Should the US clean air act include CO2 emission control?: Examination by data envelopment analysis

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., CO2 and NOx) 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 CO2 emission control) in order to examine both the influence of US Clean Air Act (CAA) on the acid rain causing gases (NOx and SO2) and its extension to the CO2 regulation. This study finds that the acid rain program under the CAA has been effective on the emission control of SO2 and NOx produced at US coal-fired power plants. Moreover, additional regulation on CO2 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 CO2 because the gas is considered as a main source of global warming and climate change.