Economic and Environmental Impacts of a Carbon Adder in New York

Goekce Akin-Olçum, Christoph Boehringer (), Thomas Rutherford and Andrew Schreiber
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Goekce Akin-Olçum: Environmental Defense Fund, Boston, USA
Christoph Boehringer: University of Oldenburg, Department of Economics
Thomas Rutherford: University of Wisconsin, Madison, USA
Authors registered in the RePEc Author Service: Christoph Böhringer

No V-424-19, Working Papers from University of Oldenburg, Department of Economics

Abstract: New York is considering additional emission regulation on top of its obligations under the Regional Greenhouse Gas Initiative (RGGI) to achieve its State Energy Plan targets. The proposed measure is a so-called “carbon adder” on CO2 emissions from the power sector which is set as the difference between the targeted social cost of carbon and the prevailing RGGI price for CO2 emission allowances. We investigate the potential economic and environmental impacts from the imposition of a carbon adder on New York’s power sector. While our analysis indicates the risk of excess cost through overlapping regulations, we find that the carbon adder gives the “right” price signal for New York’s power generation to turn into a greener one. Market requirements for permit price floors in the RGGI market induces carbon permit retirements across RGGI states leading to small reductions in region- and country-wide emissions levels.

Keywords: Environmental regulation; overlapping regulation; emission taxes; emissions trading (search for similar items in EconPapers)
Date: 2019-09, Revised 2019-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (1)

Published in Oldenburg Working Papers V-424-19

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