If the U.S. Environmental Protection Agency gives
coal-fired power generators flexibility to comply
with new and pending regulations, approximately
$100bn in future compliance expenditures could be
saved, according to a new assessment released May 31
by the Electric Power Research Institute (EPRI).
The EPRI study results are based on two potential
pathways for compliance, one based on the "current
course" and the other on an "alternative flexible
path." The analysis found that installing a series
of new emissions controls would cost the U.S.
economy up to $275bn between 2010 and 2035 in
present value terms, if the current course is
followed. A flexible path would reduce that by
$100bn while achieving the same level of compliance,
EPRI found.
"This assessment is the first to take a regional
approach in examining how current and pending
emissions requirements will impact the U.S.
generation portfolio and the overall economy," said
Bryan Hannegan, Vice President of Environment and
Renewables at EPRI. "It should be a useful tool to
inform the discussion as we pursue innovation and
technologies aimed at achieving a lower emissions
generation portfolio."
Key findings of the assessment include:
On the "current course," about 202 GW of existing
coal-fired capacity would remain financially viable
with costs for required environmental investment
being recouped in less than five years.
Another 61 GW of coal capacity – made up mostly of
older, smaller, and less efficient units – could not
be profitably retrofitted and would be retired.
Another 54 GW would either be retired or retrofitted
depending on market-specific factors, such as:
whether regulatory frameworks provide for cost
recovery, cost and performance of competing
generation, changes in power prices, trends in
demand and natural gas prices.
In the alternative "flexible path" case, about 288
GW would remain financially viable, only 25 GW would
be retired, and only 4 GW would either be retired or
retrofitted depending on market-specific factors.
EPRI examined the potential impact of current and
pending environmental regulations on the existing
generation fleet designed to meet the following
current or EPA rules:
Tthe Mercury and Air Toxics Standards (MATS) rule
with compliance by 2015;
The Clean Water Act (CWA) 316(b) for Cooling Water
Intake Structures with compliance by 2018. This was
modeled as requiring closed-cycle cooling on
facilities with intake flow of greater than 125
million gallons of water a day;
The Resource Conservation and Recovery Act (RCRA)
regulation on Coal Combustion Residuals with
compliance by 2020. This rule was modeled under
subtitle D of RCRA or as non-hazardous wastes; and
updated National Ambient Air Quality Standards on
SO2 and NOx by 2018.
The current course assumes the standard compliance
periods for environmental regulations, limited
flexibility to choose low-cost technologies, and
higher costs due to competing demand for equipment
and installation in a comparatively short time. The
flexible approach assumes an additional two years to
phase in compliance with NOx and air toxics
regulations.
Analysis results reflect improved technological
performance due to innovation, the ability to
optimize systems as they are installed, less
overlapping demand for equipment and installation
resulting in lower cost escalation, and, all while
achieving the same level of overall compliance, EPRI
found.
Among the compliance technologies included in the
analysis were dry sorbent injection systems and lime
spray drying for SO2 control; selective catalytic
reduction (SCR) for NOx; integrated mercury removal
processes; and lower cost options for aquatic
ecosystem impingement and entrainment protection.
Although not included in this analysis, EPRI said
its view is that additional advanced pollution
control technologies can be made commercially
available in the near term. These include advanced
SCR systems that have a greater NOx removal rate;
advanced coal cleaning; and a sorbent activation
process that enables the more efficient and
less-costly removal of mercury.
Another critical factor is the price of natural gas,
EPRI noted. With a projected price in 2020 of
$4/mmBtu, slightly more than 100 GW of coal-fired
generation (one-third of the existing fleet) could
be retired. A flexible path for compliance
strategies, with lower fixed costs, would still
reduce this impact, EPRI added.
An EPRI spokesperson said extending the EPA
deadlines two years would largely accomplish the
same results as the current deadlines.
This project is the first of three phases of work
planned under EPRI's "PRISM 2.0" project. Future
phases will focus on the economic impacts and
technology options under a proposed Clean Energy
Standard as well as a New Source Performance
Standard for new fossil generation. Both projects
are expected to be completed by the end of 2012.
EPRI conducts research and development relating to
the generation, delivery and use of electricity.
EPRI's members represent more than 90% of the
electricity generated and delivered in the United
States, and international participation extends to
40 countries.
Barry Cassell is chief analyst coal sector for
Generation Hub, a unit of Energy Central.
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