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Retail Electricity Price Savings from Compliance Flexibility in GHG Standards for Stationary Sources


  • Burtraw, Dallas

    () (Resources for the Future)

  • Paul, Anthony

    () (Resources for the Future)

  • Woerman, Matt

    () (Resources for the Future)


The EPA will issue rules regulating greenhouse gas (GHG) emissions from existing steam boilers and refineries in 2012. A crucial issue affecting the scope and cost of emissions reductions will be the potential introduction of flexibility in compliance, including averaging across groups of facilities. This research investigates the role of compliance flexibility for the most important of these source categories—existing coal-fired power plants—that currently account for one-third of national emissions of carbon dioxide, the most important greenhouse gas. We find a flexible standard, calibrated to achieve the same emissions reductions as an inflexible approach, reduces the increase in electricity price by 60 percent and overall costs by two-thirds in 2020. The flexible standard also leads to substantially more investment to improve the operating efficiency of existing facilities, whereas the inflexible standard leads to substantially greater retirement of existing facilities.

Suggested Citation

  • Burtraw, Dallas & Paul, Anthony & Woerman, Matt, 2011. "Retail Electricity Price Savings from Compliance Flexibility in GHG Standards for Stationary Sources," Discussion Papers dp-11-30, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-11-30

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    References listed on IDEAS

    1. Morgenstern, Richard & Harrington, Winston & Nelson, Per-Kristian, 1999. "On the Accuracy of Regulatory Cost Estimates," Discussion Papers dp-99-18, Resources For the Future.
    2. Newell, Richard G & Stavins, Robert N, 2003. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Journal of Regulatory Economics, Springer, vol. 23(1), pages 43-59, January.
    3. Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
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    Cited by:

    1. Bryan K. Mignone & Thomas Alfstad & Aaron Bergman & Kenneth Dubin & Richard Duke & Paul Friley & Andrew Martinez & Matthew Mowers & Karen Palmer & Anthony Paul & Sharon Showalter & Daniel Steinberg & , 2012. "Cost-effectiveness and Economic Incidence of a Clean Energy Standard," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 3).

    More about this item


    climate policy; efficiency; EPA; Clean Air Act; coal; compliance flexibility; regulation;

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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