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Impacts of Market-based Environmental and Generation Policy on Scrubber Electricity Usage

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  • Allen Bellas
  • Ian Lange

Abstract

The introduction of scrubbers as a means of controlling sulfur dioxide (SO2) emissions from stationary sources coincided with the implementation of the Clean Air Act of 1970. Since that time, there have been many policy changes affecting the electricity generation industry. These changes can be characterized as moving from direct regulation toward market-based incentives, both in deregulation or restructuring of power markets and adoption of market-based environmental regulation. These changes provide natural experiments for investigating whether the form of regulation can alter the rate of technological progress. This paper analyzes changes in scrubbers’ use of electricity (also known as parasitic load) in relation to regulatory policy regimes. Results show that restructured electricity markets led to innovations that reduced parasitic load considerably (35-45%). Conversely, the change to a cap-and-trade system for SO2 has not led to similar reductions.

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  • Allen Bellas & Ian Lange, 2008. "Impacts of Market-based Environmental and Generation Policy on Scrubber Electricity Usage," The Energy Journal, , vol. 29(2), pages 151-164, April.
    • Handle: RePEc:sae:enejou:v:29:y:2008:i:2:p:151-164
    DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No2-8
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    References listed on IDEAS

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    1. Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
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    3. David Popp, 2003. "Pollution control innovations and the Clean Air Act of 1990," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 641-660.
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