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Proposed Coal Power Plants and Coal-To-Liquids Plants: Which Ones Survive and Why?

Author

Listed:
  • Dean Fantazzini

    (Moscow School of Economics, Moscow State University, Russia)

  • Mario Maggi

    (Department of Economics and Management, University of Pavia)

Abstract

The increase of oil and natural gas prices since the year 2000 stimulated the planning and construction of new coal-fired electricity generating plants and coal-to-liquids plants in the US. However, a large number of these projects have been canceled or abandoned since 2007. Using a set of 145 proposed coal power plants and 25 coal-to- liquids plants, we examine the main determinants that influence the decision to abandon a project or to proceed with it. In case of coal power plants, the number of searches performed on Google relating to coal power plants and the prices of alternative fuels for electricity generation are the main factors. As for coal-to-liquids plants, the political affiliation of the state governor is the most important factor across several model specifications. An out-of-sample exercise confirms these findings. These results hold also with robustness checks considering alternative Google search keywords and the potential effects of the recession in the years 2008-2009.

Suggested Citation

  • Dean Fantazzini & Mario Maggi, 2014. "Proposed Coal Power Plants and Coal-To-Liquids Plants: Which Ones Survive and Why?," DEM Working Papers Series 082, University of Pavia, Department of Economics and Management.
    • Handle: RePEc:pav:demwpp:demwp0082
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    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0082.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Coal; Coal plants; Coal-to-Liquids; Logit; Probit; Training; Validation; Forecasting; Model Confidence Set; Google; Google Trends; Second Great Contraction; Global Financial Crisis;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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