Analysis of Strategies for Reducing Multiple Emissions from Electric Power Plants: Sulfur Dioxide, Nitrogen Oxides, Carbon Dioxide, and Mercury and a Renewable Portfolio Standard
Preface
Over the next decade, power plant operators may face significant requirements to reduce emissions of sulfur dioxide (SO2 and nitrogen oxides (NOx) beyond the levels called for in current regulations. They could also face requirements to reduce carbon dioxide (CO2 and mercury (Hg) emissions. At present, neither the future reduction requirement nor the complete timetable is known for any of these airborne emissions, and compliance planning is difficult.
Recently, plans have been proposed that would require simultaneous reductions of multiple emissions. This analysis responds to a request from the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs of the U.S. House of Representatives Committee on Government Reform1 to examine the costs of such multi-emission reduction strategies (see Appendix A for the requesting letters). In its request the Subcommittee asked the Energy Information Administration (EIA) to “analyze the potential costs of various multi-pollutant strategies to reduce the air emissions from electric power plants.” The Subcommittee requested that EIA examine the impacts of cases incorporating requirements for reductions of NOx, SO2, CO2, and Hg emissions and for a renewable portfolio standard (RPS).
At the request of the Subcommittee, EIA prepared an initial report that focused on the impacts of reducing power sector NOx, SO2, and CO2 emissions.2 The current report extends the earlier analysis to add the impacts of reducing power sector Hg emissions and introducing RPS requirements.
The projections and quantitative analysis for this report were prepared using the National Energy Modeling System (NEMS), an energy-economy model of U.S. energy markets designed, developed, and maintained by EIA, which is used each year to provide projections for EIA’s Annual Energy Outlook and for other analyses and service reports. Using econometric, heuristic, and linear programming techniques, NEMS consists of 13 submodules that represent the demand (residential, commercial, industrial, and transportation sectors), supply (coal, renewables, oil, and natural gas supply and natural gas transmission and distribution), and conversion (refinery and electricity sectors) of energy, together with a macroeconomic module that links energy prices to economic activity, and a representation of international oil markets.
Chapter 1 of this report provides a brief introduction. Chapter 2 describes the analysis cases and methodology. Chapter 3 provides electricity market results, and Chapter 4 examines projections for coal, natural gas, and renewable fuels markets and for the U.S. macroeconomy. Chapter 5 compares the results of this analysis with those of other analyses. For those familiar with the earlier report, the background material in Chapter 1 and the basic modeling methodology in Chapter 2 relating to NOx, SO2, and CO2 have only minor changes. As a result, those readers may wish to focus on the discussion of the modeling of Hg emissions and the RPS, which were not addressed in the first report.
Within its Independent Expert Review Program, EIA arranged for leading experts in the fields of energy and economic analysis to review this analysis and provide comment. The reviewers provided comments on a draft version of the report, after an earlier meeting with EIA to discuss the methodology and preliminary results. All comments from the reviewers either have been incorporated or were thoroughly considered for incorporation. As is always the case when peer reviews are undertaken, not all the reviewers may be in agreement with all the methodology, inputs, and conclusions of the final report. The contents of the report are solely the responsibility of EIA. The assistance of the following reviewers is gratefully acknowledged:
Dallas Burtraw
Resources for the Future
Steve Clemmer
Union of Concerned Scientists
Deborah Donovan
Union of Concerned Scientists
Alex Farrell
Carnegie Mellon University
Howard Gruenspecht
Resources for the Future
Gordon Hester
Electric Power Research Institute
Henry Lee
Harvard University
Karen Palmer
Resources for the Future
John Weyant
Energy Modeling Forum
The legislation that established EIA in 1977 vested the organization with an element of statutory independence. EIA does not take positions on policy questions. It is the responsibility of EIA to provide timely, high-quality information and to perform objective, credible analyses in support of the deliberations of both public and private decisionmakers. The information contained herein should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the U.S. Department of Energy or any other organization.
The projections in the reference case in this report are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The reference case projections are business-as-usual trend forecasts, given known technology, technological and demographic trends, and current laws and regulations. Thus, they provide a policy-neutral reference case that can be used to analyze policy initiatives. EIA does not propose, advocate, or speculate on future legislative and regulatory changes. All laws are assumed to remain as currently enacted; however, the impacts of emerging regulatory changes, when defined, are reflected.
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