Life-Time Emissions Budget for New Coal-Fired Power Plants By Hoff Stauffer at Climate Policy Initiative Center for Clean Air Policy November 8, 2007 Washington,

Life-Time Emissions Budget for

New Coal-Fired Power PlantsBy

Hoff Staufferat

Climate Policy Initiative

Center for Clean Air PolicyNovember 8, 2007

Washington, DC

Coal In Power Plants Is The Largest Potential Source of Growth

in Global CO2 EmissionsCumulative CO2 Emissions by Fuel/Sector

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Other Coal

Other Oil

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Oil in Transport

Coal in Power

Limitations of Cap and Trade

• Does not work well on consumer purchases, such as cars, homes, and appliances. [The so-called “discount rate” problem.]

• Could work well for electricity generation • But leverage is with new sources, not existing

sources where cap/trade has worked well.• Very hard to figure out the economic and

environmental effects and/or agree on wealth transfers (allowance allocations). [Being used as a delay tactic by opponents of progress.]

• Would not interface well with rest of world.

Market-Based Approaches Are Not Limited to Cap and Trade

• There is a very heavy government hand in the design of a cap and trade system

• With performance standards, government sets the target and then steps back to let the market achieve it

• It has worked well in the past and has served to stimulate (“force”) new technologies

Hence, Options for Controlling New Coal-fired Power Plants Should Be Considered

1. Performance Standards For New Sources Are A Viable Option;

2. As Is A Life-Time Emissions Budget

Lifetime Emissions Budget for New Coal Plants

• Set a life-time CO2 budget (e.g., 60 years) for any new coal plant.

• Budget might be based on a plausible trajectory for best-performing low-carbon coal technologies (e.g., IGCC with increasing percentages of carbon capture and sequestration over time).

• However, the plant owner could meet the budget using a variety of compliance strategies, as shown below

The Key Design Elements of a Life-time Emissions Budget Are:

• Years of Life (assume 60 years)• Capacity Factor (assume 75%)• Controlled Heat Rate (assume 9300 with 25%

control penalty)• Controlled Emissions Rate (assume 85%

removal)

Result is 71 tons per KW over 60 years,

versus 378 tons per KW uncontrolled

A Life-Time Emissions Budget Has Several Key Attributes

• The effect can be equivalent to a performance standard, but it provides increased flexibility

• It could interface well with a cap and trade system

• It would stimulate technology but does not require betting on any single technology, particularly one that is not fully “demonstrated”

Examples of Strategic Options for Compliance with a Life-Time Budget

A. Control emissions from the beginning, such as with a performance standard

B. Delay for five years and install advanced technology with lower heat rate penalty (15% versus 25%) and higher removal efficiency (90% versus 85%)

C. Delay for ten years with lower capacity factor (65% versus 75% for ten years) and then install more advanced technology with lower heat rate penalty (10% versus 15%) and higher removal efficiency (95% versus 90%)

And lots of other options

Each of These Options Will Comply With the Life-time Budget

Strategic Options with a Life-time Emissions Budget

Annual Emissions

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Strategy A

Strategy B

Strategy C

Effect on Cumulative EmissionsIs the Same

Strategic Options with a Life-time Emissions Budget

Cumulative Emissions

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Strategic Option B

Some Design Subtleties

• Life-time budget can interface well with a cap and trade system. Life-time budget amounts to allocated emission allowances which can be traded, but probably want to limit total emissions to the life-time budget.

• Need to provide for what happens after 60 years. Could assign an on-going allowable emissions rate at a high removal efficiency or could require that allowances be purchased.

• Need to guard against sham plants designed only to be granted the allowances

Comments/Questions Please To

Hoff Stauffer

Managing Director

Wingaersheek Research Group

Gloucester, MA 01930

978-281-1674

[email protected]

For Elaboration on These Points Please See Other Articles By the Author

• “The Conventional Wisdom Is Inhibiting Progress On Climate Change Mitigation,” Second Meeting of the Montreal Group on Climate Stabilization, Berlin, Germany, September 27, 2006;

• “A New Standard for Preventing Global Warming,” (Silver City, NM and Washington, DC; Foreign Policy in Focus, October 4, 2006);

• "Climate Change: Is It Prudent to Wait?" (Silver City, NM and Washington, DC: Foreign Policy In Focus, February 21, 2007);

• “Global Warming Myths,” MIT Technology Review, May, 2007.

• “New Sources Will Drive Global Emissions,” Energy Policy, July, 2007

Appendix

Other Interesting Slides

which will not be presented

The Technologies Exist To Get Where We Probably Need to Be

Components of Mitigation Strategy

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Reference Case

ReverseDeforestation

Plus Efficiency inBuidlings and Industry

Plus TransportationEfficiency

Plus Coal Mitigation(new only)

Plus Coal Mitigation(existing too)

Plus Biofuels

Globally Without Inhibiting Economic Growth

Draconian Measures Would Not be Required

MITIGATION COSTS AS % GDP IN 2050

World 0.4%

US and Canada 0.4%

Rest of OECD 0.3%

China 0.4%

Rest of Asia 0.5%

Russia and Other Transition 0.6%

Central and South America 0.3%

Mideast and Africa 0.4%

And there would not have to be a vast transfer of wealth from the developed to the developing world

The Leverage Is With The New Sources

Percent New ----------------Useful Life-----------------

After Growth Rate 10 20 30 40 50

10 Years in future 0.0% 90% 45% 30% 23% 18% 2.5% 92% 57% 45% 39% 36% 5.0% 94% 66% 57% 52% 50% 20 Years in future 0.0% 100% 95% 63% 48% 38% 2.5% 100% 97% 78% 68% 62% 5.0% 100% 98% 86% 82% 77% 30 years in future 0.0% 100% 100% 97% 73% 58% 2.5% 100% 100% 98% 87% 80% 5.0% 100% 100% 99% 94% 90% 40 Years in future 0.0% 100% 100% 100% 98% 78% 2.5% 100% 100% 100% 100% 92% 5.0% 100% 100% 100% 100% 97% 50 Years in future 0.0% 100% 100% 100% 100% 98% 2.5% 100% 100% 100% 100% 99% 5.0% 100% 100% 100% 100% 100%

Even For Coal-Fired Power PlantsNew vs Existing Coal

CO2 Emissions

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New Coal

Need to Focus on Long-Lived Assets First: Power Plants and Buildings

Delay Is A Really Dumb Idea.

Annual Global CO2 Emissions

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Mitigation Without Delay

Mitigation With Delay

With Delay, Draconian Measures Might Be Required.