Environmental performance of state-owned and privatized eastern European energy utilities

Privatization in Eastern Europe has helped in the transition of the region's economies from planned to free market. However, the effects of privatization on the environment are relatively unknown and many firms remain under state ownership today. We compare the environmental performance of state-owned and privatized energy utility plants in Eastern Europe utilizing a novel panel data that includes reported sulfur dioxide emissions, energy input, and ownership status. We find that state-owned plants emit more sulfur dioxide than privately owned plants; this is environmentally significant as privatization is associated with a reduction in emissions of about 55%. ► We examine the SO2 emissions of privatized and state-owned Eastern European energy utilities. ► Privatization is associated with lower sulfur dioxide emissions on both absolute and relative basis. ► We discuss several hypotheses for privatized plants having lower emissions.