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Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act

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  • Linn, Joshua

    ()
    (Resources for the Future)

  • Mastrangelo, Erin
  • Burtraw, Dallas

    ()
    (Resources for the Future)

Abstract

The Clean Air Act has assumed the central role in US climate policy, directing the development of regulations governing greenhouse gas emissions from existing coal-fired power plants. This paper examines the operation of coal-fired generating units over 25 years to estimate the marginal costs and potential magnitude of emissions reductions from improving their efficiency. We find that a 10 percent increase in coal prices causes a 0.2 to 0.5 percent heat rate reduction, broadly consistent with engineering assessments. We also find that coal prices have a significant effect on utilization. The results are used to compare cost-effectiveness of alternative policies.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-13-05.

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Date of creation: 19 Feb 2013
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Handle: RePEc:rff:dpaper:dp-13-05

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Keywords: efficiency; regulation; greenhouse gas; carbon dioxide; coal; performance standards;

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References

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  1. Kira Markiewicz & Nancy L. Rose & Catherine Wolfram, 2004. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency," NBER Working Papers 11001, National Bureau of Economic Research, Inc.
  2. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2007. "Vertical Arrangements, Market Structure, and Competition An Analysis of Restructured U.S. Electricity Markets," NBER Working Papers 13507, National Bureau of Economic Research, Inc.
  3. Bushnell, James & Wolfram, Catherine, 2008. "Enforcement of Vintage Differentiated Regulations: The Case of New Source Review," Staff General Research Papers 31185, Iowa State University, Department of Economics.
  4. P. Joskow, 1974. "Inflation and Environmental Concern: Structural Change in the Process of Public Utility Price Regulation," Working papers 128, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
  6. Fleishman, Rachel & Alexander, Rob & Bretschneider, Stuart & Popp, David, 2009. "Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants," Energy Policy, Elsevier, vol. 37(11), pages 4574-4582, November.
  7. Ronald Shadbegian & Wayne Gray, 2005. "Assessing Multi-Dimensional Performance: Environmental and Economic Outcomes," Working Papers 05-03, Center for Economic Studies, U.S. Census Bureau.
  8. Paul L. Joskow, 1997. "Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 119-138, Summer.
  9. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
  10. Christopher R. Knittel, 2002. "Alternative Regulatory Methods And Firm Efficiency: Stochastic Frontier Evidence From The U.S. Electricity Industry," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 530-540, August.
  11. Denny Ellerman, 1998. "Note on The Seemingly Indefinite Extension of Power Plant Lives, A Panel Contribution," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
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Citations

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Cited by:
  1. Burtraw, Dallas & Woerman, Matt, 2012. "US Status on Climate Change Mitigation," Discussion Papers, Resources For the Future dp-12-48, Resources For the Future.
  2. Burtraw, Dallas & Fraas, Arthur G. & Richardson, Nathan, 2012. "Tradable Standards for Clean Air Act Carbon Policy," Discussion Papers, Resources For the Future dp-12-05, Resources For the Future.
  3. Burtraw, Dallas & Woerman, Matt, 2013. "Technology Flexibility and Stringency for Greenhouse Gas Regulations," Discussion Papers, Resources For the Future dp-13-24, Resources For the Future.
  4. Adair, Sarah K. & Hoppock, David C. & Monast, Jonas J., 2014. "New Source Review and coal plant efficiency gains: How new and forthcoming air regulations affect outcomes," Energy Policy, Elsevier, vol. 70(C), pages 183-192.

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