if US climate policies further disadvantage coal in favour of cleaner energy sources, new research has found., University of Maryland economist Louis Preonas explains how and why rail transportation companies have the power to reduce the effectiveness of“These findings underscore the importance of looking at the whole fossil fuel supply chain,” Preonas said in a media statement.
By analyzing data on coal deliveries, rail carrier use of the US rail network and hourly energy generation from, Preonas showed that as competition from natural gas forced coal-fired plants to reduce electricity prices, railroad companies reduced their coal transportation fees. By absorbing some of the cost difference between coal and natural gas, the railroads propped up the coal market to avoid losing business.
Preonas also showed that railroads can only absorb a carbon tax for certain facilities. About 44% of US coal-fired plants are served by a single railroad. Those plants are most reliant on their rail carrier, which means those carriers have higher profit margins and are better positioned to reduce costs to keep a coal plant operational.
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