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Carbon dioxide emission standards for U.S. power plants: An efficiency analysis perspective

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  • Hampf, Benjamin
  • Rødseth, Kenneth Løvold

Abstract

On June 25, 2013, President Obama announced his plan to introduce carbon dioxide emission standards for electricity generation. This paper proposes an efficiency analysis approach that addresses which emission rates (and standards) would be feasible if the existing generating units adopt best practices. A new efficiency measure is introduced and further decomposed to identify different sources' contributions to emission rate improvements. Estimating two Data Envelopment Analysis (DEA) models – the well-known joint production model and the new materials balance model – on a dataset consisting of 160 bituminous-fired generating units, we find that the average generating unit's electricity-to-carbon dioxide ratio is 15.3% below the corresponding best-practice ratio. Further examinations reveal that this discrepancy can largely be attributed to non-discretionary factors and not to managerial inefficiency. Moreover, even if the best practice ratios could be implemented, the generating units would not be able to comply with the EPA's recently proposed carbon dioxide standard.

Suggested Citation

  • Hampf, Benjamin & Rødseth, Kenneth Løvold, 2015. "Carbon dioxide emission standards for U.S. power plants: An efficiency analysis perspective," Energy Economics, Elsevier, vol. 50(C), pages 140-153.
  • Handle: RePEc:eee:eneeco:v:50:y:2015:i:c:p:140-153
    DOI: 10.1016/j.eneco.2015.04.001
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    4. Aparicio, J. & Kapelko, M. & Zofío, J.L., 2019. "The Measurement of Environmental Economic Inefficiency with Pollution-generating Technologies," ERIM Report Series Research in Management ERS-2019-005-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
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    More about this item

    Keywords

    Emission standards; Carbon dioxide emissions; Materials balance condition; Electricity generation; Weak G-disposability; Data Envelopment Analysis;

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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