The Environmental Protection Agency is developing performance standards to limit CO2 emissions from the electric power sector, and refineries may one day face similar regulations. This paper describes the structure of the refining industry as well as the Environmental Protection Agency’s proposed authority to regulate the industry’s emissions under section 111(d) of the Clean Air Act. It discusses the three major steps for rulemaking, policy design questions that arise at each step, potential responses, and implications for environmental outcomes, equity, and cost effectiveness. The paper concludes by highlighting key considerations for refineries, including options for tailoring discussions from power plant regulation, maximizing cost effectiveness, taking into account differences among refineries, and—given the industry’s characteristics—formatting regulation in a way that may best fit them. A companion policy brief—Regulating Greenhouse Gases Sector by Sector under the Clean Air Act: How Well Does the Electric-Generating Unit Experience Translate to Petroleum Refineries?—highlights differences between the electric power industry and the petroleum refinery industry and highlights their significance for rulemaking for the latter.
Author(s): Allison Donnelly, Kristie Beaudoin, Sarah K. Adair, Brian Murray, William A. Pizer, Tim Profeta
Published: June 2014