A Closer Look at Rate-Based Approaches

Resources for the Future recently released a closer look at the economics of rate-based environmental regulations, The Environmental Effects of Clean Energy Innovations under Rate-Based Regulation. The researchers conclude through modeling that improvements in technology that reduce the cost of generation with lower CO₂ emissions can actually increase the use of energy sources with higher emissions when the standard is fixed and binding. The paper focuses on three regulatory schemes in its analysis: renewable portfolio standards, emissions rate standards (such as those provided as an option by the Clean Power Plan), and fuel economy standards for passenger vehicles.