Near-term implications of a ban on new coal-fired power plants in the United States.

Large numbers of proposed new coal power generators in the United States have been canceled, and some states have prohibited new coal power generators. We examine the effects on the U.S. electric power system of banning the construction of coal-fired electricity generators, which has been proposed as a means to reduce U.S. CO2 emissions. The model simulates load growth, resource planning, and economic dispatch of the Midwest Independent Transmission System Operator (ISO), Inc., Electric Reliability Council of Texas (ERCOT), and PJM under a ban on new coal generation and uses an economic dispatch model to calculate the resulting changes in dispatch order, CO2 emissions, and fuel use under three near-term (until 2030) future electric power sector scenarios. A national ban on new coal-fired power plants does not lead to CO2 reductions of the scale required under proposed federal legislation such as Lieberman-Warner but would greatly increase the fraction of time when natural gas sets the price of electricity, even with aggressive wind and demand response policies.

Short run effects of a price on carbon dioxide emissions from U.S. electric generators.

The price of delivered electricity will rise if generators have to pay for carbon dioxide emissions through an implicit or explicit mechanism. There are two main effects that a substantial price on CO2 emissions would have in the short run (before the generation fleet changes significantly). First, consumers would react to increased price by buying less, described by their price elasticity of demand. Second, a price on CO2 emissions would change the order in which existing generators are economically dispatched, depending on their carbon dioxide emissions and marginal fuel prices. Both the price increase and dispatch changes depend on the mix of generation technologies and fuels in the region available for dispatch, although the consumer response to higher prices is the dominant effect. We estimate that the instantaneous imposition of a price of $35 per metric ton on CO2 emissions would lead to a 10% reduction in CO2 emissions in PJM and MISO at a price elasticity of -0.1. Reductions in ERCOT would be about one-third as large. Thus, a price on CO2 emissions that has been shown in earlier workto stimulate investment in new generation technology also provides significant CO2 reductions before new technology is deployed at large scale.

Storing syngas lowers the carbon price for profitable coal gasification.

Integrated gasification combined cycle (IGCC) electric power generation systems with carbon capture and sequestration have desirable environmental qualities but are not profitable when the carbon dioxide price is less than approximately $50 per metric ton. We examine whether an IGCC facility that operates its gasifier continuously butstores the syngas and produces electricity only when daily prices are high may be profitable at significantly lower CO2 prices. Using a probabilistic analysis, we have calculated the plant-level return on investment (ROI) and the value of syngas storage for IGCC facilities located in the U.S. Midwest using a range of storage configurations. Adding a second turbine to use the stored syngas to generate electricity at peak hours and implementing 12 h of above-ground high-pressure syngas storage significantly increases the ROI and net present value. Storage lowers the carbon price at which IGCC enters the U.S. generation mix by approximately 25%.