Natural gas gains popularity with power generators

Part 7
Natural gas gains popularity with power generators (Part 7 of 12)

Why stricter emissions standards are affecting power plants

Power plants affected by stricter emissions policies

Currently, there is a push for stricter emissions standards both internationally and within the US. This has been especially topical given severe weather events that some have attributed to global warming, such as Hurricane Sandy, with such events fomenting popular opinion to curb emissions. According to the US Environmental Protection Agency, “Power plants are the largest concentrated source of emissions in the United States, together accounting for roughly one-third of all domestic greenhouse gas emissions.” Worldwide, electricity and heat generation are also the largest contributor to carbon dioxide emissions. So power plants have become a major focus for emissions reduction.

2013.09.25 - World Emissions by SectorEnlarge Graph

Fleet of retiring coal-fired plants unlikely to be replaced by new coal-fired plants

Over the next few decades, the fleet of active coal-fired plants is likely to reduce as the fleet of older less efficient and less competitive coal-fired plants eventually retires. Meanwhile, current conditions generally don’t favor the construction of new coal-fired plants. Undertaking the project of permitting and constructing a new coal plant has become more difficult in the face of opposition from local citizens around plant construction sites. Also, the outlook for the relative price of natural gas compared to coal favors the construction of natural gas-fired power. Plus, the EPA recently proposed more stringent regulations on new power plants.

Details of new EPA regulation on power plant emissions

On September 20, the Environmental Protection Agency (the EPA) proposed regulations on new power plants with the intent of cutting emissions. According to the EPA’s press release, new large natural gas-fired turbines would need to emit less than 1,000 pounds of carbon dioxide per megawatt-hour (or MWh) and small natural gas-fired turbines would need to emit less than 1,100 pounds of carbon dioxide per MWh. Meanwhile, new coal-fired units would need to emit under 1,100 pounds of carbon dioxide per MWh. The new coal-fired plants could also choose to average emissions over multiple years, which allows for additional flexibility, but at the cost of meeting a somewhat tighter limit.

Current power plant emissions versus proposed new power plant emissions

To provide context, according to the EPA, the average coal plant in the US generates 2,249 pounds of carbon dioxide per megawatt hour (as of 2000), and more recent data pegs average coal plant emissions at slightly under 1,800 pounds of carbon dioxide per MWh. This includes the entire existing coal plant fleet, encompassing both older and newer coal-fired plants. According to industry estimates, the newest modern coal plants still emit more than 1,600 pounds of carbon dioxide per MWh. In comparison, the average US natural gas plant generates 1,135 pounds of carbon dioxide per megawatt hour according to the EPA (as of 2000), and recent estimates for new natural gas plants are around 800 to 850 pounds of carbon dioxide per megawatt hour.

Few new coal plant projects on the immediate horizon

Though the newly proposed legislation appears quite drastic and stringent regarding the standard new coal plants must reach compared to what’s economically and technologically feasible at the moment, the immediate effect of the proposed rules is minimal for the current power generation landscape. Most utilities’ plans for new power plants are for gas-fired plants—not coal-fired plants, given the outlook for the relative price between the two fossil fuels as well as fear about future emissions regulation.

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