Retail Electricity Price Savings from Compliance Flexibility in GHG Standards for Stationary Sources
AbstractThe EPA will issue rules regulating greenhouse gas (GHG) emissions from existing steam boilers and refineries in 2012. A crucial issue affecting the scope and cost of emissions reductions will be the potential introduction of flexibility in compliance, including averaging across groups of facilities. This research investigates the role of compliance flexibility for the most important of these source categories—existing coal-fired power plants—that currently account for one-third of national emissions of carbon dioxide, the most important greenhouse gas. We find a flexible standard, calibrated to achieve the same emissions reductions as an inflexible approach, reduces the increase in electricity price by 60 percent and overall costs by two-thirds in 2020. The flexible standard also leads to substantially more investment to improve the operating efficiency of existing facilities, whereas the inflexible standard leads to substantially greater retirement of existing facilities.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-11-30.
Date of creation: 15 Jul 2011
Date of revision:
climate policy; efficiency; EPA; Clean Air Act; coal; compliance flexibility; regulation;
Find related papers by JEL classification:
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-ENE-2012-01-03 (Energy Economics)
- NEP-ENV-2012-01-03 (Environmental Economics)
- NEP-LAW-2012-01-03 (Law & Economics)
- NEP-REG-2012-01-03 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Newell, Richard G & Stavins, Robert N, 2003.
"Cost Heterogeneity and the Potential Savings from Market-Based Policies,"
Journal of Regulatory Economics,
Springer, vol. 23(1), pages 43-59, January.
- Stavins, Robert & Newell, Richard, 2000. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Discussion Papers dp-00-10-rev, Resources For the Future.
- Morgenstern, Richard & Harrington, Winston & Nelson, Per-Kristian, 1999. "On the Accuracy of Regulatory Cost Estimates," Discussion Papers dp-99-18, Resources For the Future.
- Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
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