Sulfur Dioxide Compliance of a Regulated Utility / Don Fullerton, Shaun P. McDermott, Jonathan P. Caulkins.

Format:

Book

Author/Creator:

Fullerton, Don, author.

McDermott, Shaun P., author.

Caulkins, Jonathan P. (Jonathan Paul), 1965- author.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5542.

NBER working paper series no. w5542

Language:

English

Physical Description:

1 online resource: illustrations (black and white).

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Summary:

Electric utilities can reduce sulfur dioxide emissions through a variety of strategies such as adding scrubbers, switching to low- sulfur coal, or shifting output between generating plants with different emissions. The cost of achieving a given emission target can be minimized using a market for emission allowances, as under the Clean Air Act Amendments of 1990, if firms with high abatement costs buy allowances while those with low abatement costs reduce emissions and sell allowances. However, public utility commissions regulate which costs can be passed to customers. Previous theoretical work has analyzed effects of regulations on a utility's choice between permits and a single continuous `abatement technology.' Here, we consider three abatement technologies and the discrete choices among them. Our numerical model uses market and engineering information on permit prices, scrubber cost and sulfur removal efficiency, alternative fuel costs and sulfur content, plus generating plant costs and efficiency. Using illustrative sets of parameters, we find that regulatory rules could more than double the cost of sulfur dioxide compliance.

Notes:

Print version record

April 1996.