Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/107658 
Year of Publication: 
2014
Series/Report no.: 
Darmstadt Discussion Papers in Economics No. 220
Publisher: 
Technische Universität Darmstadt, Department of Law and Economics, Darmstadt
Abstract: 
In this paper we analyze the economic effects of implementing EPA's newly proposed regulations for carbon dioxide (CO2) on existing U.S. coal-fired power plants using nonparametric methods on a sample of 144 electricity generating units. Moreover, we develop an approach for evaluating the economic gains from averaging emission intensities among the utilities' generating units, compared to implementing unit-specific performance standards. Our results show that the implementation of flexible standards leads to up to 2.7 billion dollars larger profits compared to the uniform standards. Moreover, we find that by adopting best practices, current profits can be maintained even if an intensity standard of 0.88 tons of CO2 per MWh is implemented. However, our results also indicate a trade-off between environmental and profit gains, since aggregate CO2 emissions are higher with emission intensity averaging than with uniform standards.
Subjects: 
environmental regulation
profit maximization
emission intensity averaging
nonparametric effciency analysis
JEL: 
D24
L50
Q54
Document Type: 
Working Paper

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