The Costs and Consequences of Clean Air Act Regulation of CO2 from Power Plants
Dallas Burtraw, Josh Linn, Karen Palmer, Anthony Paul
American Economic Review · 2014 · Volume 104 · Issue 5
Abstract
US climate policy is unfolding under the Clean Air Act. Mobile source and construction permitting regulations are in place. Most important, EPA and the states will determine the form and stringency of the regulations for power plants. Various approaches would create an implicit price on emitting greenhouse gases and create valuable assets that would be distributed differently among electricity producers, consumers, and the government. We compare a tradable performance standard with several cap-and-trade policies. Distributing asset values to fossil-fueled producers and consumers has small effects on average electricity prices but imposes greater social cost than a revenue-raising policy.
Keywords
Economics of Regulation, Electric Utilities, Industry Studies: Utilities and Transportation: Government Policy, Energy: Demand and Supply, Prices, Energy: Government Policy, Climate, Natural Disasters, Global Warming, Environmental Economics: Government Policy
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