The 1990 Clean Air Act and the implicit price of sulfur in coal - article no. 41

Journal Article · Sun Jul 01 04:00:00 EDT 2007 · B.E. Journal of Economic Analysis & Policy

OSTI ID:21095874

Lange, I; Bellas, A S ^[1]

---

1. US EPA, Washington, DC (United States)

Prior to implementation of the 1990 Clean Air Act Amendments (CAAA), many estimates of the marginal cost of SO{sub 2} abatement were provided to guide policy makers. Numerous studies estimated the marginal cost of abatement to be between $250 and $760 per ton, though permits initially traded well below $200 and remained below $$220 until 2004. We use a fixed effects estimator and a hedonic price model of coal purchases in order to determine the implicit price of sulfur. Data on contract coal purchases are divided into regulatory regimes based on when the contract was signed or re-negotiated. We find that purchases by Phase I plants made under contracts signed or re-negotiated after the passage of the 1990 CAAA show an implicit price of SO{sub 2} of approximately $$50 per ton, an amount much closer to the eventual permit price. The implicit market price of sulfur seems to have revealed better information than did the calculations of industry experts.

• OSTI ID: 21095874
• Journal Information: B.E. Journal of Economic Analysis & Policy, Journal Name: B.E. Journal of Economic Analysis & Policy Journal Issue: 1 Vol. 7; ISSN 1935-1682
• Country of Publication: United States
• Language: English

Related Subjects

01 COAL, LIGNITE, AND PEAT
AIR POLLUTION ABATEMENT
CLEAN AIR ACTS
COAL
COST
EMISSIONS TRADING
LICENSES
PRICES
SULFUR CONTENT
SULFUR DIOXIDE