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Regulating existing power plants under the U.S. Clean Air Act: Present and future consequences of key design choices

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  • Murray, Brian C.
  • Pizer, William A.
  • Ross, Martin T.

Abstract

In June 2014, the U.S. EPA released its proposed rules to regulate carbon dioxide emissions from existing fossil fuel power plants, triggering considerable debate on the proposal’s design and its environmental and economic consequences. One question not addressed by this debate is this: What if the EPA regulations turn out to be inadequate to address future mitigation goals? That is, what will the landscape for future policies look like if these regulations turn out to be just an interim measure? This analysis compares potential short- and long-term consequences of several key regulatory design choices, including mass-based versus rate-based standards, tradable versus non-tradable standards, and differentiated versus single standards. It finds that long-term consequences may be significant in terms of the legacy they leave for future policy revisions: tradable standards lead to lower electricity prices and become weaker over time; differentiated tradable standards lead to relatively greater investment in coal retrofits; non-tradable standards lead to relatively greater retirement of coal capacity. It may be the case that key policy choices entail one set of trade-offs if proposed EPA rules are viewed as relatively permanent and final and another set of tradeoffs if the rules are viewed as an interim solution.

Suggested Citation

  • Murray, Brian C. & Pizer, William A. & Ross, Martin T., 2015. "Regulating existing power plants under the U.S. Clean Air Act: Present and future consequences of key design choices," Energy Policy, Elsevier, vol. 83(C), pages 87-98.
    • Handle: RePEc:eee:enepol:v:83:y:2015:i:c:p:87-98
    DOI: 10.1016/j.enpol.2015.03.028
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    References listed on IDEAS

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    1. Johnson, Kenneth C., 2006. "Feebates: An effective regulatory instrument for cost-constrained environmental policy," Energy Policy, Elsevier, vol. 34(18), pages 3965-3976, December.
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    Cited by:

    1. Brown, Marilyn A. & Kim, Gyungwon & Smith, Alexander M. & Southworth, Katie, 2017. "Exploring the impact of energy efficiency as a carbon mitigation strategy in the U.S," Energy Policy, Elsevier, vol. 109(C), pages 249-259.
    2. Ross, Martin T. & Murray, Brian C., 2016. "What is the fuel of the future? Prospects under the Clean Power Plan," Energy Economics, Elsevier, vol. 60(C), pages 451-459.
    3. Rode, David C. & Fischbeck, Paul S. & Páez, Antonio R., 2017. "The retirement cliff: Power plant lives and their policy implications," Energy Policy, Elsevier, vol. 106(C), pages 222-232.
    4. Zachary A. Wendling & David C. Warren & Barry M. Rubin & Sanya Carley & Kenneth R. Richards, 2020. "A Scalable Energy–Economy Model for State-Level Policy Analysis Applied to a Demand-Side Management Program," Economic Development Quarterly, , vol. 34(4), pages 372-386, November.
    5. Martin T. Ross, 2018. "Regional Implications Of National Carbon Taxes," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 1-39, February.
    6. Brown, Kristen E. & Henze, Daven K. & Milford, Jana B., 2017. "How accounting for climate and health impacts of emissions could change the US energy system," Energy Policy, Elsevier, vol. 102(C), pages 396-405.
    7. Ying Sun & Fengqin Liu & Huaping Sun, 2022. "Does Standardization Improve Carbon Emission Efficiency as Soft Infrastructure? Evidence from China," Energies, MDPI, vol. 15(6), pages 1-17, March.
    8. Anderson, Jeffrey J. & Rode, David & Zhai, Haibo & Fischbeck, Paul, 2021. "Transitioning to a carbon-constrained world: Reductions in coal-fired power plant emissions through unit-specific, least-cost mitigation frontiers," Applied Energy, Elsevier, vol. 288(C).

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