【Empirical】Rethinking the Effects of the Acid Rain Program: Was it Effective in Reducing Emissions in the Long Run?
2024/05/27
研討會日期 : 2024-05-27
時間 : 10:30
主講人 : Professor Soojin Jo
地點 : Conference Room B110
主持人 : Professor Ting Yuen Terry Cheung
演講者簡介 : Prof. Soojin Jo received her PhD from the University of California at San Diego in 2012. She is currently an assistant professor at Yonsei University in Korea. Her research interests are Applied Econometrics; Macroeconomics and Energy/Environmental Economics.
演講摘要 : The Acid Rain Program (ARP) of the U.S. in the 1990s has long been referenced as a successful case in reducing sulfur-dioxide (SO2) emissions through the introduction of an emissions trading system (ETS). To comply with regulatory requirements, a coal-burning power plant could either source low-sulfur coal from the Powder River Basin (PRB), switch to less-polluting sources, or shut down. We exploit fuel-sourcing transactions, generation by fuel source, and equipment installation records data at the individual power plant level from 1985 to 2019, to examine whether plants’ decisions under the ETS policy were indeed optimal for reducing SO2 emissions in the long run. Using a plant’s distance from the PRB as an instrument for sourcing cost of low-sulfur coal, we find that plants closer to the PRB are more likely to use the PRB coal. The use of PRB coal significantly reduced SO2 emissions until 2000, particularly by larger and more polluting plants that were regulated earlier on. However, the availability of the PRB coal deterred the plants from increasing natural gas usage, even after its prices plummeted since 2009 with the shale gas boom. As a result, plants using PRB coals did not contribute to the reduction of SO2 in the later part of the sample. Together, our findings suggest that the benefit of market-based environmental policies may be curbed in the long run, if they have limiting impacts on the relative prices of natural gas over coal.
