Article
Coal or gas? In the ongoing battle over environmental policy in the United States, considerable attention has been paid to climate change and transported air pollution. A new study by Henry Lee and Shashi Kant Verma of BCSIA''s Environment and Natural Resources Program steps into this debate by examining electricity-generating plants in the Midwest fired by coal.
In a newly-released report, the authors examine what it would cost to persuade these plants to voluntarily switch to a greater use of natural gas. The authors provide a framework for calculating these costs that considers air pollution restrictions and changes in fuel prices.
The coal-fired plants— which have supplied low-cost power for decades— have been criticized as a source of carbon emissions and other air pollutants. The Environmental Protection Agency (EPA) is now requiring much stricter emission standards for SO2, NOx, and perhaps, particles. While these new requirements will require significant new investments, coal-fired facilities will continue to be less costly to operate than building a new gas-fired plant.
To make switching from coal to gas economically attractive to Midwest coal-fired generators, an additional carbon penalty will be needed of somewhere between $65-$110 per ton of carbon.
The authors also argue that it would be more economical to develop a pollution abatement plan to reduce carbon emissions and all the conventional pollutants together rather than reducing them one by one as the United States government is now doing.
(A version of this article appeared in the Kennedy School''s October Update.)