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Technology Flexibility and Stringency for Greenhouse Gas Regulations

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  • Burtraw, Dallas

    (Resources for the Future)

  • Woerman, Matt

Abstract

The Clean Air Act provides the primary regulatory framework for climate policy in the United States. Tradable performance standards (averaging) emerge as the likely tool to achieve flexibility in the regulation of existing stationary sources. This paper examines the relationship between flexibility and stringency. The metric to compare the stringency of policies is ambiguous. The relevant section of the act is traditionally technology based, suggesting an emissions rate focus. However, a specific emissions rate improvement averaged over a larger set of generators reduces the actual emissions change. A marginal abatement cost criterion to compare policy designs suggests cost-effectiveness across sources. This criterion can quadruple the emissions reductions that are achieved, with net social benefits exceeding $25 billion in 2020, with a 1.3 percent electricity price increase. Under the act, multiple stringency criteria are relevant. EPA should evaluate state implementation plans according to a portfolio of attributes, including effectiveness and cost.

Suggested Citation

  • Burtraw, Dallas & Woerman, Matt, 2013. "Technology Flexibility and Stringency for Greenhouse Gas Regulations," RFF Working Paper Series dp-13-24, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-13-24
    as

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    File URL: http://www.rff.org/RFF/documents/RFF-DP-13-24.pdf
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    References listed on IDEAS

    as
    1. Burtraw, Dallas & Woerman, Matt & Paul, Anthony, 2012. "Retail electricity price savings from compliance flexibility in GHG standards for stationary sources," Energy Policy, Elsevier, vol. 42(C), pages 67-77.
    2. Newell, Richard G. & Rogers, Kristian, 2003. "The Market-based Lead Phasedown," Discussion Papers 10445, Resources for the Future.
    3. Laurie Johnson & Chris Hope, 2012. "The social cost of carbon in U.S. regulatory impact analyses: an introduction and critique," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 2(3), pages 205-221, September.
    4. Burtraw, Dallas & Fraas, Arthur G. & Richardson, Nathan, 2012. "Tradable Standards for Clean Air Act Carbon Policy," RFF Working Paper Series dp-12-05, Resources for the Future.
    5. Joshua Linn & Erin Mastrangelo & Dallas Burtraw, 2014. "Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 97-134.
    6. Paul, Anthony & Palmer, Karen & Woerman, Matt, 2013. "Modeling a clean energy standard for electricity: Policy design implications for emissions, supply, prices, and regions," Energy Economics, Elsevier, vol. 36(C), pages 108-124.
    7. Burtraw, Dallas & Woerman, Matt, 2012. "US Status on Climate Change Mitigation," RFF Working Paper Series dp-12-48, Resources for the Future.
    8. Richardson, Nathan, 2011. "Playing without Aces: Offsets and the Limits of Flexibility under Clean Air Act Climate Policy," RFF Working Paper Series dp-11-49, Resources for the Future.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jeffrey C. Peters & Thomas W. Hertel, 2017. "Achieving the Clean Power Plan 2030 CO2 Target with the New Normal in Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    2. Dallas Burtraw & Josh Linn & Karen Palmer & Anthony Paul, 2014. "The Costs and Consequences of Clean Air Act Regulation of CO2 from Power Plants," American Economic Review, American Economic Association, vol. 104(5), pages 557-562, May.
    3. Anthony Paul & Karen Palmer & Matthew Woerman, 2015. "Incentives, Margins, And Cost Effectiveness In Comprehensive Climate Policy For The Power Sector," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-27, November.
    4. Thomas P. Lyon & John W. Maxwell, 2014. "Self-Regulation and Regulatory Flexibility: Why Firms May be Reluctant to Signal Green," Working Papers 2014-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    5. Paul, Anthony & Beasley, Blair & Palmer, Karen, 2013. "Taxing Electricity Sector Carbon Emissions at Social Cost," RFF Working Paper Series dp-13-23-rev, Resources for the Future.
    6. Zhou, Yishu & Huang, Ling, 2016. "Have U.S. power plants become less technically efficient? The impact of carbon emission regulation," Energy Economics, Elsevier, vol. 58(C), pages 105-115.

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    More about this item

    Keywords

    climate policy; efficiency; EPA; Clean Air Act; coal; compliance flexibility; regulation;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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