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Enforcement of vintage differentiated regulations: The case of new source review

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  • Bushnell, James B.
  • Wolfram, Catherine D.

Abstract

We analyze the effects of the New Source Review (NSR) environmental regulations on coal-fired electric power plants. Regulations that grew out of the Clean Air Act of 1970 required new electric generating plants to install costly pollution control equipment but exempted existing plants. Plants lost their exemptions if they made “major modifications.” We examine whether this caused firms to invest less in grandfathered plants, possibly leading to lower efficiency and higher emissions. We find evidence that heightened NSR enforcement reduced capital investment at vulnerable plants. However, we find no discernible effect on other inputs or emissions.

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  • Bushnell, James B. & Wolfram, Catherine D., 2012. "Enforcement of vintage differentiated regulations: The case of new source review," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 137-152.
    • Handle: RePEc:eee:jeeman:v:64:y:2012:i:2:p:137-152
    DOI: 10.1016/j.jeem.2012.01.006
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    2. Bialek, Sylwia & Gregory, Jack & Revesz, Richard L., 2022. "Still your grandfather's boiler: Estimating the effects of the Clean Air Act's grandfathering provisions," Working Papers 05/2022, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    3. Barrows, Geoffrey & Garg, Teevrat & Jha, Akshaya, 2019. "The Health Costs of Coal-Fired Power Plants in India," IZA Discussion Papers 12838, Institute of Labor Economics (IZA).
    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.
    5. Puja Singhal, 2018. "Are Emission Performance Standards Effective in Pollution Control? Evidence from the EU's Large Combustion Plant Directive," Discussion Papers of DIW Berlin 1773, DIW Berlin, German Institute for Economic Research.
    6. Dou, Xiaoya & Linn, Joshua, 2020. "How do US passenger vehicle fuel economy standards affect new vehicle purchases?," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    7. Chan, H. Ron & Zhou, Yichen Christy, 2021. "Regulatory spillover and climate co-benefits: Evidence from New Source Review lawsuits," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    8. Evangelina Dardati & Julio Riutort, 2016. "Cap-and-Trade and Financial Constraints: Is Investment Independent of Permit Holdings?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 841-864, December.
    9. Germeshausen, Robert & von Graevenitz, Kathrine & Achtnicht, Martin, 2022. "Does the stick make the carrot more attractive? State mandates and uptake of renewable heating technologies," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    10. Coysh, Daniel & Johnstone, Nick & Kozluk, Tomasz & Nachtigall, Daniel & Cárdenas Rodríguez, Miguel, 2020. "Vintage differentiated regulations and plant survival: Evidence from coal-fired power plants," Ecological Economics, Elsevier, vol. 176(C).
    11. James M. Sallee, 2023. "Retiring Old Capital to Foster Decarbonization," NBER Chapters, in: Entrepreneurship and Innovation Policy and the Economy, volume 3, pages 115-138, National Bureau of Economic Research, Inc.
    12. Heutel, Garth, 2011. "Plant vintages, grandfathering, and environmental policy," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 36-51, January.

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