Multipollutant Emissions Reduction and
CO2 Control: The Costs of Regulatory Uncertainty
Engineering and Public Policy, Carnegie
Tighter controls on electric sector SO2,
NOX, mercury, and fine particulate emissions would impose cost and
performance penalties that, in turn, influence technology choices.
Stricter regulation of conventional pollutants, for instance, could
accelerate retirement of existing coal plants and favor investment in
new gas units and renewable energy sources. The advent of a CO2 control
regime could have similar effects. Important interactions between the
reduction of criteria pollutants and CO2, however, may lead to the
opposite outcome - especially if the latter is achieved via carbon
capture and sequestration (CCS).
While proposed CCS technologies would increase capital and operating
costs, they also decrease conventional pollutant emissions
(post-combustion amine coal plant retrofits are perhaps the sole
exception, with higher NOX emissions on a per-kWh basis). As a result,
the costs of CCS technologies are likely to be less for electric power
plants that must meet stronger criteria pollutant control standards than
for those that do not, and plausible scenarios of more stringent
environmental regulation could
accelerate the adoption of CCS technologies.
The timing and integration of any new criteria pollutant and CO2
regulations, however, will affect the extent to which technological
synergies lower control costs. More stringent reductions in SO2 and NOX,
for instance, if required in the near future, might lead the electric
power industry onto a technology path that would be suboptimal should
higher-than-anticipated reductions in CO2 emissions be necessary, say, a
decade or two later. Technology choices made on this basis
("lock-in") could yield higher emission control costs should
assumptions about either be in error and stranded costs become
significant. Path dependencies and the costs of regulatory uncertainty
therefore deserve further analysis.
The work to be described extends the capacity planning and dispatch
model I developed for my EPP Ph.D. dissertation to examine CCS in a
multipollutant framework, once again focusing on a regional electricity
market (the MAAC NERC region). In particular, I have adopted a value of
information framework to examine optimal technology paths and the costs
of regulatory uncertainty under a variety of emission control regimes.