Estimation of the marginal abatement costs of airborne pollutants in Korea’s power generation sector

Using an output distance function and its duality to the revenue function, we estimated the marginal abatement costs of airborne pollutants of bunker-C and coal fired power plants in Korea. The average marginal abatement costs are 310.6 thousand won per ton for SO_x, 146.7 thousand won per ton for NO_x, 15 482.3 thousand won per ton for TSP, and 3.8 thousand won per ton for CO₂ for the period of 1990–1995. These estimates are well within the range of the results by the previous studies in the US. The wide variations in the marginal abatement costs by the types of plant imply that Korea’s regulatory policy on pollution has not achieved the cost-efficiency in reducing emissions.     

Marginal abatement costs of greenhouse gas emissions: A meta-analysis

In this paper, we carry out a meta-analysis of recent studies into the costs of greenhouse gas mitigation policies that aim at the long-term stabilisation of these gases in the atmosphere. We find the cost estimates of the studies to be sensitive to the stringency of the stabilisation target, the assumed emissions baseline, the way in which the time profile of emissions is determined in the model, the choice of control variable (CO₂ only versus multigas), the number of regions and energy sources in the model and, to a lesser degree, the scientific “forum” in which the study was developed. We find that marginal abatement costs of the stringent long-term targets that are currently considered by the European Commission are still very uncertain but might exceed the costs that have been suggested by recent policy assessments.     

Uncertainty quantification of CO2 emission reduction for maritime shipping

The International Maritime Organization (IMO) has recently proposed several operational and technical measures to improve shipping efficiency and reduce the greenhouse gases (GHG) emissions. The abatement potentials estimated for these measures have been further used by many organizations to project future GHG emission reductions and plot Marginal Abatement Cost Curves (MACC). However, the abatement potentials estimated for many of these measures can be highly uncertain as many of these measures are new, with limited sea trial information. Furthermore, the abatements obtained are highly dependent on ocean conditions, trading routes and sailing patterns. When the estimated abatement potentials are used for projections, these ‘input’ uncertainties are often not clearly displayed or accounted for, which can lead to overly optimistic or pessimistic outlooks. In this paper, we propose a methodology to systematically quantify and account for these input uncertainties on the overall abatement potential forecasts. We further propose improvements to MACCs to better reflect the uncertainties in marginal abatement costs and total emissions. This approach provides a fuller and more accurate picture of abatement forecasts and potential reductions achievable, and will be useful to policy makers and decision makers in the shipping industry to better assess the cost effective measures for CO₂ emission reduction.     

Regional differences in China's CO2 abatement cost

Under a framework of output distance function with multiple outputs, the study discusses the carbon abatement cost at provincial and regional levels in China, using the shadow price analysis. The findings show that the abatement cost, reflecting the marginal opportunity cost of carbon reduction, varies greatly among the provinces. On average, the abatement cost of the eastern region was much higher than that of the mid-western region during the observed period. The findings provide evidence that the carbon prices in the current ETS pilots have been much lower than desired levels, implying inefficiency of the markets. The wide range of the abatement cost estimates supports that the equi-marginal principle does not hold for the regulations on carbon pollution at regional levels. The regional cost differences indicate the huge potential for China to minimize the total abatement cost with policy instruments that may motive the emissions moving from areas of low abatement cost to where the abatement cost is higher. For a few undeveloped provinces that are environmentally fragile and have high abatement cost, supplementary measures will be needed to reduce the negative impact of carbon cutbacks on the poor to the minimum.     

Woody biomass supply potential for thermal power plants in Japan

Biomass energy is one of mitigation method of CO₂ reduction. In Japan, it aimed to reduce fossil fuels supply 670,000 kL of crude oil equivalent in thermal power plants and 340,000 kL of crude oil equivalent in the utilization of heat by biomass. It was decided to use 25% or more of the forestry products such as logging residues. Japanese government aim to supply 634 PJ of woody biomass for power generation in 2010. This amount of energy accounts for 2.8% of total primary energy. More than 68% of Japan is covered by forests, and more than 40% of these forests are plantations. But the use of woody biomass is limited because it is still not seen as economically viable. In this article, we developed a large scale forestry economic model which can estimate the wood chips supply for coal thermal power plants across all around Japan. By using this model, wood chips supply potential is currently 32,000 m³/year and supply will increase drastically when wood chips price increase or carbon credit is installed and we found that biomass production of 15 PJ that is the numeric target of Japanese government is possible. Especially, the lengthening of rotation period of forestry and the decrease of wood chips transportation cost is important for wood chips use in coal thermal plant.     

