A nonparametric method to estimate a technical change effect on marginal abatement costs of U.S. coal power plants

Maethee Mekaroonreung, Andrew L. Johnson*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

14 Citations (Scopus)

Abstract

The literature usually assumes that technical change reduces marginal abatement cost; however, recent results suggest that precisely the opposite occurs. This paper proposes a nonparametric method to determine the effect of technical change on marginal abatement cost. The method decomposes NOx marginal abatement cost changes in 2000-2004 and in 2004-2008 for 325 boilers operating in 134 U.S. bituminous coal power plant into technical and non-technical change effects. We find that technical change reduces the NOx marginal cost about 28.3% in 2000-2004 and 26.5% in 2004-2008. However, more stringent regulations enacted the NOx budget program results in lower NOx emission levels as plant operators install more advanced NOx abatement equipment which in turn causes an overall increase in marginal abatement cost.

Original languageEnglish
Pages (from-to)45-55
Number of pages11
JournalEnergy Economics
Volume46
DOIs
Publication statusPublished - 1 Nov 2014
MoE publication typeA1 Journal article-refereed

Keywords

  • Marginal abatement cost
  • Multiplicative decomposition
  • Sequential frontier estimation
  • Technical change

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