Should the US clean air act include CO 2 emission control?: Examination by data envelopment analysis

Abstract

This study proposes a new use of Data Envelopment Analysis (DEA) to measure the operational, environmental and both-unified efficiency measures of US coal-fired power plants. The power plants produce not only desirable outputs (e.g., electricity) but also undesirable outputs (e.g., CO 2 and NO x ) as a result of their plant operations. A Range-Adjusted Measure (RAM) is used as an original non-radial DEA model. Then, it is reformulated for handling undesirable (bad) outputs. The proposed use of DEA models measures the environmental and unified performance of power plants under two variable alternatives (with and without CO 2 emission control) in order to examine both the influence of US Clean Air Act (CAA) on the acid rain causing gases (NO x and SO 2) and its extension to the CO 2 regulation. This study finds that the acid rain program under the CAA has been effective on the emission control of SO 2 and NO x produced at US coal-fired power plants. Moreover, additional regulation on CO 2 may enhance their environmental and unified performance. Thus, it is recommended that the US federal and state governments need to expand the legal scope of CAA to the emission control on CO 2 because the gas is considered as a main source of global warming and climate change.