Analysis of Strategies for Reducing Multiple Emissions from Electric Power Plants: Sulfur Dioxide, Nitrogen Oxides, Carbon Dioxide, and Mercury and a Renewable Portfolio Standard

The EIA report Analysis of Strategies for Reducing Multiple Emissions from Electric Power Plants: Sulfur Dioxide, Nitrogen Oxides, Carbon Dioxide, Mercury and a Renewable Portfolio Standard was released in July 2001, in response to a request from the Subcommittee on Energy Policy, Natural Resources, and Regulatory Affairs of the U.S. House of Representatives Committee on Government Reform. The Subcommittee requested that EIA analyze the impacts of coordinated efforts to reduce power plant emissions of NO_x, SO₂, CO₂, and Hg together with a 20-percent renewable portfolio standard. The analysis was prepared in two parts. The first part, which analyzed NO_x, SO₂, and CO₂, was released in December 2000. The report released in July 2001 extended the analysis to include the impacts of Hg emission reductions and the renewable portfolio standard.

The July 2001 EIA report examined the impact of the proposed emissions requirements on fuel use by electricity generators, capacity expansion and retirement decisions, electricity prices, and consumer demand for electricity. It also included discussion of the price and supply impacts on coal, natural gas, and renewable technologies. As requested by the Subcommittee, cases were prepared to examine the impacts of Hg emissions targets and a renewable portfolio standard separately, as well as when all of the emissions limits were combined with the standard. The “integrated cases” included cases reducing CO₂ emissions to 1990 levels and to 7 percent below 1990 levels. The key findings of the analysis included the following:

• Reducing NO_x and SO₂ emissions in the electricity generation sector to 75 percent below their 1997 levels is projected to lead to the installation of a large amount of pollution control equipment with little change in fuel use for electricity generation. The power suppliers are projected to incur significant expenditures, but electricity prices are expected to be only slightly higher than the reference case level.

• Reducing Hg emissions by electricity generators to 90 percent below their 1997 level is projected to lead to the installation of a large amount of pollution-control equipment. The cost and price impacts of reducing the Hg emissions are projected to be larger than those of reducing NO_x or SO₂ emissions.

• There is considerable uncertainty regarding the cost and performance of Hg control technologies due to the lack of sufficient full-scale tests on existing generating units.

• The projected impacts of a limit on CO₂ emissions from electricity generators that is 7 percent below 1990 levels dominate the impacts of limits on other emissions. The key compliance strategy in the cases that include CO₂ emissions reductions is expected to be a large shift from coal to natural gas and, to a lesser extent, renewables and nuclear power as fewer existing nuclear plants are retired.^a Consumers are also expected to reduce their use of electricity in response to higher electricity prices.

• The imposition of a 20-percent renewable portfolio standard is projected to cause electricity generators to moderate the growth in their use of natural gas and, to a lesser extent, coal. Biomass, wind, and geothermal resources are projected to provide most of the required increase in renewable generation.

• Combining a 20-percent renewable portfolio standard with limits on NO_x (75 percent below 1997), SO₂ (75 percent below 1997), Hg (90 percent below 1997), and CO₂ emissions (7 percent below 1990) is projected to reduce the shift to natural gas as a fuel for electricity generation and increase the use of renewable fuels.

^aIn accordance with the Subcommittee request, this study assumed that there would be no construction of new nuclear plants.