Tradable Standards for Clean Air Act Carbon Policy

Resources for the Future Discussion Paper No. 12-05

22 Pages Posted: 14 Feb 2012

See all articles by Dallas Burtraw

Dallas Burtraw

Resources for the Future

Arthur G. Fraas

Resources for the Future

Nathan D. Richardson

University of South Carolina - Law Library; Resources for the Future

Date Written: February 9, 2012

Abstract

EPA is in the process of regulating U.S. greenhouse gas (GHG) emissions using its powers under the Clean Air Act. The likely next phase of this regulatory program is performance standards under Section 111 of the act for coal plants and petroleum refineries, which the agency has committed to finalize by the end of 2012. Section 111 appears to allow use of flexible, market-based regulatory tools. In this paper, we discuss one such tool, tradable standards. Tradable standards appear to be a legally and politically viable choice for the agency, and evidence suggests they are substantially more cost-effective than traditional performance standards. The paper discusses implementation issues with tradable standards, including categorization, banking, and phased implementation, as well as broader issues with the Section 111 rule-making process as it relates to state-level GHG regulatory efforts.

Keywords: averaging, flexibility, regulatory design, market-based regulation

JEL Classification: Q54, Q58

Suggested Citation

Burtraw, Dallas and Fraas, Arthur G. and Richardson, Nathan D., Tradable Standards for Clean Air Act Carbon Policy (February 9, 2012). Resources for the Future Discussion Paper No. 12-05. Available at SSRN: https://ssrn.com/abstract=2004401 or http://dx.doi.org/10.2139/ssrn.2004401

Dallas Burtraw (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5087 (Phone)

Arthur G. Fraas

Resources for the Future ( email )

1616 P ST, NW
Washington, DC 20036
United States

Nathan D. Richardson

University of South Carolina - Law Library ( email )

1525 Senate Street
Columbia, SC 29208
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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