Paper Number: 2007-10

Document Date: 12/2007

Authors: Ian Lange

Subject Areas: Energy; Distributional Effects

Keywords: 1990 clean air act; coke; input substitution

Abstract: The Clean Air Act of 1990 initiated a tradable permit program for emissions of sulfur dioxide from coal-fired power plants. The effect of this enlightened policy on the coal industry was a large increase in consumption of low-sulfur bituminous and subbituminous coals. Low-sulfur bituminous coal is most attractive to coal-fired power plants as they have higher heat content and require less alteration to the boiler to burn as effectively the coal previously in use. However, low-sulfur bituminous coal is also the ideal coal for coking. The analysis presented here will attempt to determine whether the increased consumption of low-sulfur bituminous coal for electricity generation caused a decrease in the quality and/or quantity of coking coal consumption. Most evidence suggests that the market for coking coal was unaffected, even as the consumption of low-sulfur bituminous coal for electricity generation increased substantially. Implications of potential greenhouse gas regulation on this market are also discussed.

This paper is part of the Environmental Economics Working Paper Series.

• Environmental Policy Induced Input Substitution: The Case of Coking and Steam Coal f (PDF)(18 pp, 273 K, 12/2007)