Still Your Grandfather’s Boiler: Estimating the Effects of the Clean Air Act’s Grandfathering Provisions

52 Pages Posted: 14 Jan 2023

See all articles by Sylwia Bialek

Sylwia Bialek

Goethe University Frankfurt

Jack Gregory

University of California

Richard L. Revesz

New York University School of Law

Bridget Pals

New York University School of Law

Date Written: January 13, 2023

Abstract

While vintage differentiation is a highly prominent feature of various regulations, it can induce significant biases. We study these biases in the context of New Source Review - a program within the US Clean Air Act imposing costly sulfur dioxide (SO2) abatement requirements on new boilers but not existing ones. In particular, we empirically investigate how the differential treatment of coal boilers shaped the generation landscape by affecting unit utilization, retirement, and emissions. Leveraging a novel dataset covering state-level sulfur dioxide regulations for power plants, we show that the differentiation continued to have a strong effect even 30 years after its passage, raising the probability of surviving another year by 1.5 percentage points for grandfathered boilers and increasing their operations by around 800 hours annually. We estimate exempted units would have emitted a third fewer emissions per year, had they been subject to NSR. We run back-of-the-envelope calculations to assess the societal damages associated with the delayed retirements, higher utilization and higher emission rates of the grandfathered boilers. Focusing solely on the additional SO2 emissions, we estimate annual costs of up to $65 billion associated with the vintage differentiation in New Source Review.

Keywords: Grandfathering, regulation design, Clean Air Act, power plants, coal

JEL Classification: K23, K32

Suggested Citation

Bialek, Sylwia and Gregory, Jack and Revesz, Richard L. and Pals, Bridget, Still Your Grandfather’s Boiler: Estimating the Effects of the Clean Air Act’s Grandfathering Provisions (January 13, 2023). Available at SSRN: https://ssrn.com/abstract=4323865 or http://dx.doi.org/10.2139/ssrn.4323865

Sylwia Bialek

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Jack Gregory

University of California

Richard L. Revesz (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6185 (Phone)
212-995-4590 (Fax)

Bridget Pals

New York University School of Law ( email )

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