Greenhouse Gas Regulation Under the Clean Air Act: A Guide for Economists
Resources for the Future Discussion Paper No. 11-08
32 Pages Posted: 21 Feb 2011
Date Written: February 9, 2011
Until recently, most attention to U.S. climate policy has focused on legislative efforts to introduce a price on carbon through cap and trade. In the absence of such legislation, the Clean Air Act is a potentially potent alternative. Decisions regarding existing stationary sources will have the greatest effect on emissions reductions. The magnitude is uncertain, but plausibly 10 percent reductions in greenhouse gas emissions from 2005 levels could be achieved at moderate costs by 2020. This is comparable to the reductions that would have been achieved under the Waxman-Markey legislation in the domestic economy. These measures do not include the switching of fuels, which could yield further reductions. The ultimate cost of regulation under the act hinges on the stringency of standards and the flexibility allowed. A broad-based tradable performance standard is legally plausible and would provide incentives comparable to the proposed legislation, at least in the near term.
Keywords: climate policy, efficiency, EPA, Clean Air Act, NAAQS, coal
JEL Classification: K32, Q54, Q58
Suggested Citation: Suggested Citation