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Technological Modifications in the Nitrogen Oxides Tradable Permit Program

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  • Joshua Linn

Abstract

Tradable permit programs allow firms greater flexibility in reducing emissions than command-and-control regulations and encourage firms to use low cost abatement options, including small-scale modifications to capital equipment. This paper shows that firms have extensively modified capital equipment in the Nitrogen Oxides Budget Trading Program, which covers power plants in the eastern United States. The empirical strategy uses geographic and temporal features of the program to estimate counterfactual emissions, finding that modifications have reduced emission rates by approximately 10-15 percent. The modifications would not have occurred under command-and-control regulation and have reduced regulatory costs.

Suggested Citation

  • Joshua Linn, 2008. "Technological Modifications in the Nitrogen Oxides Tradable Permit Program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 153-176.
  • Handle: RePEc:aen:journl:2008v29-03-a08
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    Cited by:

    1. Bonilla, Jorge & Coria, Jessica & Mohlin, Kristina & Sterner, Thomas, 2014. "Diffusion of NOx abatement technologies in Sweden," Working Papers in Economics 585, University of Gothenburg, Department of Economics.
    2. Linn, Joshua, 2010. "The effect of cap-and-trade programs on firms' profits: Evidence from the Nitrogen Oxides Budget Trading Program," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 1-14, January.
    3. Meredith Fowlie & Nicholas Muller, 2013. "Market-based Emissions Regulation When Damages Vary Across Sources: What Are the Gains from Differentiation?," NBER Working Papers 18801, National Bureau of Economic Research, Inc.
    4. Bonilla, Jorge & Coria, Jessica & Mohlin, Kristina & Sterner, Thomas, 2015. "Refunded emission payments and diffusion of NOx abatement technologies in Sweden," Ecological Economics, Elsevier, vol. 116(C), pages 132-145.
    5. E. Mark Curtis, 2014. "Who Loses Under Power Plant Cap-and-Trade Programs?," NBER Working Papers 20808, National Bureau of Economic Research, Inc.
    6. Galloway, Emily & Johnson, Erik Paul, 2016. "Teaching an old dog new tricks: Firm learning from environmental regulation," Energy Economics, Elsevier, vol. 59(C), pages 1-10.
    7. Ian A. Lange & Peter Maniloff, 2017. "Updating Allowance Allocations in Cap-and-Trade: Evidence from the NOx Budget Program," CESifo Working Paper Series 6666, CESifo Group Munich.
    8. Burtraw, Dallas & Szambelan, Sarah Jo, 2009. "U.S. Emissions Trading Markets for SO2 and NOx," Discussion Papers dp-09-40, Resources For the Future.
    9. Castillo, Anya & Linn, Joshua, 2011. "Incentives of carbon dioxide regulation for investment in low-carbon electricity technologies in Texas," Energy Policy, Elsevier, vol. 39(3), pages 1831-1844, March.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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