can be disseminated to potential adopters of the new technology, reducing future adoption costs.

Achieving a low-carbon economy could also be achieved through the more productive use of carbon-intensive, fossil fuel energy resources. However, whether or not energy efficiency gains lead to reductions in aggregate fossil fuel consumption remains an open question. For instance, despite a more than two-fold increase in the productivity of common energy service technologies, global energy consumption has continued to rise over the past century. What might explain this pattern? Over the same time period, we observe that many production processes have become increasingly organized into complex, supply chains. We investigate whether this evolution of industrial, supply chain networks has affected the way energy efficiency improvements manifest on an aggregate scale. Using a combination of theory and numerical models, we illustrate that the structure of the economy’s production networks plays a critical role in how micro-scale energy efficiency improvements alter aggregate energy consumption within the economy. In particular, we show that the network centrality of the sector experiencing the energy efficiency improvement dictates the size of aggregate energy savings. Our results suggest energy efficiency policy in an interconnected world may produce unintended consequences without considering how the policy shock propagates through the underlying production structure of the economy.