The Impacts of the Clean Air Act Amendments of 1990 and Changes in Rail Rates on Western Coal
2017
Bitzan, John | Tolliver, Denver | Linderman, Wayne
This study examines the impacts of the Clean Air Act Amendments of 1990 (CAAA90) oncoal production and coal flows. The CAAA90 take a markedly different approach to pollutioncontrol from stationary sources when compared to past 'clean air' legislation. The new approachto limiting sulfur dioxide emissions from electric utilities allows the least cost method of pollutioncontrol to be used by those utilities that realize the lowest costs in reducing pollution. In manycases, the lowest cost method of reducing pollution will be to purchase low sulfur coal. Because86 percent of the nation's recoverable low sulfur coal reserves are located in the west, thispresents a great opportunity for western coal producers. Linear programs are estimated in thestudy, showing the large potential increases in western coal production resulting from theCAAA90. Finally, the study shows that future changes in nationwide transportation rates couldhave a major impact on regional coal production and market shares. To the extent that increasesin railroad efficiency continue, western coal production should realize an even greateropportunity. This study also presents a model of rail rates, showing the influences of costs andcompetitive factors in determining individual rates for coal.
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