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An Economic Impact Analysis of EPA’s Mercury and Air Toxics Standards Rule

1 March 2012
By Dr. Anne E. Smith, Dr. Paul Bernstein, Scott Bloomberg, Sebastian Mankowski, and Dr. Sugandha Tuladhar

On 16 December 2011, the US Environmental Protection Agency (EPA) released its final Mercury and Air Toxics Standards (MATS) Rule, accompanied by a Regulatory Impact Analysis (RIA) that reported that the incremental cost to the US electricity sector would be $9.6 billion per year in 2015. This is a large cost to the US economy and, therefore, the Rule merits close examination. In this paper, several members of NERA's Environment and Climate Change Group -- Senior Vice President Dr. Anne E. Smith, Vice Presidents Scott Bloomberg, Dr. Paul Bernstein, and Dr. Sugandha Tuladhar, and Consultant Sebastian Mankowski -- analyze the economic impacts of the MATS Rule. Their analysis is designed to generally match the EPA assumptions in its own analysis, and to offer a broader range of insights about the impacts of that Rule than EPA provided in its RIA. This paper briefly summarizes the approach in the authors' MATS analysis, compares their results to those that EPA has reported, and provides some further results that are available from the authors' own analysis. The authors also provide insight into the overall economy-wide impacts of the Rule that can be expected to result from the costs that the US electric sector is projected to bear under the MATS Rule.