Electric Sector Impacts CSAPR, MATS, etc. July 19, 2012

Transcription

1 Electric Sector Impacts CSAPR, MATS, etc. July 19, 2012

2 Contents Scenario Definitions Assumptions Results 1

3 Scenario Definitions Scenario CSAPR Scenario Definition Cross State Air Pollution Rule (Base) CSAPR + MATS (2015) Implementation of EPA s Mercury and Air Toxics Standards (MATS) in 2015 CSAPR + MATS (2017) Implementation of MATS in 2017 CSAPR + MATS + 316b + CO 2 CSAPR-MATS (2015) + EPA s 316b by $10/tonne CO 2 policy in 2020 (rising at 5% over inflation) CSAPR + MATS + SCR + 316b + CO 2 Same as previous, with a requirement for SCRs on all coal units that lack them In all scenarios, the only new coal that can be built is that which is under construction. 2

4 Contents Scenario Definitions Assumptions Results 3

5 Additional Detail on Modeling of Forthcoming EPA Policies CSAPR Phase 2 assumed to start in 2014 Simulation reflects the December 2011 Supplemental Final Rule that adds 5 states to the summertime NOx program (but not KS) MATS All units lacking acid gas controls need to add them We have made economic judgments about the need for wet FGD vs. DSI These simulations do not include dry FGD, though we expect significant penetration of this technology. Through other analyses, we believe this simplification does not significantly affect our overall results. All units lacking Hg controls will add ACI systems In reality, these won t always be necessary (e.g., SCR + wet FGD combination with a highchlorine coal) We used the EPA fabric filter requirement list (ESP-4 designation) from the MATS Final Rule Units that already have fabric filters (FF), were assumed compliant Units not on EPA s FF-required list (that have ESP s), were subject to ESP upgrades 316b: Cooling towers for units > 200 MW in certain regions 4

6 Natural Gas Prices The above prices are for AEO In our scenarios, we used futures through

7 Announced Retirements For this set of simulations, we are locking in announced retirements as of early 2011 For 2012 and later, we locked in 9.2 GW of U.S. coal retirements (this includes a few GW of retirements that have occurred in early 2012) This pre-dates the MATS proposed rule (Air Toxics Rule) This approach results in more realistic retirements in the CSAPR base scenario But is unrealistic from today s point of view where the announced coal retirements reflect CSAPR, MATS, 316b, coal ash (likely as non-hazardous), and (uncertain) CO 2 policy 6

8 Contents Scenario Definitions Assumptions Results 7

9 CSAPR/MATS results in about 36 GW of coal retirements by 2020 Coal Retirements through GW CSAPR 35.5 CSAPR/MATS (2015) CSAPR/MATS + 316b + CO2 CSAPR/MATS + 316b + SCR + CO2 The CSAPR number of 23 GW reflects low gas prices and an aging coal fleet CSAPR/MATS (2015) and CSAPR/MATS (2017) have similar retirements through 2020 The incremental impact of the CO 2 price is large (316b is relatively unimportant) 8

10 PJM and the Southeast will incur the greatest number of coal retirements Coal Retirements by 2020 (GW) 9

11 Retiring coal units will tend to be small and lack controls (particularly acid gas controls) CSAPR - MATS 45% of coal units that are smaller than 200 MW are projected to retire 25% of units lacking both AGC and FF are projected to retire Retiring coal units also tend to be old and have high dispatch costs / low capacity factors 10

12 MATS has a relatively small impact on the 2020 mix, but adding Carbon and SCR s Reduces Coal Dramatically (TWh basis) CSAPR CSAPR - MATS CSAPR - MATS, 316b, CO2 CSAPR - MATS, SCR, 316b, CO2 11

13 The Present Value Cost of MATS is about $130B Change in Present Value of all Electric Sector Costs (versus CSAPR base case ) 2011$, Billions MATS MATS MATS 2015, 316b, CO2 884 MATS 2015, SCR, 316b, CO2 952 Delaying MATS by 2 years saves $14B in present value cost. This estimate does not include reduced costs from relaxing skilled labor constraints, etc. The scenarios with a CO 2 price are considerably more costly to the electric sector 12

14 Delaying MATS by two years would result in a temporary increase in SO 2 emissions 6 U.S. SO2 Emissions 5 SO2, Millions of Tons per Year CSAPR Phase , MATS 2015 CSAPR Phase , MATS This simulated impact is sensitive to the gas price forecast. 13

15 Charles River Associates Ira Shavel Barclay Gibbs