CSAPR & MATS: Is Coal Doomed? Dallas Burtraw, Karen Palmer, Anthony Paul, Blair Beasley, and Matt Woerman

Transcription

1 CSAPR & MATS: Is Coal Doomed? Dallas Burtraw, Karen Palmer, Anthony Paul, Blair Beasley, and Matt Woerman

2 Introduction Haiku Electricity Market Model Overview of results Large effect on SO 2 and mercury, small effects elsewhere Retirements of existing coal-fired plants Only 4-5 GW retire due to regulations Costs of the regulations $ billion in % on consumers, 30% on producers

3 Haiku Electricity Market Model Covers electricity sector in the contiguous 48 states by 22 regions Each region is cost-of-service regulated or competitive Supply-side investment, retirement, system operation Endogenous investment in air pollution abatement technologies Dynamic, price-responsive demand side with 3 customer classes Simulation to 2035 for 3 seasons per year, 4 time block per season Calibration to AEO 2011 for electricity consumption and price, and natural gas and oil consumption

4 Haiku Regions

5 Haiku Pollution Controls NO x controls SCR and SNCR SO 2 and HCl controls Wet FGD, dry FGD, and DSI Mercury controls ACI and combinations of other controls (SCR and wet FGD) Particulate controls Exogenous assignment of fabric filters or upgraded ESP to comply with MATS Data comes from IPM

6 Emissions SO2 Emissions (1000 tons) 6,000 5,000 4,000 3,000 2,000 1, MATS CSAPR&MATS Baseline Mercury Emissions from Fossil Fuels (lbs) 70,000 60,000 50,000 40,000 30,000 20,000 10, MATS CSAPR&MATS Baseline 2,500 2,000 1,500 1, NOx Emissions (1000 tons) 3,000 2,500 2,000 1,500 1, CO2 Emissions (M tons) MATS CSAPR&MATS Baseline MATS CSAPR&MATS Baseline

7 National Average Electricity Price (2009$/MWh) MATS CSAPR&MATS Baseline '09 Baseline

8 Generation Mix in 2020 (TWh) Other Wind Hydro Nuclear Nat Gas Steam Coal Baseline MATS CSAPR&MATS

9 Existing Coal Capacity 321 GW of existing coal in Baseline in 2020 Includes 13 GW of retirement Under MATS alone 101 GW do not need additional controls 216 GW invest in new pollution controls 4 GW retire Under CSAPR and MATS Additional 1 GW retires

10 Pollution Controls in 2020 (GW) Baseline MATS CSAPR&MATS

11 Pollution Control Capital Costs in 2020 (Billion 2009$) Baseline MATS CSAPR & MATS SCR SNCR Wet Scrubber Dry Scrubber DSI ACI Fabric Filter Total

12 Allowance Prices (2009$/ton) Investment in new pollution controls reduces allowance prices CAIR Annual NOx Title IV SO2 (CAIR) CSAPR Annual NOx CSAPR SO2 Middle Zone CSAPR SO2 Edge Zone 0 BL MATS CSAPR & MATS

13 Dispatch of Existing Coal-Fired Plants Allowances represent an opportunity cost for coal generators Allowance price is reflected in the variable cost of operating a coal-fired plant Reduction of the allowance price reduces the variable cost of coal generation, moving it down in the dispatch order Additional pollution controls increase variable cost of coal generation, but often by less than the reduction due to allowance prices High Allowance Prices Low Allowance Prices Hydro Natural Gas Coal Hydro Coal Natural Gas

14 Retirement of Existing Coal-Fired Capacity Some coal plants increase profits Increased revenue from increased generation more than offsets pollution control costs Some coal plants decrease profits but do not retire Increased revenue from increased generation, but not enough to offset pollution control costs Decreased revenues from decreased generation, plus pollution control costs, but not enough to force retirement 4-5 GW retire Cost of pollution controls and decreased generation is enough to force retirement

15 Costs of MATS and CSAPR Costs of the regulations in 2020 MATS: $7.1 billion CSAPR & MATS: $6.6 billion Distribution of costs Consumers bear 70% of costs Producers bear 30% of costs, all in competitive regions of the country

16 Conclusion MATS and CSAPR reduce emissions of SO 2 and mercury Small effect on electricity prices and generation mix Reduce allowance burden for coal plants 4-5 GW of existing coal-fired capacity retire Costs of $ billion in % of costs borne by consumers, 30% by producers

17 Electricity Prices (2009$/MWh) Cost-of-service regions Electricity prices decrease, if coal is at the margin, because total generation cost falls Electricity prices increase to cover pollution control costs MATS CSAPR&MATS Baseline

18 Electricity Prices (2009$/MWh) Competitive regions Electricity prices decrease when a plant with an allowance burden is at the margin MATS CSAPR&MATS Baseline