Prolonging Coal’s Sunset: The Causes and Consequences of Local Protectionism for a Declining Polluting Industry

Abstract

In recent years, the share of U.S electricity generated by coal has fallen from nearly 50% to 33%. The costs of this transition are spatially concentrated, and mining states have already lost income due to the reduced demand for coal. Coal states have enacted policies to encourage local power plants to purchase from within state mines. We document that power plants in states and counties with substantial mining activity are more likely to be coal fired and to purchase more within political boundary coal. These results are robust to including flexible controls for the distance from power plants to mines. While coal states benefits from local protectionism, these efforts impose social costs because coal mining and coal burning creates significant environmental consequences. We quantify these effects and find that a one-percentage point increase in the proportion of coal plants in a NERC region with an in-state coal mine results in approximately 2.3 million additional annual tons of CO2 emissions.

Responses to the Clean Power Plan: Factors Influencing State Decision‐Making

“…Even if costs are not actually higher or job losses do not result, state officials may be concerned about perceptions that these things will occur. This would be consistent with other evidence that the coal industry is especially politically important (Bomberg, ; Eyer & Khan, ; Vietor, ). Strictly speaking, this influence need not always be an economic cost, but it is categorized that way here since it might be in some circumstances.…”

“…In terms of complying with CPP implementation plan requirements, only 6% of Americans surveyed want their state to sue to block the requirement (Mills et al, ; Rabe et al, ) and yet 40% of states have suspended implementation planning. One reason for this disconnect may be that environmental issues seem to have low salience—they are not the dominant issues in elections or what voters make their decision based upon (Brulle, Carmichael, & Jenkins, ; Guber, ). This apparent disconnect between public policy decisions and public opinion raises the question of, if public opinion is not driving the states’ response to the CPP, what is?…”

Coal Demand, Market Forces, and US Coal Mine Closures

“…The fact that Western low cost coal does not reach all consumers could be due to transportation costs or to incomplete and sluggish pass-through of mining costs to delivered prices (Chu et al, 2017). Eyer and Kahn (2017) find that the amount of coal bought from in-state mines has been increasing. These patterns suggest that market power of shipping firms and coal mines may vary geographically.…”

Pollution's Role in Reducing Urban Quality of Life in the Developing World

“…Elected officials are likely to be aware of how their constituents will be affected by increases in regulation. If they anticipate that the costs of certain policy changes exceed the benefits for their key constituents, then these officials will be less likely to support them (Eyer and Kahn, 2019).…”