Washington (Platts)--27Jun2008

The US Energy Information Administration expects a 60.6% decrease in
sulfur dioxide emissions and a 35% drop in nitrogen oxide emissions by 2030
despite a steady increase in coal production to meet power demand, according
to its annual energy outlook for 2008.

Released Thursday, the outlook projects a drop in SO2 emissions from 9.4
million short tons in 2006 to 3.7 million st in 2030 as a result of the use of
lower sulfur coal and the addition of flue gas-desulfurization equipment, also
known as scrubbers, on 125 GW of existing capacity.

Likewise, the outlook projects a decline in NOx emissions from 3.4
million st in 2006 to 2.2 million st in 2030, owing to the installation of
selective catalytic reduction units on an additional 98 GW of coal-fired
generating capacity in 2030.

Because of uncertainty surrounding carbon caps, total coal production is
projected to increase anywhere from 5% to 36%, assuming that carbon caps would
lead to lower economic growth.

The decline in both SO2 and NOx emissions would be the result of EPA's
Clean Air Interstate Rule, which takes effect for NOX in January 2009 and for
SO2 in 2010.

ANNUAL SO2 PRICES EXPECTED TO RISE, THEN FALL

Because of the mandatory nature of these caps, EIA, the statistical arm
of the Energy Department, projects that annual SO2 allowance prices would rise
to more than $1,000/st in 2020 and then "decline slowly," eventually settling
below $500/st in 2030.

For NOx, the EIA said, allowance prices would range between $2,500/st and
$3,400/st shortly after mandatory compliance begins. These prices would
continue to rise as the NOx emissions caps tighten until 2030.
--Amena Saiyid, amena_saiyid@platts.com