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Cost-Effective Reduction of NOx Emissions from Electricity Generation

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  • Burtraw, Dallas

    ()
    (Resources for the Future)

  • Palmer, Karen

    ()
    (Resources for the Future)

  • Bharvirkar, Ranjit
  • Paul, Anthony

Abstract

This paper analyzes the benefits and costs of policies to reduce nitrogen oxides (NOx) emissions from electricity generation in the United States. Because emissions of NOx contribute to the high concentration of atmospheric ozone in the eastern states that is associated with health hazards, the U.S. Environmental Protection Agency (EPA) has called on eastern states to formulate state implementation plans (SIPs) for reducing NOx emissions. Our analysis considers three NOx reduction scenarios: a summer seasonal cap in the eastern states covered by EPA’s NOx SIP Call, an annual cap in the same SIP Call region, and a national annual cap. All scenarios allow for emissions trading. Although EPA’s current policy is to implement a seasonal cap in the SIP Call region, this analysis indicates that an annual cap in the SIP Call region would yield about 400 million dollars more in net benefits (benefits less costs) than would a seasonal policy, based on particulate-related health effects only. An annual cap in the SIP Call region is also the policy that is most likely to achieve benefits in excess of costs. Consideration of omissions from this accounting, including the potential benefits from reductions in ozone concentrations, strengthens the finding that an annual program offers greater net benefits than a seasonal program.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-00-55-rev.

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Date of creation: 01 Jan 2001
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Handle: RePEc:rff:dpaper:dp-00-55-rev

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Keywords: emissions trading; electricity; particulates; nitrogen oxides; NO x; health benefits;

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References

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  1. Krupnick, Alan, et al, 2002. " Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 161-86, March.
  2. Banzhaf, H. Spencer & Desvousges, William H. & Johnson, F. Reed, 1996. "Assessing the externalities of electricity generation in the Midwest," Resource and Energy Economics, Elsevier, vol. 18(4), pages 395-421, December.
  3. Dallas Burtraw & Alan Krupnick & Erin Mansur & David Austin & Deirdre Farrell, 1998. "Costs And Benefits Of Reducing Air Pollutants Related To Acid Rain," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 379-400, October.
  4. Williams, Roberton III, 2002. "Environmental Tax Interactions when Pollution Affects Health or Productivity," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 261-270, September.
  5. Rowe, Robert D. & Lang, Carolyn M. & Chestnut, Lauraine G., 1996. "Critical factors in computing externalities for electricity resources," Resource and Energy Economics, Elsevier, vol. 18(4), pages 363-394, December.
  6. Krupnick, Alan & McConnell, Virginia & Stoessell, Terrell & Cannon, Matthew & Batz, Michael, 2000. "Cost-Effective NOx Control in the Eastern United States," Discussion Papers dp-00-18, Resources For the Future.
  7. Anna Alberini & Maureen Cropper & Alan Krupnick & Nathalie Simon, 2006. "Willingness to pay for mortality risk reductions: Does latency matter?," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 231-245, May.
  8. Burtraw, Dallas & Krupnick, Alan, 1996. "The Social Cost of Electricity: Do the Numbers Add Up?," Discussion Papers dp-96-30, Resources For the Future.
  9. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "Restructuring and Cost of Reducing NOx Emissions in Electricity Generation," Discussion Papers dp-01-10-rev, Resources For the Future.
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Citations

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Cited by:
  1. Ian W.H. Parry, 2005. "Fiscal Interactions and the Costs of Controlling Pollution from Electricity," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 849-869, Winter.
  2. Parry, Ian W. H., 2004. "Are emissions permits regressive?," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 364-387, March.
  3. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," Discussion Papers dp-01-30-, Resources For the Future.
  4. Burtraw, Dallas & Palmer, Karen, 2005. "The Environmental Impacts of Electricity Restructuring: Looking Back and Looking Forward," Discussion Papers dp-05-07, Resources For the Future.
  5. Timothy Brennan & Karen Palmer & Salvador Martinez, 2002. "Implementing Electricity Restructuring," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 99-132, June.
  6. Burtraw, Dallas & Szambelan, Sarah Jo, 2009. "U.S. Emissions Trading Markets for SO2 and NOx," Discussion Papers dp-09-40, Resources For the Future.
  7. Jaeger, William K. & Egelkraut, Thorsten M., 2011. "Biofuel economics in a setting of multiple objectives and unintended consequences," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4320-4333.
  8. Spencer Banzhaf, H. & Burtraw, Dallas & Palmer, Karen, 2004. "Efficient emission fees in the US electricity sector," Resource and Energy Economics, Elsevier, vol. 26(3), pages 317-341, September.
  9. Palmer, Karen & Brennan, Timothy & Martinez, Salvador, 2001. "Implementing Electricity Restructuring: Policies, Potholes, and Prospects," Discussion Papers dp-01-62-, Resources For the Future.
  10. Denise L. Mauzeral & Babar Sultan & Namsoug Kim & David F. Bradford, 2004. "Charging NOx Emitters for Health Damages: An Exploratory Analysis," Working Papers 99, Princeton University, Department of Economics, Center for Economic Policy Studies..
  11. Rezek, Jon P. & Campbell, Randall C., 2007. "Cost estimates for multiple pollutants: A maximum entropy approach," Energy Economics, Elsevier, vol. 29(3), pages 503-519, May.
  12. Burtraw, Dallas & Bharvirkar, Ranjit & Bloyd, Cary, 2002. "Investment in Electricity Transmission and Ancillary Environmental Benefits," Discussion Papers dp-02-14-, Resources For the Future.
  13. Denise L. Mauzerall & Babar Sultan & Namsoug Kim & David Bradford, 2005. "Charging NO x Emitters for Health Damages: An Exploratory Analysis," CESifo Working Paper Series 1442, CESifo Group Munich.

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