Iowa NSF EPSCoR Energy Policy Seminar Series

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Date/Time:Thursday, 11 Sep 2014 from 3:40 pm to 5:00 pm
Location:1344 Howe Hall
Channel:Bioeconomy Institute
Categories:Lectures Live Green
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"Firm behavior and emissions under emission intensity regulation: Evidence from Alberta's Specified Gas Emitters Regulation," Deepak Rajagopal, School of Public and Environmental Affairs, Indiana University; and Institute of the Environment and Sustainability, University of California, Los Angeles.

Restricting the rate of greenhouse gas (GHG) emissions appears a politically more feasible alternative to economists' prescription to price emissions. While emission intensity standards (EIS) are quite common in the real world, we are not aware of another economy-wide GHG EIS barring the regulation analyzed herein. In this paper, we econometrically analyze firm-level data from one-of-a-kind EI regulation, the Specified Gas Emitters Regulation (SGER) adopted in 2006 by the Canadian province of Alberta, that world's second largest oil reserves. After developing a model of firm behavior under a generic EIS with SGER-like features, we test hypotheses relating to the impact on emissions, emission intensity and the cost-effectiveness of GHG abatement in the industrial sector. We find that the regulation had no impact on annual emissions or the emission intensity of the average facility and this was true for the average facility in all the 12 different economic sectors covered by the regulation. Compliance was achieved predominantly through the purchase of offset credits from unregulated sectors and by payments to a carbon fund in lieu of non-compliance. We discuss the implications of these findings for some frequently cited estimates of marginal cost of GHG abatement.

Dr. Rajagopal's research interests include Economics of climate change, Economics of renewable energy, Impact of climate change on Agriculture, Multi-criteria decision analysis, Consequential life cycle assessment. See his web site here: