The Clean Air Act of 1970 helped standardize pollution limits at the national level, but individual politicians can wield significant influence over the rates of industrial emissions in their districts, according to a new analysis conducted by a multi-institutional team that includes researchers at Penn State.
Industrial plants located in districts represented by a narrowly elected Democrat have approximately 30% lower emissions on average than those located in districts that are narrowly won by a Republican, according to the researchers, who assessed nearly 40,000 industrial plants and more than 5,000 U.S. House elections over 25 years. They also found that firms with plants in multiple districts reallocated emissions away from areas represented by Democrats. This reallocation was associated with potential financial impacts for firms as well as public health concerns for local communities.
The study was published in the September print edition of The Review of Financial Studies.
"Firms have a lot more control over their emissions than we think," said study co-author Stefan Lewellen, assistant professor of finance at Penn State's Smeal College of Business. "This research suggests that even something as small as a local representative using some soft power to intervene causes those firms to turn up or turn down the pollution dial pretty significantly."
Industrial plants have several levers they can theoretically adjust to reduce their emissions, Lewellen said, including investing in abatement technologies like wet scrubbers - which remove pollutants directly from contaminated gas before release - increasing their postproduction treatment or simply lowering their production. Indeed, the researchers found a 47% higher investment in abatement technologies in Democratic districts as well as higher rates of postproduction treatment and recycling, though there were no major differences in plant productivity.
