UC Davis Agricultural and Resource Economics

Kevin Nakolan, University of California, Davis

Hard NOx: Identifying Spillovers and Operational Inefficiencies Within the EPA NOx Budget Trading Program

Date and Location

Wednesday, October 9, 2019, 3:40 PM - 5:00 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities


Previous studies demonstrate that cap and trade programs for pollution in the U.S. electricity sector induce substantial installation of post-combustion emissions control technologies. In this paper, I examine whether cap and trade programs incentivize electricity generators to operate their pollution control technologies in a way that minimizes their compliance costs. Focusing on a NOx cap and trade program in the Eastern U.S., I find that electricity generators that recover costs through regulated rates, as opposed to competing in energy markets, are far more likely to operate their pollution control technologies during periods when it is privately, and socially, not optimal to do so.

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