Output and Attribute-Based Carbon Regulation Under Uncertainty

50 Pages Posted: 20 Aug 2019 Last revised: 7 Jul 2023

See all articles by Ryan Kellogg

Ryan Kellogg

University of Chicago - Harris School of Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: August 2019

Abstract

Output-based carbon regulations—such as fuel economy standards and the rate-based standards in the Clean Power Plan—create well-known incentives to inefficiently increase output. Similar distortions are created by attribute-based regulations. This paper demonstrates that, despite these distortions, output and attribute-based standards can always yield greater expected welfare than “flat” emission standards given uncertainty in demand for output (or attributes), assuming locally constant marginal damages. For fuel economy standards, the welfare-maximizing amount of attribute or mileage-basing is likely small relative to current policy. For the electricity sector, however, an intensity standard may yield greater expected welfare than a flat standard.

Suggested Citation

Kellogg, Ryan, Output and Attribute-Based Carbon Regulation Under Uncertainty (August 2019). NBER Working Paper No. w26172, Available at SSRN: https://ssrn.com/abstract=3439181

Ryan Kellogg (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
13
Abstract Views
281
PlumX Metrics