Valuation of marginal CO2 abatement options for electric power plants in Korea

The electricity generation sector in Korea is under pressure to mitigate greenhouse gases as directed by the Kyoto Protocol. The principal compliance options for power companies under the cap-and-trade include the application of direct CO₂ emission abatement and the procurement of emission allowances. The objective of this paper is to provide an analytical framework for assessing the cost-effectiveness of these options. We attempt to derive the marginal abatement cost for CO₂ using the output distance function and analyze the relative advantages of emission allowance procurement option as compared to direct abatement option. Real-option approach is adopted to incorporate emission allowance price uncertainty. Empirical result shows the marginal abatement cost with an average of €14.04/ton CO₂ for fossil-fueled power plants and confirms the existence of substantial cost heterogeneity among plants which is sufficient to achieve trading gains in allowance market. The comparison of two options enables us to identify the optimal position of the compliance for each plant. Sensitivity analyses are also presented with regard to several key parameters including the initial allowance prices and interest rate. The result of this paper may help Korean power plants to prepare for upcoming regulations targeted toward the reduction of domestic greenhouse gases.     

Getting reforms done in inhospitable institutional environments: untying a Gordian Knot in India’s power distribution sector

When grand institutional reforms based on idealized models are stalled by the poor institutional environments and difficult politics which often surround large infrastructure systems in developing countries, partial reforms whose design and implementation take into account the different interests of the key stakeholders can provide valuable and immediate benefits while moving these systems from low- towards higher-level equilibria. Strategically negotiated, experimentally partial and purposefully hybrid, these reforms are based on careful stakeholder analysis and strategic coalition building that avoid rigid positions based on idealized models. Our findings are based on a study of power sector reforms in India, where we performed a micro-level and in-depth analysis of a partial and innovative experiment which has allowed private sector participation in electricity distribution within a hostile institutional environment.     

Marginal CO2 abatement costs: Findings from alternative shadow price estimates for Shanghai industrial sectors

Shanghai, one of the most developed cities in China, is implementing a pilot regional carbon emission trading scheme. Estimating the marginal abatement costs of CO₂ emissions for the industrial sectors covered in Shanghai's emission trading scheme provides the government and participating firms useful information for devising compliance policies. This paper employs multiple distance function approaches to estimating the shadow prices of CO₂ emissions for Shanghai industrial sectors. Our empirical results show that the overall weighted average of shadow price estimates by different approaches ranges between 394.5 and 1906.1 Yuan/ton, which indicates that model choice truly has a significant effect on the shadow price estimation. We have also identified a negative relationship between the shadow price of CO₂ emissions and carbon intensity, and the heavy industries with higher carbon intensities tend to have lower shadow prices. It has been suggested that Shanghai municipal government take various measures to improve its carbon market, e.g. using the marginal abatement costs of participating sectors/firms as a criterion in the initial allocation of carbon emission allowances.     

The prospects for hard coal as a fuel for the Polish power sector

This paper presents the prospects for the development of the Polish hard coal sector from the perspective of the power sector. The most important issues determining the mid- and long-term future for domestic coal production are: (1) the development of the economy, hence the demand for electricity, (2) regulations (mostly environmental) affecting the power sector, (3) the competitiveness of coal-based technologies, and (4) the costs of domestic coal production. Since the range of issues and relations being considered is very broad, a specific method needs to be employed for the quantitative analysis. The tool applied in this study is the partial equilibrium model POWER-POL, in which both the coal and the power sectors are incorporated. The model focuses on energy–economy–environmental issues without capturing detailed macroeconomic links. The model was run under six scenario assumptions. The results show that the domestic coal sector should maintain its position as a key supplier of primary energy for the Polish power sector. However, the environmental regulations to which the domestic power sector has to conform will decrease the share of coal in the fuel-mix. Since the investment processes in this sector are usually long-term, the effects of changes will be noticeable from 2015 onwards.     

Implications of private sector participation in power generation—a case study from India

India suffers from widespread shortages of electricity supply. These shortages, among others, are detrimental to the economic growth. The prospects for the next decade do not seem to be much brighter. Efforts in expanding generation capacity by the state-owned electric utilities are hampered by severe resource constraints. Against this backdrop, to mobilize additional resources to help bridge the gap in demand and supply, the Government of India formulated a policy in 1991 with the objective to encourage greater investment by private enterprises in the electricity sector. To study the implications of such an initiative on various stakeholders, viz., public utilities, consumers and private sector, the present paper tries to analyse issues like planned rationing, guarantees to private sector, backing down of existing capacity. Using the state of Karnataka (in Southern India) as a case study, the paper develops multiple scenarios using an integrated mixed integer-programming model. The results show the advantage of marginal non-supply (rationing) of electricity in terms of achieving overall effective supply demand matching as well as providing economic benefits to the state that could be generated through cost savings. The results also show the negative impacts of high guarantees offered to the private sector in terms of the opportunity costs of reduced utilization of both the existing and the new public capacity. The estimated generation losses and the associated economic impacts of backing down of existing and new public capacity on account of guarantees are found to be significantly high. For 2011–12, depending on the type of scenarios, the estimated generation and economic losses are likely to be in the range of 3200–10,000 GWh and Rs. 4200–13,600 million respectively. The impact of these losses on the consumers could be in terms of significant increase in energy bills (in the range of 19–40% for different scenarios) due to rise in tariffs.     

