Coals found in Iowa have sulfur contents that exceed the amount allowed by most federal, state, county and municipal sulfur dioxide emission standards. Tightening and strict enforcement of the state implementation plan regulations may increase the demand for desulfurization by of high-sulfur Midwestern and Eastern coals. This study examines the potential impact of this process and of improved transportation of coal from within and outside Iowa on the utilization of Iowa coal. Iowa coal production has steadily declined from one million tons in 1971 [15] to 513,000 tons in 1977 [14]. Only 259,000 tons of Iowa coal were strip mined in 1975 [16]. This decline is attributable to a number of factors. First, low-cost, 100-car unit trains hauling low-sulfur western coal have recently become available in Iowa. Second, the small scale of Iowa mining operations and the relatively thin Iowa coal seams lying deep underground result in relatively high mining costs. Finally, imposition of sulfur dioxide emission standards has augmented the decline in Iowa coal production; strippable coal reserves in Iowa typically average between 3.1 and 5.8 percent sulfur [5]. The U.S. Environmental Protection Agency [17] has adopted a national standard that limits emissions to 1.2 pounds of sulfur dioxide per million Btu of heat at coal-fired stationary boilers constructed after August 17, 1971 with a heat input greater than 250 million Btu. Assuming 10,000 Btu per pound, only coal with 0.6 percent sulfur or less could be burned in these boilers under this emission standard. Recently, The U.S. Environmental Protection Agency proposed revisions to the new source performance standards that would require a minimum of 85 percent reduction of sulfur between the point of extraction and the point of discharge of combustion products into the atmosphere, and limit sulfur emissions to no more than 1.2 pounds of sulfur dioxide per million Btu on a 24-hour average [18] . Individual states, counties, or cities may establish emission standards for smaller boilers and boilers constructed before August 17, 1971. The current emission standards for these boilers in Iowa are five or six pounds of sulfur dioxide per million Btu, depending upon the location of the boiler. Assuming 10,000 Btu per pound, only coals with sulfur contents of 2.5 or 3.0 percent or less, respectively, could be burned in these boilers under these emission standards. Increasingly stringent air pollution standards w ll have an impact on technologies used to control sulfur dioxide emissions from coal combustion. Physical coal is now used in a limited number of cases to remove sulfur for compliance with state implementation plan [SIP] emission regulations. Tightening and strict enforcement of the SIP regulations may increase the demand for desulfurization of high sulfur Midwestern and Eastern coals by cleaning [19]. Commerciallymined Midwest coal reserves have heat values ranging from about 10,000 to 13,000 Btu/lb and sulfur contents ranging up to above 6 percent 18]. One method of improving the competitive position of high-sulfur coal may be to reduce the content of sulfur and other impurities. An experimental coal (beneficiation) plant operated by Iowa State University-the only such plant in Iowa-has shown that removal of pyritic sulfur will reduce the total sulfur content by about 35 percent for most types of Iowa coal, on the average [7]. Managers of steam generating electric utility plants have reported excellent combustion results from using this beneficiated coal. The proposed revisions in sulfur emission standards would require new utility plants to utilize flue gas desulfurization technologies. However, recent studies have suggested that in many cases, coal beneficiation combined with flue gas desulfurization would be cheaper than flue gas desulfurization alone [4]. Thus, coalbeneficiation plant location will be an important issue under both existing and proposed sulfur dioxide emission standards. Another alternative for improving the competitive position of high-sulfur coal is to reduce the cost of transporting coal to users. Possible imThomas P. Drinka, formerly a postdoctoral research associate at Iowa State University, is now the chief economist for the I.W. Milliken Corporation. John J. Miller is a predoctoral research associate, and C. Phillip Baumel is a professor of Economics at Iowa State University. This article is Journal Paper No. J-9187 of the Iowa Agriculture and Home Economics Experiment Station, Ames, Iowa. Project No. 22156. This content downloaded from 207.46.13.120 on Wed, 14 Sep 2016 05:41:26 UTC All use subject to http://about.jstor.org/terms 114 NORTH CENTRAL JOURNAL OF AGRICULTURAL ECONOMICS, Vol. 2, No. 2, July 1980 provements in coal transportation include larger rail shipments such as 15and 50-car units, alternative types of trucks, and intermodal combinations. The study reported here assessed the potential impact of beneficiation of Iowa coal and of improved coal transportation on the utilization of Iowa coal.