Technological Advance in Cooling Systems at U.S. Power Plants

Prior to adoption of the 1972 Clean Water Act (CWA) most U.S. power plants used once-through cooling water systems that discharged large quantities of warm water. This resulted in significant amounts of thermal pollution in neighboring bodies of water. The CWA essentially mandated recirculating systems for new facilities. This paper investigates whether there was technological advance in cooling systems, which we define as reductions in performance-adjusted costs, and how these advances are related to imposition of the CWA. Results suggest that the performance-adjusted cost of installing a recirculating cooling system was falling prior to implementation of the CWA but rose thereafter. This is consistent with the theoretical work suggesting that command and control regulation offers poor incentives for advances in pollution control technology.
Keywords: Electricity generation, Water cooling, Innovation, Environmental policy