The Impacts of the Clean Air Act Amendments of 1990 and Changes in Rail Rates on Western Coal

This study examines the impacts of the Clean Air Act Amendments of 1990 (CAAA90) on coal production and coal flows. The CAAA90 take a markedly different approach to pollution control from stationary sources when compared to past 'clean air' legislation. The new approach to limiting sulfur dioxide emissions from electric utilities allows the least cost method of pollution control to be used by those utilities that realize the lowest costs in reducing pollution. In many cases, the lowest cost method of reducing pollution will be to purchase low sulfur coal. Because 86 percent of the nation's recoverable low sulfur coal reserves are located in the west, this presents a great opportunity for western coal producers. Linear programs are estimated in the study, showing the large potential increases in western coal production resulting from the CAAA90. Finally, the study shows that future changes in nationwide transportation rates could have a major impact on regional coal production and market shares. To the extent that increases in railroad efficiency continue, western coal production should realize an even greater opportunity. This study also presents a model of rail rates, showing the influences of costs and competitive factors in determining individual rates for coal.

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MPC Report

 Record created 2017-04-01, last modified 2018-01-23

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