Emissions abating technology adoption under the SO2 permit market: A social networks approach

Bernardo Creamer, Germán G. Creamer

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

2 Scopus citations

Abstract

SO2, sulfur dioxide, emissions generated by electric power plants account for a large proportion of the total emissions in the U.S.A. In 2008, electricity generation caused nearly 7.9 million tons of SO2 emissions out of a total of 9.5 million tons. The negative side effects of SO2 emissions have been thoroughly evaluated, especially health deterioration issues caused by acid rain and other unwanted impacts that generate significant social costs. In response to these effects, the U.S. Congress passed the Clear Air Act (CAA) in the 1970s to cut down SO2 among other emissions. The CAA Amendments (CAAA) of 1990 created a competitive cap-and-trade market for SO2 allowances that lowered overall emission levels. This paper builds a social network among the different states of U.S.A. based on the trade of coal during the period 1990 to 2005 to evaluate the factors that affect the decision of coal burning electric power firms to adopt emission abating technology. In particular, these companies follow one or a combination of these strategies to comply with the CAAA emission restrictions: 1) paying the new costs of emissions and continuing business as usual, 2) using higher quality inputs (lower sulfur coal) that generate less pollution, or 3) upgrading their processes and equipment to lower emissions. The main factors explored are prices and quantities of low and high sulfur coal; SO2 allowances prices; and the operation and maintenance cost of abating technology (flue-gas desulfurization (FGDs) or scrubbers). This paper concludes that firms respond to the imposition of pollution control regulations by selecting a strategy that simultaneously control emissions and minimize costs. The firms reduce their pollutions using higher quality inputs (sub-bituminous coal), investing in new emission abating technology or a combination of both approaches. The longitudinal social network analysis shows that the dynamic of the fuel network where there is an increasing adoption of technology by most of the states may explain, jointly with the reduction of gas prices, the collapse of the allowance market for SO2 after 2005.

Original languageEnglish
Title of host publicationProceedings - SocialCom/PASSAT/BigData/EconCom/BioMedCom 2013
Pages744-749
Number of pages6
DOIs
StatePublished - 2013
Event2013 ASE/IEEE Int. Conf. on Social Computing, SocialCom 2013, the 2013 ASE/IEEE Int. Conf. on Big Data, BigData 2013, the 2013 Int. Conf. on Economic Computing, EconCom 2013, the 2013 PASSAT 2013, and the 2013 ASE/IEEE Int. Conf. on BioMedCom 2013 - Washington, DC, United States
Duration: 8 Sep 201314 Sep 2013

Publication series

NameProceedings - SocialCom/PASSAT/BigData/EconCom/BioMedCom 2013

Conference

Conference2013 ASE/IEEE Int. Conf. on Social Computing, SocialCom 2013, the 2013 ASE/IEEE Int. Conf. on Big Data, BigData 2013, the 2013 Int. Conf. on Economic Computing, EconCom 2013, the 2013 PASSAT 2013, and the 2013 ASE/IEEE Int. Conf. on BioMedCom 2013
Country/TerritoryUnited States
CityWashington, DC
Period8/09/1314/09/13

Keywords

  • Computational economics
  • Energy economics
  • Environmental economics
  • Social networks
  • Technological change

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