Journal Article

Proximate Mirror: Greenhouse Gas Rules and Strategic Behavior Under the US Clean Air Act

Pan, Sophie, Burtraw, Dallas, Paul, Anthony, Palmer, Karen

2015

Overview

The development of climate policy in the United States mirrors international developments, with efforts to initiate a coordinated approach giving way to jurisdictions separately taking actions. The centerpiece of US policy is regulation in the electricity sector that identifies a carbon emissions rate standard (intensity standard) for each state but leaves to states the design of policies, including potentially the use of technology policies, emissions rate averaging, or cap and trade. Differences in policies among states within the same power market could promote predatory behavior resulting in a geographic shift in generation and investment in new resources. This paper examines the coordination problem using a detailed partial equilibrium model of operations and investment. We demonstrate that leading jurisdictions have available a rich set of design options including targetted output based allocation that would impose costs on neighbors and may protect against strategic predation.

• Publisher: Springer Netherlands,Springer Nature B.V,Springer Science + Business Media
• Subject: Air cleanliness / carbon / Carbon dioxide / Clean air / Clean Air Act-US / Climate / Climate policy / Coal / Compliance / Coordination / Cost control / Development policy / Economic models / Economic Policy / Economic statistics / Economic theory / Economics / Economics and Finance / Electricity / Emission standards / Emissions / Emissions trading / Environmental Economics / Environmental law / Environmental Law/Policy/Ecojustice / Environmental Management / environmental markets / Environmental policy / Environmental protection / Equilibrium / Greenhouse gases / Investments / Jurisdiction / Kyoto Protocol / market power / Predation / Regulation / Studies / Technology policy / United States