CSAPR & MATS: Is Coal Doomed?
Dallas Burtraw, Karen Palmer, Anthony Paul,
Blair Beasley, and Matt Woerman
Introduction
Haiku Electricity Market Model
Overview of results
• Large effect on SO2 and mercury, small effects
elsewhere
Retirements of existing coal-fired plants
• Only 4-5 GW retire due to regulations
Costs of the regulations
• $6.6-7.1 billion in 2020
• 70% on consumers, 30% on producers
Haiku Electricity Market Model
Covers electricity sector in the contiguous 48 states by 22 regions
Each region is cost-of-service regulated or competitive
Supply-side investment, retirement, system operation
Endogenous investment in air pollution abatement technologies
Dynamic, price-responsive demand side with 3 customer classes
Simulation to 2035 for 3 seasons per year, 4 time block per season
Calibration to AEO 2011 for electricity consumption and price, and
natural gas and oil consumption
Haiku Regions
Haiku Pollution Controls
NOx controls
• SCR and SNCR
SO2 and HCl controls
• Wet FGD, dry FGD, and DSI
Mercury controls
• ACI and combinations of other controls (SCR and wet
FGD)
Particulate controls
• Exogenous assignment of fabric filters or upgraded ESP to
comply with MATS
• Data comes from IPM
Emissions
SO2 Emissions (1000 tons)
Mercury Emissions from Fossil Fuels (lbs)
6,000
70,000
5,000
60,000
50,000
4,000
40,000
3,000
30,000
2,000
20,000
1,000
0
2010
10,000
2015
MATS
2020
2025
CSAPR&MATS
2030
0
2010
2035
Baseline
2015
MATS
NOx Emissions (1000 tons)
2020
2025
CSAPR&MATS
2030
2035
Baseline
CO2 Emissions (M tons)
2,500
3,000
2,000
2,500
2,000
1,500
1,500
1,000
1,000
500
0
2010
500
2015
MATS
2020
2025
CSAPR&MATS
2030
Baseline
2035
0
2010
2015
MATS
2020
2025
CSAPR&MATS
2030
Baseline
2035
National Average Electricity Price (2009$/MWh)
102
100
98
96
94
92
90
88
86
2010
MATS
2015
2020
CSAPR&MATS
2025
Baseline
2030
2035
'09 Baseline
Generation Mix in 2020 (TWh)
4500
4000
3500
3000
Other
Wind
2500
Hydro
2000
Nuclear
1500
Nat Gas
Steam Coal
1000
500
0
Baseline
MATS
CSAPR&MATS
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
Pollution Controls in 2020 (GW)
300
250
200
150
100
50
0
Baseline
MATS
CSAPR&MATS
Pollution Control Capital Costs in 2020 (Billion 2009$)
Baseline
MATS
CSAPR & MATS
SCR
3.4
3.6
3.4
SNCR
0.2
0.2
0.2
Wet Scrubber
9.2
9.9
10.2
Dry Scrubber
1.9
1.8
1.8
DSI
0.1
1.3
1.4
ACI
1.3
4.3
4.4
Fabric Filter
1.0
2.2
2.2
Total
17.0
23.3
23.6
Allowance Prices (2009$/ton)
Investment in new pollution controls reduces allowance prices
4000
3500
3000
2500
CAIR Annual NOx
2000
Title IV SO2 (CAIR)
1500
CSAPR Annual NOx
1000
CSAPR SO2 Middle Zone
CSAPR SO2 Edge Zone
500
2013
2016
2020
2025
2030
2013
2016
2020
2025
2030
2013
2016
2020
2025
2030
0
BL
MATS
CSAPR & MATS
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
Low Allowance Prices
High Allowance Prices
Hydro
Natural Gas
Coal
Hydro
Coal
Natural Gas
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
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
Conclusion
MATS and CSAPR reduce emissions of SO2 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 $6.6-7.1 billion in 2020
70% of costs borne by consumers, 30% by
producers
Electricity Prices (2009$/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
88
87
86
85
84
83
82
2010
2015
MATS
2020
2025
CSAPR&MATS
2030
Baseline
2035
Electricity Prices (2009$/MWh)
Competitive regions
• Electricity prices decrease when a plant with an allowance
burden is at the margin
108
106
104
102
100
98
96
94
92
2010
2015
2020
2025
MATS
CSAPR&MATS
2030
Baseline
2035