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On the Frontier
Joseph Cullen
Ph.D. in Economics ’09

By Eller College

Newly-minted Ph.D. focuses on economics of environmental policy.

Tomorrow’s top professors are graduating into the academic workforce every year. For many of them, the research that comprises their dissertation topic is a jumping-off point for future exploration. eller buzz checked in with economics Ph.D. alumnus Joseph Cullen, who joined Harvard University in the fall as a postdoctoral fellow.

eller buzz: Could you describe your research focus?

Joseph Cullen: I’m interested in how environmental policies such as wind power subsidies and carbon taxes may change business behavior as well as evaluating the costs of these policies to an industry. My dissertation focused on the electricity industry, a large source of emissions in the U.S.

EB: How did you decide on a dissertation topic?

JC: When I came to the UA to do my Ph.D. in economics, I wanted to work on energy issues. I had the opportunity to work with some great professors in the department, including Guatam Gowrisankaran, Manuela Angelucci, Stan Reynolds, Price Fishback, and Greg Crawford on other research topics. However, my advisor Gautam encouraged me to continue pursing topics in my area of interest. Eventually, I found some interesting data on the Texas electricity grid, and in December 2007, started to work on a dissertation based on that information. Although energy is not my advisor’s field, his expertise in dynamic modeling was invaluable.

EB: Part of your dissertation is a measurement paper.

JC: I was looking at wind power in Texas. On a blustery day, 10 percent of the electricity needed to power the state comes from wind turbines. And that data just goes through 2007 — the state has added more turbines since then. So one of the questions was: What are the emissions savings for wind turbines? The government subsidizes wind power through a tax credit; subsidies are very important for the bottom line of the wind farms, providing 40-60 percent of revenue. I looked at how the value of offset emissions compared to the size of the subsidy.

EB: What did you discover about the implications of carbon taxes?

JC: I wanted to understand how firms would change their behavior under a carbon tax like the one that just passed in the House of Representatives. My research shows that the tax wouldn’t make a considerable difference in emissions from the electricity sector in the short run. So that’s not encouraging. Ideally, firms would use gas generators more and coal generators less. The problem is that coal generators are so much cheaper to operate that it is hard to incentivize firms to switch from coal to gas. In the short run, with a carbon tax, most of the reduction in emissions may come from reduced consumption due to higher energy prices rather than changes in production. My continuing research is investigating the long-run scenario where firms can invest in new generation equipment.