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Technological Modifications in the Nitrogen Oxides Tradable Permit Program

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  • Joshua Linn

Abstract

Tradable permit programs allow firms greater flexibility in reducing emissions than command-and-control regulations and encourage firms to use low cost abatement options, including small-scale modifications to capital equipment. This paper shows that firms have extensively modified capital equipment in the Nitrogen Oxides Budget Trading Program, which covers power plants in the eastern United States. The empirical strategy uses geographic and temporal features of the program to estimate counterfactual emissions, finding that modifications have reduced emission rates by approximately 10-15 percent. The modifications would not have occurred under command-and-control regulation and have reduced regulatory costs.

Suggested Citation

  • Joshua Linn, 2008. "Technological Modifications in the Nitrogen Oxides Tradable Permit Program," The Energy Journal, , vol. 29(3), pages 153-176, July.
    • Handle: RePEc:sae:enejou:v:29:y:2008:i:3:p:153-176
    DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No3-8
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    References listed on IDEAS

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    1. David Popp, 2006. "Exploring Links Between Innovation and Diffusion: Adoption of NOx Control Technologies at U.S. Coal-Fired Power Plants," NBER Working Papers 12119, National Bureau of Economic Research, Inc.
    2. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
    3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
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