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

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  • Ian Lange

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

  • Ian Lange, 2007. "Environmental Policy Induced Input Substitution? The Case of Coking and Steam Coal," NCEE Working Paper Series 200710, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Dec 2007.
  • Handle: RePEc:nev:wpaper:wp200710
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    File URL: https://www.epa.gov/environmental-economics/working-paper-environmental-policy-induced-input-substitution-case-coking
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Crompton, Paul, 2001. "The diffusion of new steelmaking technology," Resources Policy, Elsevier, vol. 27(2), pages 87-95, June.
    2. Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2005. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521023894, May.
      • Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2000. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521660839, March.
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    Keywords

    1990 Clean Air Act; coke; Input substitution;

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