Regulatory Spillover and Climate Co-Benefits: Evidence from the New Source Review Lawsuits

52 Pages Posted: 17 Jun 2019 Last revised: 1 Dec 2020

See all articles by H. Ron Chan

H. Ron Chan

University of Manchester - Department of Economics

Christy Zhou

Clemson University, John E. Walker Department of Economics

Date Written: Nov 23, 2020

Abstract

Though policies on greenhouse gas emissions have been shown to generate benefits in
reducing local pollutants such as SO2 and NOx, spillover benefits in the reverse direction
have not been well studied. This paper estimates one such spillover by examining how SO2
and NOx regulations of the New Source Review affect CO2 emissions of US power plants.
We address the ambiguity surrounding the stringency of enforcement of the regulations by
using a discrete-time duration model that allows us to predict the likelihood of being named
in a lawsuit, and to use this likelihood as a continuous treatment variable. We find that a 1
percent increase in the probability of being sued reduces CO2 emissions by 0.3 percent, an
effect comparable to a carbon tax of $10 per ton. Further decomposition analysis suggests
that most of these carbon co-benefits arise from the shutdown of both coal-fired-only power
plants and certain power-generating units.

Keywords: New Source Review, Environmental Lawsuits, Pollution Emissions, Climate Policies, Fuel Switches

JEL Classification: L94, K32, Q58, H23

Suggested Citation

Chan, Hei Sing and Zhou, Yichen, Regulatory Spillover and Climate Co-Benefits: Evidence from the New Source Review Lawsuits (Nov 23, 2020). Available at SSRN: https://ssrn.com/abstract=3399713 or http://dx.doi.org/10.2139/ssrn.3399713

Hei Sing Chan

University of Manchester - Department of Economics ( email )

Oxford Road
Manchester, Greater Manchester M13 9PL
United Kingdom

Yichen Zhou (Contact Author)

Clemson University, John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

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