Anthropogenic green house gas (GHG) emissions, such as those emitted by coal-fired power plants, are reported by the Intergovernmental Panel on Climate Change to be very likely influencing the global climate change. Many states of the US have adopted a renewable electricity portfolio standard to facilitate incorporation of renewable energy sources to mitigate GHG impacts. Ohio’s advanced electricity portfolio includes clean coal and renewable sources leaving leeway for continued large dependency on coal. The argument for deployment of coal-fired electricity to a large extent is the lower upfront private cost of electricity. However, ongoing coalmining impacts in Ohio and unregulated Carbon dioxide (CO2) suggest that the current price structure of Ohio does not reflect the true cost of electricity. This inability of the prevailing cost structure to fully internalize the externalities misleads the decision makers from providing a level playing field for renewable energy sectors which could reduce water pollution, global warming, and potentially create green jobs.
This dissertation identifies the externalities of coal-based electricity generation and evaluates the externalities inadequately addressed by contemporary regulatory framework. Three major areas addressed by this research are evaluation of coalmining impacts on lake recreation; estimation of reclamation costs and revisiting the taxes on coal mined in Ohio; and the impacts of internalizing the externalities on electricity portfolio of Ohio.
The visitation function model was developed to evaluate two important aspects of coalmining impact. First, the externality associated with coalmining on five of the impacted lakes is estimated as $18.04 million. Secondly, potential recreational benefits due to improved water quality attributed to reclamation in watersheds of impacted lakes were estimated as $3.88 to $5.75 million per year.
Reclamation costs were estimated for existing coalmining problems in Ohio. Estimated reclamation costs is $ 689.616 million dollars, out of which $383.807 million is the construction costs and the rest is administrative cost. Federal budget allocated for reclamation until 2021 is $157.899 dollars. Federal fees and State severance tax obtained from mining coal in Ohio is estimated as $32.6 and $5.35 million. This leaves a large deficit of $512.899 million for reclamation of all abandoned mines.
A federal fee of $2.68 and $2.04 per ton of surface and underground mined coal respectively until 2012 followed by $2.30 and $20.04 for the period of 2013 -2021 will generate required reclamation funds assuming leverage funds ceteris paribus.
Based upon these research results on five of the impacted lakes, Potential Pareto Improvement (PPI) could be demonstrated for continued reclamation of the coalmining problems for Seneca Lake and Wills Creek Lake. Our analysis does not include all the impacted lakes and notably excludes revenue from increased house and land values, aesthetic improvement, recreation on streams, and impacts on wild life. Estimation of revenue from all these sectors upon reclamation would help determine the PPI of reclamation.
Including these externality costs in OH-MARKAL model indicates a reduction of average annual share of coal-based electricity generation by 0.3 %. More importantly, reduction in CO2 emissions by 15,000 to 574,000 tons/year will be achieved.