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    Cost-Benefit Politics in U.S. Energy Policy

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    Cost-Benefit-Politics-in-U.S.-Energy-Policy.pdf (990.6Kb)
    Date
    2015-08-11
    Author
    Spence, David B.
    Adelman, David E.
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    Department
    The Kay Bailey Hutchison Center for Energy, Law, and Business
    Description
    The political economy of energy policy in the United States is dominated by partisanship and industry lobbying. Both are reflected in the widespread belief that the Environmental Protection Agency (EPA) is engaged in a misguided “war on coal”—despite decades of regulatory delays, the coal industry’s status as the leading industrial source of air pollution, and compelling evidence that the benefits of EPA’s regulations vastly exceed their costs. The politics are compounded by tensions between electricity managers and environmental regulators. Much of this is driven by competing perspectives: EPA tends to have a national focus, whereas grid managers operate regionally. This Article resolves the apparent conflicts by downscaling the regulatory analyses of three high-profile EPA rules that cover conventional pollutants, air toxics, and greenhouse gases associated with climate change. We utilize complementary EPA databases and draw on several model estimates to examine the regional impacts, both costs and benefits, of regulations targeting coal-fired power plants. Overall we find little evidence of significant regional disparities, as the distribution of compliance costs and benefits is roughly commensurate with each regions’ reliance on coal-fired power, and particularly older facilities. This result follows naturally from the benefits of reducing emissions under these rules being predominantly local; as a consequence, regulatory benefits exceed costs at the regional level and typically by large margins. Further, with a few important caveats, we find that while the EPA rules will encourage many power-plant closures, most will occur in electricity markets that have sufficient excess capacity to mitigate potential threats to electricity supplies and reliability. We conclude that while interest group opposition and political partisanship are clearly both important in this context, the latter appears to hold greater sway based on varying levels of political opposition regionally and may—incrementally—be shifting in EPA’s favor.
    Subject
    air pollution
    air toxics
    Climate change
    compliance costs and benefits
    conventional pollutants
    cost-benefit politics
    electricity managers
    electricity markets
    emissions
    Environmental Protection Agency
    environmental regulators
    EPA
    EPA rules
    Greenhouse gases
    grid managers
    industry lobbying
    partisanship
    political economy of energy policy
    power plants
    U.S. energy policy
    United States
    war on coal
    URI
    http://hdl.handle.net/2152/33365
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    • KBH Energy Center Research and Publications

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    • facebook
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    • Web Accessibility Policy
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    • Adobe Reader
    Subscribe to our NewsletterGive to the Libraries

    © The University of Texas at Austin