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The Flexibility in the Obama Administration's Emission Reductions Proposal

The Obama administration recently announced a proposed rule for reducing emissions from existing power plants that would amount to about a 15% reduction in power plant emissions and a 5% reduction of total U.S. carbon dioxide emissions. While something like a nationwide carbon tax would be more cost-effective than this sector-specific approach that relies on the Clean Air Act’s regulatory mechanisms, the proposal does a good job of providing compliance flexibility, which is the key to containing costs.

With this in mind, it’s important to focus on how much flexibility states will have to reduce emissions over time, how these emission reductions will be measured, and whether adopting state-level carbon taxes would be permitted.

Read more about these issues in the Fortune op-ed “3 Questions for Obama’s Fight Against Climate Change.”

  • Ted Gayer is the vice president and director of the Economic Studies program and the Joseph A. Pechman Senior Fellow at the Brookings Institution. He conducts research on a variety of economic issues, focusing particularly on public finance, environmental and energy economics, housing, and regulatory policy.

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