Electrification in the Long Run

Stephen P. Holland, Erin T. Mansur, and Andrew J. Yates

Working Paper, July 2024.
NBER Working Paper 30082, May 2022 (Titled "Decarbonization and Electrification in the Long Run").

Abstract:

Electrification requires switching from fossil fuels to electricity to power transportation, heating, and industrial processes. We study electrification in a long-run model that captures crucial aspects of electricity markets including time-varying demand, intermittent renewables, and costly storage. Theoretical possibilities differ from short-run intuition. Electrification may crowd out renewable investment, or it may lead to decreased electricity-sector emissions, depending on the time profile of increased electricity usage. To analyze these possibilities we calibrate the model to the U.S. We calculate long-run marginal emissions from electrification and show that electrifying vehicles could decrease total electricity emissions if vehicles charge during the day.