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Additional market incentives for abatement: An analysis of flue-gas desulfurization by-products

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  • He, Qingxin
  • Lee, Jonathan M.

Abstract

Energy and environmental regulations often result in by-products that can reduce compliance costs. This research evaluates a unique case in which the marketability of gypsum by-product produced from sulfur dioxide (SO2) scrubbing operations at coal-fired electric plants has a theoretically ambiguous impact on pollution emissions. Intuitively, the ability to market flue-gas desulfurization (FGD) gypsum provides incentives for electricity generating plants to operate their scrubbers more efficiently by providing gypsum revenues, and lowering gypsum disposal costs. Gypsum marketability also creates incentives for plants to burn coal with higher sulfur content in order to increase their gypsum (CaSO4·2H2O) production. The overall impact of FGD gypsum marketability on boiler-level SO2 emissions is therefore the empirical question of interest. Electricity boiler-level fixed-effect estimations suggest annual SO2 emissions decline by 3494tons (39%) as a result of gypsum marketing. An upper bound on the total external benefits associated with the reduced SO2 emissions is estimated at $350.6 billion (2011$), or roughly 2.1% of the total benefits of the U.S. Clean Air Act (CAA) from 1990 to 2010.

Suggested Citation

  • He, Qingxin & Lee, Jonathan M., 2014. "Additional market incentives for abatement: An analysis of flue-gas desulfurization by-products," Resource and Energy Economics, Elsevier, vol. 36(2), pages 370-393.
    • Handle: RePEc:eee:resene:v:36:y:2014:i:2:p:370-393
    DOI: 10.1016/j.reseneeco.2014.01.004
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    References listed on IDEAS

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    Cited by:

    1. He, Qingxin & Lee, Jonathan M., 2016. "The effect of coal combustion byproducts on price discrimination by upstream industries," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 11-24.

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    More about this item

    Keywords

    By-products; Sulfur dioxide (SO2) emissions; Scrubber; Gypsum; Clean Air Act;
    All these keywords.

    JEL classification:

    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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