REGIONAL DIFFERENCES IN EMISSIONS REDUCTION OPPORTUNITIES - POLICY IMPLICATIONS

Electric utilities around the USA have profound differences in their existing capital stock. These affect the character of regional opportunities for reducing pollutant emissions. This paper introduces a simple system level emissions model and identifies cost-effective pollution reduction strategies for each region, given choices that include life extending existing capacity, investing in new technology, and demand-side management. It shows that superior solutions differ across pollutants and regions. This implies that policy prescriptions to reduce the environmental externalities associated with power production should recognize existing capacity characteristics in order to be efficient.