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Economic and Environmental Impacts of a Carbon Adder in New York

Author

Listed:
  • Goekce Akin-Olçum

    (Environmental Defense Fund, Boston, USA)

  • Christoph Boehringer

    (University of Oldenburg, Department of Economics)

  • Thomas Rutherford

    (University of Wisconsin, Madison, USA)

  • Andrew Schreiber

    (National Center for Environmental Economics, Washington, USA)

Abstract

New York is considering additional emission regulation on top of its obligations under the Regional Greenhouse Gas Initiative (RGGI) to achieve its State Energy Plan targets. The proposed measure is a so-called “carbon adder” on CO2 emissions from the power sector which is set as the difference between the targeted social cost of carbon and the prevailing RGGI price for CO2 emission allowances. We investigate the potential economic and environmental impacts from the imposition of a carbon adder on New York’s power sector. While our analysis indicates the risk of excess cost through overlapping regulations, we find that the carbon adder gives the “right” price signal for New York’s power generation to turn into a greener one. Market requirements for permit price floors in the RGGI market induces carbon permit retirements across RGGI states leading to small reductions in region- and country-wide emissions levels.

Suggested Citation

  • Goekce Akin-Olçum & Christoph Boehringer & Thomas Rutherford & Andrew Schreiber, 2019. "Economic and Environmental Impacts of a Carbon Adder in New York," Working Papers V-424-19, University of Oldenburg, Department of Economics, revised Sep 2019.
    • Handle: RePEc:old:dpaper:424
    as

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    File URL: http://www.uni-oldenburg.de/fileadmin/user_upload/wire/fachgebiete/vwl/V-424-19.pdf
    File Function: First version, 2019
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    References listed on IDEAS

    as
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    Cited by:

    1. Gong, Xiaohui & Wong, Wing-Keung & Peng, Yiling & Khamdamov, Shoh-Jakhon & Albasher, Gadah & Hoa, Vu Tam & Thanh Nhan, Nguyen Thi, 2023. "Exploring an interdisciplinary approach to sustainable economic development in resource-rich regions: An investigation of resource productivity, technological innovation, and ecosystem resilience," Resources Policy, Elsevier, vol. 87(PA).

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    Keywords

    Environmental regulation; overlapping regulation; emission taxes; emissions trading;
    All these keywords.

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