Privatization in Eastern Europe has helped transition the region's economies from planned to free market. However, the e¤ects of privatization on the environment are relatively unknown and many …rms remain under state ownership today. We compare the environmental performance of state-owned and privatized energy utility plants in Eastern Europe utilizing a novel panel data that includes reported sulfur dioxide emissions, energy input, and ownership status. We …nd that state-owned plants emit more sulfur dioxide than privately owned plants; this is environmentally signi…cant as privatization is associated with a reduction in emissions of about 55 percent.
The European Union (EU) Emissions Trading System (ETS) has implicitly made it more expensive to bum coal relative to natural gas because coal has a higher carbon content. Therefore, it is important to understand how much plants reduce their coal usage in response to higher coal prices to assess the effectiveness of the ETS in reducing carbon emissions. We analyze a novel panel of coal-burning large combustion plants from a subsample of eight EU countries and found that, holding constant the natural gas price, a 10/0 increase in the coal price results in a 0.36% decrease in coal consumption. At current ETS prices, this implies that the average large combustion plant in our sample EU countries is burning 7% less coal than it would be absent in the ETS. This suggests that the ETS has significantly reduced carbon emissions from coalfired plants for the eight countries represented in our sample.
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