What’s Powering Wind? Measuring the Environmental Benefits of Wind Generated Electricity ∗

copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. 1 Production subsidies for renewable energy have experienced inter-mittent support from the federal government. One reason for less than unified support arises from uncertainty over the environmental impact of projects implemented because of such subsidies. Wind en-ergy in particular has taken advantage of federal subsidies, but what has been the environmental impact? Taking investment in wind capac-ity as given, I am able to identify the short run substitution patterns between wind power and conventional power for one geographic area of the US electric grid. I exploit the exogenous nature of wind to identify generator level substitution of wind generated electricity for conventionally generated electricity. I then quantify the avoided emis-sions and associated costs using generator level emissions information and market clearing prices for pollution permits. The end result is the value of avoided emissions due to government subsidies. 2