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Spillovers from Climate Policy

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  • Stephen P. Holland

Abstract

Climate policy spillovers can be either positive or negative since firms change their production processes in response to climate policies, which may either increase or decrease emissions of other pollutants. Understanding these ancillary benefits or costs has important implications for climate policy design, modeling, and benefit-cost analysis. This paper shows how spillovers can be decomposed into output effects (which have ancillary benefits) and substitution effects (which may have ancillary benefits or ancillary costs). The ambiguous net effect highlights the importance of polluters' responses to climate policy. I then test for climate policy spillovers in electricity power generation. The estimates are consistent with ancillary benefits from climate policy arising primarily from reductions in output (primarily at older plants) rather than from changes in emissions rates.

Suggested Citation

  • Stephen P. Holland, 2010. "Spillovers from Climate Policy," NBER Working Papers 16158, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16158
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    1. Feng, Hongli & Kling, Catherine L. & Gassman, Philip W., 2004. "Carbon Sequestration, Co-Benefits, and Conservation Programs," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 19(3), pages 1-6.
    2. Stephen P. Holland & Erin T. Mansur, 2008. "Is Real-Time Pricing Green? The Environmental Impacts of Electricity Demand Variance," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 550-561, August.
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    9. Stephen P. Holland, 2009. "Taxes and Trading versus Intensity Standards: Second-Best Environmental Policies with Incomplete Regulation (Leakage) or Market Power," NBER Working Papers 15262, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Zhang, Xiao-Bing & Xu, Jing, 2018. "Optimal policies for climate change: A joint consideration of CO2 and methane," Applied Energy, Elsevier, vol. 211(C), pages 1021-1029.
    2. Hélène Ollivier, 2016. "North–South Trade and Heterogeneous Damages from Local and Global Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(2), pages 337-355, October.
    3. Xu, Kun & Guan, Zhihua & Xu, Wenli, 2015. "省级财政支出效率空间溢出效应研究：基于超效率dea和gsm模型 [Study on Spatial Spillover Effect of Provincial Fiscal Efficiency: Based on Super-Efficient DEA and GSM Model]," MPRA Paper 71132, University Library of Munich, Germany.
    4. Stephen P. Holland, 2011. "Spillovers from Climate Policy to Other Pollutants," NBER Chapters, in: The Design and Implementation of US Climate Policy, pages 79-90, National Bureau of Economic Research, Inc.
    5. Hampf, Benjamin & Rødseth, Kenneth Løvold, 2015. "Carbon dioxide emission standards for U.S. power plants: An efficiency analysis perspective," Energy Economics, Elsevier, vol. 50(C), pages 140-153.
    6. Xiang Bi, 2017. "“Cleansing the air at the expense of waterways?” Empirical evidence from the toxic releases of coal-fired power plants in the United States," Journal of Regulatory Economics, Springer, vol. 51(1), pages 18-40, February.
    7. James Boyce & Manuel Pastor, 2012. "Cooling the Planet, Clearing the Air: Climate Policy, Carbon Pricing, and Co-Benefits," Published Studies cooling_the_planet_sept20, Political Economy Research Institute, University of Massachusetts at Amherst.
    8. Atkinson, Robert D. & Hackler, Darrene, 2010. "Economic Doctrines and Approaches to Climate Change Policy," MPRA Paper 29718, University Library of Munich, Germany.
    9. Ambec, Stefan & Coria, Jessica, 2013. "Prices vs quantities with multiple pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 123-140.
    10. Jared Woollacott, 2018. "The Economic Costs And Co-Benefits Of Carbon Taxation: A General Equilibrium Assessment," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 1-22, February.
    11. Brunel, Claire & Johnson, Erik Paul, 2019. "Two birds, one stone? Local pollution regulation and greenhouse gas emissions," Energy Economics, Elsevier, vol. 78(C), pages 1-12.
    12. Hampf, Benjamin & Rødseth, Kenneth Løvold, 2014. "Carbon dioxide emission standards for US power plants: An efficiency analysis perspective," Darmstadt Discussion Papers in Economics 219, Darmstadt University of Technology, Department of Law and Economics.

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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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