The EPA’s recently finalized Clean Power Plan (CPP) establishes several pathways for compliance, including category-specific rate standards, state rate standards, and state mass targets. For each compliance pathway, states are allowed to cooperate in order to reduce compliance costs. While cooperation through trade will unambiguously lower total compliance costs, at the state level it can either lower costs for both states, or for one at the expense of the other. Moreover, the impacts of cooperation on total emissions are ambiguous in the context of rate policy. In this paper, we develop a simple two-state electricity model to illustrate the potential implications of cooperation for state costs and total emissions within each compliance pathway. For the category-specific rate standards, we show that cooperation typically, though not always, lowerscosts in both states. However, it can also result in increased CO2 emissions, an outcome that becomes increasingly likely as renewable energy costs diverge across the states. For the state rate standards, the CPP requires cooperating states to blend their state-specific rates into a single weighted-average rate. We demonstrate two counteracting effects of cooperation faced by the state with the more lenient standard: a “trade effect” that lowers state costs through a shared compliance credit market, and an “averaging effect” that raises state costs for one state through the adoption of a more stringent standard. For the state mass targets, we show that for a cap-and-trade policy with auctioned allowances, lump-sum rebating back to the states on the basis of their initial caps will benefit both states.