An Empirical Analysis of the Determinants of NOx Emission Standard Stringency for Boilers at Swedish Combustion Plants

Abstract

Abstract Operators at Swedish combustion plants have raised a concern that the stringency of boiler specific NOx emission standards varies between counties, potentially causing competitive advantages for plants in counties with relatively less stringent regulations. By utilizing a unique dataset we are provided with an opportunity to analyse the determinants of emission standard stringency in order to explain these potential variations. Relying on pooled OLS estimations we find that more stringent standards are imposed in counties where the NOx associated environmental damages are more severe. We also find that less stringent standards are imposed in counties where concerns about the employment levels are higher or where the environmental awareness among the inhabitants is lower. Furthermore we find that plants with a higher bargaining power obtain less stringent standards. The last three findings indicate that structural differences in the regulation is present, potentially leading to unjustified competitive advantages for some plants. This suggests that a more uniform enforcement of the emission standards between Swedish counties may be necessary.