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

49 Pages Posted: 27 Feb 2017

See all articles by Jonathan Eyer

Jonathan Eyer

University of Southern California

Matthew E. Kahn

University of Southern California; National Bureau of Economic Research (NBER)

Date Written: February 2017

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.

Suggested Citation

Eyer, Jonathan and Kahn, Matthew E., Prolonging Coal's Sunset: The Causes and Consequences of Local Protectionism for a Declining Polluting Industry (February 2017). NBER Working Paper No. w23190. Available at SSRN: https://ssrn.com/abstract=2924280

Jonathan Eyer (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Matthew E. Kahn

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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