 Do differentiated performance standards help coal? CO2 policy in the U.S. electricity sectorDavid A. Bielen Resource and Energy Economics, 2018, vol. 53, issue C, 79-100 Abstract: A salient feature of the Clean Power Plan is that it imposes higher emission rate standards on coal power plants than it does on their natural gas counterparts. In this paper, I examine the consequences of this design feature by modeling a series of tradable performance standard policies. I analyze how fuel-based standard differentiation affects compliance incentives and the regulatory burden on coal stakeholders through three key outcomes: coal usage, coal plant profits, and electricity prices. Analysis of a simple analytic model shows that differentiation, compared to a policy with a uniform standard for all fuel types, always increases coal usage, but price and profit impacts are ambiguous. To quantify these outcomes, I construct and implement a detailed simulation model of the U.S. wholesale electricity market. Simulation results suggest that differentiation increases coal usage modestly, increases coal plant profits well beyond the no-regulation level, and increases electricity prices in almost every region of the country. Keywords: Carbon regulation; Performance standards; Electricity markets; Distributional impacts (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:53:y:2018:i:c:p:79-100 DOI: 10.1016/j.reseneeco.2018.02.002 Access Statistics for this article Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders More articles in Resource and Energy Economics from Elsevier |
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