Analysis of Multi-Pollutant Initiatives in Electricity Markets

Presented to the

25th USA/IAEE North American Conference

ByRobert T Eynon

Energy Information AdministrationU.S. Department of Energy

September 19, 2005

Emission Targets in S.366, S.843, and S.1844

No cap2,332 million metric tons CO2 (636 million metric tons carbon equivalent) in 20092,244 million metric tons CO2 (612 million metric tons carbon equivalent) in 2013f

1,863 million metric tons CO2 (508 million metric tons carbon equivalent) in 2009e

Carbon Dioxide (CO2)

34 tons in 201015 tons in 2018

24 tons in 200910 tons in 2013d

5 tons in 2008cMercury (Hg)

4.4 million tons in 20103.0 million tons in 2018

4.5 million tons in 20093.5 million tons in 20132.25 million tons in 2016

2.25 million tons in 2009b

Sulfur Dioxide (SO2)

2.19 million tons in 20081.79 million tons in 2018a

1.87 million tons in 20091.7 million tons in 2013

1.51 million tons in 2009

Nitrogen Oxides (NOx)

S. 1844, Clear Skies Act (Inhofe)

S. 843, Clean Air Planning Act (Carper)

S. 366, Clean Power Act (Jeffords)

Emission

Oil and Gas

Supply Module

Natural Gas

Transmission

and Distribution

Module

Coal Market

Module

Renewable

Fuels Module

Supply

Residential

Demand Module

Commercial

Demand

Module

Transportation

Demand Module

Industrial

Demand Module

Demand

Electricity

Market

Module

Petroleum

Market

Module

Conversion

Macroeconomic

Activity

Module

International

Energy

Module

Integrating

Module

National Energy System Modeling

Clear Skies Act

• Emissions cap and trade• Safety valve • Grandfathering (based on fuel consumption)• Covers plants 25 megawatts and larger

Clean Air Planning Act

• Covers facilities 25 megawatt and greater• Minimum removal rate for mercury• Emissions cap and trade• Grandfathering (output based)

Clean Power Act

• Covers facilities 15 megawatts and larger• Emissions cap and trade except for Hg• Maximum emissions rate specified• Birthday provision (best available control

technology)

Analysis of Clear Skies Act (Inhofe)

• Add emissions control equipment• Use early credit program for mercury• Emissions targets not met for SO2 or Hg• Lowest resource cost and smallest price increase• CO2 emissions increase over time

Analysis of Clean Air Planning Act (Carper)

• Additions of emissions control equipment• Switch into natural gas and renewables• Sensitive to availability and cost of offsets• Higher resource costs than Clear Skies Act• CO2 Emissions increase

Analysis of Clean Power Act (Jeffords)

• Switching to gas, renewables, and nuclear• Birthday provision causes emissions for NOx, Hg

and SO2 to fall below targets• Has highest resource costs

Nitrogen Oxide Emissions in Alternative Cases(million tons)

0 .0

0 .5

1 .0

1 .5

2 .0

2 .5

3 .0

3 .5

4 .0

4 .5

5 .0

2 0 0 2 2 0 1 0 2 0 2 0 2 0 2 5

R e fe re n c eIn h o feC a rp e r In te rn a t io n a lC a rp e r D o m e s t icJ e ffo rd s

T a rg e ts

C a rp e r J e ffo rd sIn h o fe

Electricity Sector Mercury Emissions in Alternative Cases

(tons)

0

10

20

30

40

50

60

2002 2010 2020 2025

Reference Inhofe Carper International Carper Dom estic Jeffords

T argetsCarper JeffordsInhofe

Electricity Sector Carbon and Carbon Dioxide Emissions in Alternative Cases

0

20

40

60

80

100

120

140

2010 2020 2025

2002

Dol

lars

per

Met

ricTo

n C

arbo

n Eq

uiva

lent

0

5

11

16

22

27

33

38

2002

Dol

lars

per

Met

ric T

on C

O2 E

quiv

alen

t

Reference Inhofe Carper International Carper Dom estic Jeffords

Nitrogen Oxide Allowance Price in the East(2002 dollars per ton)

0

500

1,000

1,500

2,000

2,500

3,000

2010 2020 2025

Reference Inhofe Carper International Carper Domestic Jeffords

Sulfur Dioxide Allowance Price in the East(2002 dollars per ton)

0

500

1,000

1,500

2,000

2,500

2010 2020 2025

Reference Inhofe Carper International Carper Domestic Jeffords

Mercury Allowance Price(thousand 2002 dollars per pound)

0

10

20

30

40

50

60

70

80

2010 2020 2025

Reference Inhofe Carper International Carper Domestic Jeffords

Carbon Allowance Price(2002 dollars per metric ton carbon equivalent)

0

20

40

60

80

100

120

140

2010 2020 2025

2002

Dol

lars

per

Met

ricTo

n C

arbo

n Eq

uiva

lent

0

5

11

16

22

27

33

38

2002

Dol

lars

per

Met

ric T

on C

O2 E

quiv

alen

t

Reference Inhofe Carper International Carper Domestic Jeffords

Coal-Fired Generation in Alternative Cases(billion kilowatthours)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2002 2010 2020 2025

ReferenceInhofeCarper InternationalCarper Dom esticJeffords

Natural Gas-Fired Generation in Alternative Cases

(billion kilowatthours)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2002 2010 2020 2025

ReferenceInhofeCarper InternationalCarper DomesticJeffords

Renewable Generation in Alternative Cases(billion kilowatthours)

0

200

400

600

800

1,000

1,200

1,400

2002 2010 2020 2025

ReferenceInhofeCarper InternationalCarper DomesticJeffords

Electricity Prices in Alternative Cases(2002 cents per kilowatthour)

0

2

4

6

8

10

12

2002 2010 2020 2025

Reference Inhofe Carper International Carper Dom estic Jeffords

Change in Resource Cost(billion 2002 dollars)

0

50

100

150

200

250

300

Inho fe C arp er In te rnatio na l C arp er D o m estic Je ffo rd s

Electricity Market Impacts

• Emission targets aren’t met in 2010 for Hg (Inhofe) or CO2 (Carper)

• Emissions decline more in the Jeffords Case

• Coal generation declines in all cases.

• Electricity prices increase more rapidly in the Jeffords Case.

If you have questions:Email address:

reynon@eia.doe.gov