Power and cogeneration technology environomic performance typification in the context of CO2 abatement part II: Combined heat and power cogeneration

This is the second of a series of two articles, dealing with a new approach of environomic (thermodynamic, economic and environmental) performance ‘Typification’ and optimization of power generation technologies. This part treats specifically of combined heat and power (CHP) cogeneration technologies in the context of CO₂ abatement and provides a methodology for a flexible and fast project based CHP system design evaluation. One of the aspect of the approach is the post-optimization integration of the operating and capital costs, in order to effectively deal with the uncertainty of the project specific design and operation conditions (fuel, electricity and heat selling prices, project financial conditions such as investment amortization periods, annual operating hours, etc). In addition the approach also allows to efficiently evaluate the influence of the external cost such as the CO₂ tax level under a tax scheme or the CO₂ permit price in the emission trading market.     

Impact of reform and privatization on consumers: A case study of power sector reform in Orissa,India

Orissa is the first state in India to have undergone reform in the power sector, with the government withdrawing its control. The model of this reform is known as the WB–Orissa model. The goal of this paper is to examine the impact of this reform on consumers of electricity, which has been measured using multiple regression models. The variables represent the parameters that consumers are most interested in, and the regression coefficients represent the weights of the corresponding variables. The data were collected using a survey methodology. The impact of reform was found to be mixed. Some groups of consumers saw benefits, while others felt a negative impact. A focus group study was conducted to identify the variables of interest to consumers of electricity. The model was used to estimate consumer benefit and was validated using primary data and structural equation modeling. The study revealed beneficial aspects of reform and areas with no benefits.     

Long-term CO2 emissions reduction target and scenarios of power sector in Taiwan

This study analyses a series of carbon dioxide (CO₂) emissions abatement scenarios of the power sector in Taiwan according to the Sustainable Energy Policy Guidelines, which was released by Executive Yuan in June 2008. The MARKAL-MACRO energy model was adopted to evaluate economic impacts and optimal energy deployment for CO₂ emissions reduction scenarios. This study includes analyses of life extension of nuclear power plant, the construction of new nuclear power units, commercialized timing of fossil fuel power plants with CO₂ capture and storage (CCS) technology and two alternative flexible trajectories of CO₂ emissions constraints. The CO₂ emissions reduction target in reference reduction scenario is back to 70% of 2000 levels in 2050. The two alternative flexible scenarios, Rt4 and Rt5, are back to 70% of 2005 and 80% of 2005 levels in 2050. The results show that nuclear power plants and CCS technology will further lower the marginal cost of CO₂ emissions reduction. Gross domestic product (GDP) loss rate in reference reduction scenario is 16.9% in 2050, but 8.9% and 6.4% in Rt4 and Rt5, respectively. This study shows the economic impacts in achieving Taiwan's CO₂ emissions mitigation targets and reveals feasible CO₂ emissions reduction strategies for the power sector.     

Environmental damage costs in Iran by the energy sector

On the basis of the energy supply and demand, this paper assesses the environmental damage from air pollution in Iran using the Extern-E study that has extended over 10 years and is still in progress in the European Union (EU) commission. Damage costs were transferred from Western European practice to the conditions of Iran by scaling according to GDP per capital measured in PPP terms.     

A simple method to compute hydrogen chloride abatement in geothermal power plants

One of the most important problems affecting geothermal fields is the abatement of hydrogen chloride contained in the vapor phase. If the chloride concentration exceeds a few ppmw, steam scrubbing must be provided in order to prevent corrosion of the gathering system and turbine failure. In some fields at Larderello, one of the most important geothermal areas in Italy, steam scrubbing is performed by injecting a caustic solution directly into the steam pipeline. In particular, the abatement system depends on absorption with chemical reaction of hydrogen chloride by a sodium hydroxide solution. This paper describes some of the Larderello power plant abatement systems and presents analyses of the different solutions adopted for this purpose. Finally, some simplified models for computing abatement efficiency in sprays, pipelines, static mixers, cyclones and vane type demisters—the equipment generally used in these plants—are proposed. The proposed models are able to predict the data measured in these power plants with good accuracy, and so they can be regarded as useful tools for designing new abatement systems or optimizing the existing ones.