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References in periodicals archive ?
Even in the absence of robust allowance trading, the program has empowered utilities with the flexibility to take advantage of exogenous changes in input markets, such as a decline in the cost and an increase in the availability of low sulfur coal. Moreover, this flexibility has promoted competition between input markets, which in turn has encouraged innovation and amplified cost savings.
The emergence of low sulfur coal as a widely available low-cost compliance option helps to explain the apparent success thus far.
Nonetheless, future performance standards may not be sufficient if low sulfur coal markets become constrained, especially after the year 2000 when phase II of Title IV will greatly expand the program's coverage.
The majority of the low sulfur coal originates in the Powder River Basin of northeast Wyoming and southeast Montana.
Fuel switching to and fuel blending with low sulfur coal has been the most popular compliance option to date.
Instead, about 50 million tons of production for phase I has shifted away from high sulfur coal markets to low sulfur coal. From 1989 to 1993, Appalachian coal production has increased 3.1 percent, Western coal production has increased by 3.7 percent, and Interior coal production has decreased by 4.1 percent (USEIA, 1994a, pp.
Rules written in 1979 to implement the 1977 amendments imposed a minimum S[O.sub.2] reduction standard of 90 percent on high sulfur coal and 70 percent on low sulfur coal, effectively requiring the use of scrubbers on all coal and eliminating the incentive for use of low sulfur coal.
As one example of the low compliance cost using low sulfur coal, phase I obligations of Title IV will cost the Southern Company, which will rely heavily on fuel switching, about $292 million.
This decline was due to demographic shifts in electricity demand toward areas more proximate to low sulfur coal, coupled with increased availability of low sulfur coal, not only as a low cost compliance option for Title IV but as a cheaper fuel for power production.
Transportation costs constitute about 50 percent of the total cost for low sulfur coal from the West delivered to the East.
The supply of Western low sulfur coal has proved able to expand to meet opportunities presented by the 1990 CAAA.
This in part is because ICF Resources, Inc., which conducted the analysis, maintains a sophisticated coal market model and because ICF correctly anticipated that low sulfur coal would play the most prominent role in compliance, at least through phase I of the program.