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Tradable Standards for Clean Air Act Carbon Policy

Author

Listed:
  • Burtraw, Dallas

    (Resources for the Future)

  • Fraas, Arthur G.

    (Resources for the Future)

  • Richardson, Nathan

    (Resources for the Future)

Abstract

EPA is in the process of regulating U.S. greenhouse gas (GHG) emissions using its powers under the Clean Air Act. The likely next phase of this regulatory program is performance standards under Section 111 of the act for coal plants and petroleum refineries, which the agency has committed to finalize by the end of 2012. Section 111 appears to allow use of flexible, market-based regulatory tools. In this paper, we discuss one such tool, tradable standards. Tradable standards appear to be a legally and politically viable choice for the agency, and evidence suggests they are substantially more cost-effective than traditional performance standards. The paper discusses implementation issues with tradable standards, including categorization, banking, and phased implementation, as well as broader issues with the Section 111 rulemaking process as it relates to state-level GHG regulatory efforts.

Suggested Citation

  • Burtraw, Dallas & Fraas, Arthur G. & Richardson, Nathan, 2012. "Tradable Standards for Clean Air Act Carbon Policy," RFF Working Paper Series dp-12-05, Resources for the Future.
  • Handle: RePEc:rff:dpaper:dp-12-05
    as

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    File URL: http://www.rff.org/RFF/documents/RFF-DP-12-05.pdf
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    References listed on IDEAS

    as
    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. Newell, Richard G. & Rogers, Kristian, 2003. "The Market-based Lead Phasedown," Discussion Papers 10445, Resources for the Future.
    3. 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.
    4. Richardson, Nathan, 2011. "Playing without Aces: Offsets and the Limits of Flexibility under Clean Air Act Climate Policy," RFF Working Paper Series dp-11-49, Resources for the Future.
    5. William M. Shobe & Dallas Burtraw, 2012. "Rethinking Environmental Federalism In A Warming World," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-33.
    6. repec:rff:dpaper:dp-11-43-rev is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Böhringer, Christoph & Garcia-Muros, Xaquin & Gonzalez-Eguino, Mikel & Rey, Luis, 2017. "US climate policy: A critical assessment of intensity standards," Energy Economics, Elsevier, vol. 68(S1), pages 125-135.
    2. 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.
    3. Lawrence H. Goulder & Marc A. C. Hafstead & Roberton C. Williams III, 2016. "General Equilibrium Impacts of a Federal Clean Energy Standard," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 186-218, May.
    4. Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2023. "Tradable Performance Standards for a Greener Automobile Sector: An Economists’ Appraisal of the German Greenhouse Gas Mitigation Quota," FCN Working Papers 9/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    5. Warwick J. McKibbin & Adele Morris & Peter J. Wilcoxen, 2015. "Controlling carbon emissions from U.S. power plants: how a tradable performance standard compares to a carbon tax," CAMA Working Papers 2015-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Ian W.H. Parry & Mr. Dirk Heine & Kelley Kizzier & Tristan Smith, 2018. "Carbon Taxation for International Maritime Fuels: Assessing the Options," IMF Working Papers 2018/203, International Monetary Fund.
    7. Burtraw, Dallas & Woerman, Matt, 2013. "Technology Flexibility and Stringency for Greenhouse Gas Regulations," RFF Working Paper Series dp-13-24, Resources for the Future.
    8. Bielen, David A., 2018. "Do differentiated performance standards help coal? CO2 policy in the U.S. electricity sector," Resource and Energy Economics, Elsevier, vol. 53(C), pages 79-100.

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    More about this item

    Keywords

    averaging; flexibility; regulatory design; market-based regulation;
    All these keywords.

    JEL classification:

    • 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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