Download this Paper Open PDF in Browser

A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act

18 Pages Posted: 24 May 2014  

Samuel D. Eisenberg

Stanford Law School

Michael W. Wara

Stanford Law School

Adele C. Morris

The Brookings Institution

Marta R. Darby

Independent

Joel Minor

Independent

Date Written: May 22, 2014

Abstract

The economic literature supports the case that an emissions excise tax is one of the most cost- effective approaches to reducing greenhouse gas (GHG) emissions. The United States Environmental Protection Agency (EPA) has begun the process of regulating GHG emissions under section 111(d) of the Clean Air Act. Under this provision, EPA issues an emission guideline for states based on the agency’s assessment of the best system of emission reduction (BSER) for a particular type of stationary air pollution source. States then develop compliance plans that include standards of performance for pollution sources that reflect the BSER and are consistent with the emission guideline. The states submit these compliance plans to EPA for approval. This paper walks through the legal framework to show that EPA can allow states to adopt a tax on carbon dioxide (CO2) or other GHGs as a standard of performance. We also show that EPA can encourage this approach by providing the states with model tax levels and compliance schedules in its emission guideline. We conclude that a state-level carbon tax is a viable legal mechanism for cutting greenhouse gas emissions from power plants and other stationary sources under the Clean Air Act.

Suggested Citation

Eisenberg, Samuel D. and Wara, Michael W. and Morris, Adele C. and Darby, Marta R. and Minor, Joel, A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act (May 22, 2014). Available at SSRN: https://ssrn.com/abstract=2440925 or http://dx.doi.org/10.2139/ssrn.2440925

Samuel D. Eisenberg

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Michael W. Wara (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Adele C. Morris

The Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/morrisa.aspx

Marta R. Darby

Independent ( email )

No Address Available

Joel Minor

Independent ( email )

No Address Available

Paper statistics

Downloads
280
Rank
91,216
Abstract Views
1,332