Beneficial Leakage: The Effect of the Regional Greenhouse Gas Initiative on Aggregate Emissions
Subglobal and subnational policies aimed at reducing greenhouse gases are often thought to be less effective than more geographically comprehensive policies as production, and thus emissions, of trade exposed industries may move from the regulated to the unregulated regions. This so-called leakage may negate all emission reductions from the regulated regions and, even worse, may lead to an overall increase in emissions if the unregulated regions have equally or more emissions intensive production. However, if the unregulated regions have less emissions intensive production, the regional regulation may prompt more switching to the relatively cleaner producers than would otherwise occur, creating a type of beneficial leakage. We use detailed electricity generation and transmission data to show that this might be the case for the Regional Greenhouse Gas Initiative (RGGI), a CO$_2$ cap-and-trade program for the electricity sector in select Northeastern U.S. states. We find evidence that electricity generation did leak out of the RGGI region to surrounding state, but electricity generation in the non-capped jurisdictions is less emissions intensive than in the RGGI region, resulting in a net decrease in aggregate emissions. Back-of-the-envelope calculations suggest that one-quarter of apparent emissions reductions actually leaked but that this served to reduce total combined emissions by an additional one percent.
|Date of creation:||Jun 2015|
|Contact details of provider:|| Postal: Golden, Colorado 80401|
Phone: (303) 273-3480
Fax: (303) 273-3416
Web page: http://econbus-papers.mines.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bushnell, James & Chen, Yihsu, 2012. "Allocation and leakage in regional cap-and-trade markets for CO2," Resource and Energy Economics, Elsevier, vol. 34(4), pages 647-668.
- Joseph E. Aldy & William A. Pizer, 2015.
"The Competitiveness Impacts of Climate Change Mitigation Policies,"
Journal of the Association of Environmental and Resource Economists,
University of Chicago Press, vol. 2(4), pages 565-595.
- Joseph E. Aldy & William A. Pizer, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," NBER Working Papers 17705, National Bureau of Economic Research, Inc.
- Aldy, Joseph E. & Pizer, William A., 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp11-047, Harvard University, John F. Kennedy School of Government.
- Aldy, Joseph E. & Pizer, William A., 2014. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp14-025, Harvard University, John F. Kennedy School of Government.
- Aldy, Joseph Edgar & Pizer, William, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Scholarly Articles 5688779, Harvard Kennedy School of Government.
- Aldy, Joseph E. & Pizer, William A., 2015. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp15-046, Harvard University, John F. Kennedy School of Government.
- Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
- Justin Caron, Sebastian Rausch, and Niven Winchester, 2015. "Leakage from sub-national climate policy: The case of Californias capandtrade program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
- Rahel Aichele & Gabriel Felbermayr, 2015.
"Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade,"
The Review of Economics and Statistics,
MIT Press, vol. 97(1), pages 104-115, March.
- Rahel Aichele & Gabriel Felbermayr, 2011. "Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade," CESifo Working Paper Series 3661, CESifo Group Munich.
- Goulder, Lawrence H. & Jacobsen, Mark R. & van Benthem, Arthur A., 2012. "Unintended consequences from nested state and federal regulations: The case of the Pavley greenhouse-gas-per-mile limits," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 187-207.
- Joseph A. Cullen & Erin T. Mansur, 2014. "Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach using the Shale Revolution," NBER Working Papers 20795, National Bureau of Economic Research, Inc.
- repec:clg:wpaper:2008-02 is not listed on IDEAS
- Bushnell, James & Chen, Yihsu & Zaragoza-Watkins, Matthew, 2014. "Downstream regulation of CO2 emissions in California's electricity sector," Energy Policy, Elsevier, vol. 64(C), pages 313-323.
- Kahn, Matthew E. & Mansur, Erin T., 2013. "Do local energy prices and regulation affect the geographic concentration of employment?," Journal of Public Economics, Elsevier, vol. 101(C), pages 105-114.
When requesting a correction, please mention this item's handle: RePEc:mns:wpaper:wp201506. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jared Carbone)
If references are entirely missing, you can add them using this form.