Still Your Grandfather’s Boiler: Estimating the Effects of the Clean Air Act’s Grandfathering Provisions

Sylwia Bialek-Gregory, Jack Gregory, Bridget Pals and Richard L. Revesz

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 5, 1199 - 1242

Abstract: While vintage differentiation is a highly prominent feature of various regulations, it can induce significant biases. We study these biases in the context of New Source Review—a program within the US Clean Air Act imposing costly sulfur dioxide (SO2) abatement requirements on new boilers but not existing ones. Leveraging a novel dataset covering state-level SO2 regulations, we show that the regulatory differentiation decreased the probability of a grandfathered boiler retiring in a given year by 2.4 percentage points (i.e., 60% smaller) and increased their operations by around 1,150 hours annually. Conservative back-of-the-envelope calculations suggest annual societal damages of up to $2.5 billion associated with additional SO2 emissions caused by delayed retirements, higher utilization, and higher emission rates in the years considered. The results imply that long after their passage and in the presence of many subsequent, more stringent environmental policies, grandfathering provisions continued to have strong perverse impacts.

Date: 2025
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