Baseload coal investment decisions under uncertain carbon legislation

Journal Article · Tue May 15 00:00:00 EDT 2007 · Environmental Science and Technology

DOI:https://doi.org/10.1021/es062198e· OSTI ID:20905840

Bergerson, Joule A; Lave, Lester B ^[1]

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1. University of Calgary, Calgary, AB (Canada)

More than 50% of electricity in the U.S. is generated by coal. The U.S. has large coal resources, the cheapest fuel in most areas. Coal fired power plants are likely to continue to provide much of U.S. electricity. However, the type of power plant that should be built is unclear. Technology can reduce pollutant discharges and capture and sequester the CO{sub 2} from coal-fired generation. The U.S. Energy Policy Act of 2005 provides incentives for large scale commercial deployment of Integrated Coal Gasification Combined Cycle (IGCC) systems (e.g., loan guarantees and project tax credits). This analysis examines whether a new coal plant should be pulverized coal (PC) or IGCC. Do stricter emissions standards (PM, SO{sub 2}, NOx, Hg) justify the higher costs of IGCC over PC? How does potential future carbon legislation affect the decision to add carbon capture and storage (CCS) technology? Finally, can the impact of uncertain carbon legislation be minimized? We find that SO{sub 2}, NOx, PM, and Hg emission standards would have to be far more stringent than twice current standards to justify the increased costs of the IGCC system. A CO{sub 2} tax less than $29/ton would lead companies to continuing to choose PC, paying the tax for emitted CO{sub 2}. The earlier a decision-maker believes the carbon tax will be imposed and the higher the tax, the more likely companies will choose IGCC with CCS. Having government announce the date and level of a carbon tax would promote more sensible decisions, but government would have to use a tax or subsidy to induce companies to choose the technology that is best for society. 14 refs., 6 figs., 4 tabs.

• OSTI ID: 20905840
• Journal Information: Environmental Science and Technology, Vol. 41, Issue 10; Other Information: [e-mail]; ISSN 0013-936X
• Country of Publication: United States
• Language: English

Related Subjects

20 FOSSIL-FUELED POWER PLANTS
01 COAL, LIGNITE, AND PEAT
29 ENERGY PLANNING
POLICY AND ECONOMY
USA
COAL
INVESTMENT
FOSSIL-FUEL POWER PLANTS
POWER GENERATION
PULVERIZED FUELS
COAL GASIFICATION
COMBINED-CYCLE POWER PLANTS
DECISION MAKING
LEGISLATION
CARBON SEQUESTRATION
POLLUTION REGULATIONS
AIR POLLUTION CONTROL
EMISSIONS TAX
COMPARATIVE EVALUATIONS
COST
ELECTRIC POWER
ECONOMIC ANALYSIS
PARTICULATES
ECONOMIC IMPACT
SULFUR DIOXIDE
NITROGEN OXIDES
MERCURY
RETROFITTING
FINANCIAL INCENTIVES
SOCIAL IMPACT
COAL RANK
PERFORMANCE
TECHNOLOGY ASSESSMENT
RELIABILITY