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Proposed Coal Power Plants and Coal-To-Liquids Plants: Which Ones Survive and Why?

Dean Fantazzini and Mario Maggi ()
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Mario Maggi: Department of Economics and Management, University of Pavia

No 82, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: The increase of oil and natural gas prices since the year 2000 stimulated the planning and construction of new coal-fired electricity generating plants and coal-to-liquids plants in the US. However, a large number of these projects have been canceled or abandoned since 2007. Using a set of 145 proposed coal power plants and 25 coal-to- liquids plants, we examine the main determinants that influence the decision to abandon a project or to proceed with it. In case of coal power plants, the number of searches performed on Google relating to coal power plants and the prices of alternative fuels for electricity generation are the main factors. As for coal-to-liquids plants, the political affiliation of the state governor is the most important factor across several model specifications. An out-of-sample exercise confirms these findings. These results hold also with robustness checks considering alternative Google search keywords and the potential effects of the recession in the years 2008-2009.

Keywords: Coal; Coal plants; Coal-to-Liquids; Logit; Probit; Training; Validation; Forecasting; Model Confidence Set; Google; Google Trends; Second Great Contraction; Global Financial Crisis (search for similar items in EconPapers)
JEL-codes: C25 C52 C53 L94 Q40 Q41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2014-07
New Economics Papers: this item is included in nep-ene, nep-ppm and nep-reg
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