Enforcement of Vintage Differentiated Regulations: The Case of New Source Review

James Bushnell and Catherine Wolfram

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper analyzes the effects of the New Source Review (NSR) environmentalregulations on coal-fired electric power plants. Regulations that grew out of the Clean Air Act of 1970 required new electric generating plants to install costly pollution control equipment but exempted existing plants. Existing plants lost their exemptions if they made ``major modifications.'' We examine whether this caused firms to invest less in grandfathered plants, possibly leading to lower efficiency and higher emissions. We find evidence that heightened NSR enforcement reduced capital expenditures at vulnerableplants. However, we find no discernable effect on other inputs or emissions.This paper analyzes the effects of the New Source Review (NSR) environmental regulations on coal-fired electric power plants. Regulations that grew out of the Clean Air Act of 1970 required new electric generating plants to install costly pollution control equipment but exempted existing plants. Existing plants lost their exemptions if they made ``major modifications.'' We examine whether this caused firms to invest less in grandfathered plants, possibly leading to lower efficiency and higher emissions. We find evidence that heightened NSR enforcement reduced capital expenditures at vulnerable plants. However, we find no discernable effect on other inputs or emissions.

Keywords: New Source Review; Environmental Regulations; productivity; electricity (search for similar items in EconPapers)
JEL-codes: L51 L94 Q52 Q58 (search for similar items in EconPapers)
Date: 2010-03-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Enforcement of Vintage Differentiated Regulations: The Case of New Source Review (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:31805

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