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.
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