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Environmental Policy Induced Input Substitution? The Case of Coking and Steam Coal

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  • Lange, Ian

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.

Suggested Citation

  • Lange, Ian, 2007. "Environmental Policy Induced Input Substitution? The Case of Coking and Steam Coal," National Center for Environmental Economics-NCEE Working Papers 280860, United States Environmental Protection Agency (EPA).
    • Handle: RePEc:ags:nceewp:280860
    DOI: 10.22004/ag.econ.280860
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    File URL: https://ageconsearch.umn.edu/record/280860/files/NCEE2007-10.pdf
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    References listed on IDEAS

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    1. Crompton, Paul, 2001. "The diffusion of new steelmaking technology," Resources Policy, Elsevier, vol. 27(2), pages 87-95, June.
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    Keywords

    Environmental Economics and Policy;

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