Emissions Trading, Electricity Industry Restructuring and Investment in Pollution Abatement



regulatory incentives across electricity markets have resulted in a disproportionate
amount of the mandated NOx emissions reductions occurring in regulated electricity
markets where ozone non-attainment is less of a problem. A recent study finds that
shifting 11 tons of NOx emissions per day from a relatively "low damage" location
(North Carolina, a state that has not restructured its electricity market) to a "high
damage" area (Maryland, a state that restructured its electricity industry) over a
ten day period could result in the loss of approximately one human life (Mauzerall
et al.). An average unit in the sample emitted 15 tons of NOx per day in 1999;
retrofitting a
single unit with the most capital intensive NOx control option results
in daily reductions of 12 tons on average.

In the next section, I present a simple theoretical model of the compliance deci-
sion. I then describe the data and the empirical framework for assessing the relation-
ship between economic regulation in the electricity market and firms’ environmental
compliance decisions. Section 5 summarizes the results. Section 6 concludes.

The firm’s compliance choice

This section describes a simple model of a plant manager’s choice between J mutually
exclusive approaches to complying with the NOx SIP Call. The purpose of specifying
the model is to provide a framework to test the hypothesis that the structure of the
electricity market in which a unit is operating significantly affects a firm’s choice of
compliance strategy.

Two factors that are likely to figure significantly into a plant manager’s compli-
ance decision are the up-front capital costs associated with retrofitting a plant with
a particular NOx control technology, and the anticipated variable compliance costs
(i.e. the costs of operating the control technology plus the cost of purchasing required
permits per kWh of electricity generated). The capital costs, variable operating costs



More intriguing information

1. Olive Tree Farming in Jaen: Situation With the New Cap and Comparison With the Province Income Per Capita.
2. Should informal sector be subsidised?
3. The name is absent
4. Optimal Vehicle Size, Haulage Length, and the Structure of Transport Costs
5. The Modified- Classroom ObservationScheduletoMeasureIntenticnaCommunication( M-COSMIC): EvaluationofReliabilityandValidity
6. The name is absent
7. Conservation Payments, Liquidity Constraints and Off-Farm Labor: Impact of the Grain for Green Program on Rural Households in China
8. EXECUTIVE SUMMARY
9. Commuting in multinodal urban systems: An empirical comparison of three alternative models
10. L'organisation en réseau comme forme « indéterminée »
11. EU enlargement and environmental policy
12. Large Scale Studies in den deutschen Sozialwissenschaften:Stand und Perspektiven. Bericht über einen Workshop der Deutschen Forschungsgemeinschaft
13. Higher education funding reforms in England: the distributional effects and the shifting balance of costs
14. The name is absent
15. Design and investigation of scalable multicast recursive protocols for wired and wireless ad hoc networks
16. The storage and use of newborn babies’ blood spot cards: a public consultation
17. On Social and Market Sanctions in Deterring non Compliance in Pollution Standards
18. Exchange Rate Uncertainty and Trade Growth - A Comparison of Linear and Nonlinear (Forecasting) Models
19. What Contribution Can Residential Field Courses Make to the Education of 11-14 Year-olds?
20. Three Strikes and You.re Out: Reply to Cooper and Willis