Allowance markets, fossil generation trends and SO{sub 2} compliance

Conference · Sun Dec 31 04:00:00 EST 1995

OSTI ID:271829

White, K; Hewson, T Jr; Van Horn, A

This paper evaluates prospects and uncertainties in the emission allowance and emission control markets of concern to electric utilities required to reduce SO{sub 2} emissions under the 1990 Clean Air Act Amendments. Over-control in Phase One, 1995 through 1999, is projected to produce a surplus of about 10 million tons of banked emission allowances that can later be drawn down to delay costly controls otherwise required in Phase Two, starting in year 2000. Trading of emission allowances in Phase Two is projected to reach roughly 1.5 million tons per year. Aversion to trading may slightly depress the price of allowances. Long term (2010) allowance prices are estimated to fall in the $350--600 per ton range (1994$), depending on fossil generation levels. When discounted to reflect major uncertainties, this range may be consistent with today`s low prices. The delay of Phase Two controls may cause some projected Phase Two costs to fall beyond short planning horizons that are reflective of high levels of uncertainty. Such short planning horizons make FGD retrofits less attractive than longer term evaluations would suggest. Barring major developments, the authors anticipate allowance prices and trading volumes to move more in line with long term expectations (with appropriate discounting) as Phase Two approaches.

• OSTI ID: 271829
• Report Number(s): CONF-950196--
• Country of Publication: United States
• Language: English

Related Subjects

20 FOSSIL-FUELED POWER PLANTS
AIR POLLUTION ABATEMENT
CLEAN AIR ACTS
COMPLIANCE
ECOLOGICAL CONCENTRATION
ECONOMICS
FOSSIL-FUEL POWER PLANTS
SULFUR DIOXIDE
WASTE MANAGEMENT