Discussion Paper

Uncertainty and the Cost-Effectiveness of Regional NOx Emissions Reductions from Electricity Generation

Jan 1, 2002 | Dallas Burtraw, Ranjit Bharvirkar, Meghan C. McGuinness


This paper analyzes uncertainties surrounding the benefits and costs of a policy to reduce nitrogen oxides (NOX) emissions from electricity generation in the eastern U.S. Under each of 18 scenarios examined, we find an annual policy would yield net benefits that are at least as great as those expected under the U.S. Environmental Protection Agency’s (EPA) currently planned seasonal policy. Preferred (midpoint) assumptions yield additional benefits of $724 million per year under an annual policy compared to a seasonal one (1997 dollars). The subset of 11 northeastern states benefit the most from an annual policy relative to a seasonal one, but relative net benefits are also positive in the remaining states in the region. An annual policy implemented on a national basis appears to be slightly less cost-effective than the EPA’s policy under midpoint assumptions but it is more cost-effective under half of the scenarios we examine.