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The Impact of Heterogeneous NOx Regulations on Distributed Electricity Generation in U.S. Manufacturing

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April 2015

Written by: Jonathan M. Lee

Working Paper Number:

CES-15-12

Abstract

The US EPA's command-and-control NOx policies of the early 1990s are associated with a 3.1 percentage point reduction in the likelihood of manufacturing plants vertically integrating the electricity generation process. During the same period California adopted a cap-and-trade program for NOx emissions that resulted in no significant impact on distributed electricity generation in manufacturing. These results suggest that traditional command-and-control approaches to air pollution may exacerbate other market failures such as the energy efficiency gap, because distributed generation is generally recognized as a more energy efficient means of producing electricity

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production, manufacturing, industrial, produce, efficiency, producing, regulation, regulatory, emission, electricity, pollution, epa, environmental, pollutant, consumer, polluting, generation, utility

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Annual Survey of Manufactures, Standard Statistical Establishment List, Service Annual Survey, National Bureau of Economic Research, Labor Productivity, Review of Economics and Statistics, Energy Information Administration, Census Bureau Longitudinal Business Database, Longitudinal Business Database, Department of Energy, Manufacturing Energy Consumption Survey, Environmental Protection Agency, Chicago Census Research Data Center, Census of Manufacturing Firms, Federal Register, Journal of Economic Perspectives, National Ambient Air Quality Standards, Special Sworn Status, University of Toronto, CAAA

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