Analysis of environmental productivity on fossil fuel power plants in the U.S.

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Authors
Lu, Yunghsiang
Chen, Ku Hsieh
Cheng, Jen-Chi
Chen, Chihchun
Li, Sian Yuan
Issue Date
2019-12-04
Type
Article
Language
en_US
Keywords
Environmental efficiency , Fossil fuel power plant , Metafrontier
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Abstract

In 2007, the Clean Air Act officially included greenhouse gases, making fossil fuel power plants the first of key industries regulated by the Environmental Protection Agency. How do we measure the impact of the regulations on these power plants' productivity? Previous studies that attempt to answer this question have provided inadequate answers because their samples cover the periods only up to 2007, and they often use greenhouse gases as the only proxy for the undesirable output. This paper collects data from 133 fossil fuel power plants in the United States and covers 2004 to 2013. These power plants are divided into Sun Belt and Frost Belt based on their geographical locations. To measure the undesirable outputs, we used both carbon dioxide and toxic emissions as the proxies. The estimation model includes the construction of a generalized common stochastic frontier (metafrontier) and a Malmquist productivity index. We used the index to measure the change in productivity for the power plants before and after the implementation of the regulation. The results indicate that, since regulation in 2007, the overall production efficiency of the power plants has declined incessantly while productivity has seen a sustained downward trend despite two surges in growth.

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© 2019 by the authors. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Citation
Lu, Yung-Hsiang; Chen, Ku-Hsieh; Cheng, Jen-Chi; Chen, Chih-Chun; Li, Sian-Yuan. 2019. "Analysis of Environmental Productivity on Fossil Fuel Power Plants in the U.S.." Sustainability 11, no. 24: 6907
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MDPI AG
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ISSN
2071-1050
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