The Economic Impact Of EPA So2 Standards On The U.S. Coal Industry

Changes in SO2 emission standards will not only influence the cost of supplying energy demands from coal, but also the competitive position of various production regions and the method of mining (surface vs. underground). A multiperiod interregional competition model was utilized to evaluate the interactions between mining capacity, new mine development, coal reserves, mining, processing and transportation costs and equipment availability and SO2 emission standards. The empirical results indicate that not only will costs increase dramatically, but production in eastern as well as western regions that have low sulfur reserves will also increase as sulfur standards become increasingly more strict. Implications of the adjustments in the location of coal mining activity for the processing, transportation, and capital goods markets are also presented.