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Policy Monitor--Greenhouse Gas Regulation under the Clean Air Act: A Guide for Economists

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  • Dallas Burtraw
  • Art Fraas
  • Nathan Richardson

Abstract

Until recently, most attention to U.S. climate policy has focused on legislative efforts to introduce a price on carbon through cap and trade. In the absence of such legislation, the Clean Air Act is a potentially effective vehicle for achieving reductions in greenhouse gas (GHG) emissions. Decisions regarding existing stationary sources will have the greatest effect on emissions reductions. Although the magnitude of reductions is uncertain, it is plausible that a 10 percent reduction in GHG emissions from 2005 levels could be achieved at moderate costs by 2020. This is comparable to domestic emissions reductions that would have been achieved under the Waxman--Markey legislation. These measures do not include the switching of fuels, which could yield further reductions. The ultimate cost of regulation under the Act hinges on the stringency of standards and the flexibility allowed. A broad-based tradable performance standard is legally plausible and would provide incentives comparable to the proposed legislation, at least in the near term. Copyright 2011, Oxford University Press.

Suggested Citation

  • Dallas Burtraw & Art Fraas & Nathan Richardson, 2011. "Policy Monitor--Greenhouse Gas Regulation under the Clean Air Act: A Guide for Economists," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(2), pages 293-313, Summer.
  • Handle: RePEc:oup:renvpo:v:5:y:2011:i:2:p:293-313
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    References listed on IDEAS

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    1. Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2009. "The Incidence of U.S. Climate Policy: Alternative Uses of Revenues From a Cap-and-Trade Auction," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(3), pages 497-518, September.
    2. Dallas Burtraw & William Shobe, 2008. "State and Local Climate Policy under a National Emissions Floor," Working Papers 2008-05, Center for Economic and Policy Studies.
    3. Parry, Ian W. H. & Williams III, Roberton C., 1999. "A second-best evaluation of eight policy instruments to reduce carbon emissions," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 347-373, August.
    4. Carolyn Fischer & Alan K. Fox, 2007. "Output-Based Allocation of Emissions Permits for Mitigating Tax and Trade Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 575-599.
    5. Burtraw, Dallas & Kahn, Danny & Palmer, Karen, 2006. "CO2 Allowance Allocation in the Regional Greenhouse Gas Initiative and the Effect on Electricity Investors," The Electricity Journal, Elsevier, vol. 19(2), pages 79-90, March.
    6. Carolyn Fischer, 2003. "Combining rate-based and cap-and-trade emissions policies," Climate Policy, Taylor & Francis Journals, vol. 3(sup2), pages 89-103, December.
    7. Spulber, Daniel F., 1985. "Effluent regulation and long-run optimality," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 103-116, June.
    8. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
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    Cited by:

    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. Fan, Jin & Li, Jun & Wu, Yanrui & Wang, Shanyong & Zhao, Dingtao, 2016. "The effects of allowance price on energy demand under a personal carbon trading scheme," Applied Energy, Elsevier, vol. 170(C), pages 242-249.
    3. 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.
    4. Alfred Endres & Tim Friehe, 2013. "The monopolistic polluter under environmental liability law: incentives for abatement and R&D," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(3), pages 753-770, March.
    5. Burtraw, Dallas & Woerman, Matt, 2013. "Economic Ideas for a Complex Climate Policy Regime," Discussion Papers dp-13-03-rev, Resources For the Future.
    6. 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.
    7. Yihsu Chen & Andrew Liu, 2013. "Emissions trading, point-of-regulation and facility siting choices in the electric markets," Journal of Regulatory Economics, Springer, vol. 44(3), pages 251-286, December.
    8. Burtraw, Dallas & Woerman, Matt, 2013. "Economic ideas for a complex climate policy regime," Energy Economics, Elsevier, vol. 40(S1), pages 24-31.

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