2014 Progress Report: Analysis of Dynamic, Flexible NOx and SO2 Abatement from Power Plants in the Eastern U.S. and Texas

EPA Grant Number: R835216
Title: Analysis of Dynamic, Flexible NOx and SO2 Abatement from Power Plants in the Eastern U.S. and Texas
Investigators: McDonald-Buller, Elena , Allen, David T. , Craig, Michael T. , Kimura, Yosuke , McGaughey, Gary , Webster, Mort D.
Institution: The University of Texas at Austin , Massachusetts Institute of Technology , Pennsylvania State University
EPA Project Officer: Chung, Serena
Project Period: June 1, 2012 through May 31, 2016
Project Period Covered by this Report: June 1, 2014 through July 21,2015
Project Amount: $500,000
RFA: Dynamic Air Quality Management (2011) RFA Text |  Recipients Lists
Research Category: Air Quality and Air Toxics , Air

Objective:

Emissions cap and trade programs have been the preferred federal policy instruments for achieving reductions in emissions of nitrogen oxides (NOx) and sulfur dioxide (SO2) from electric generating units (EGUs) motivated by concerns associated with acid deposition and regional ozone and fine particulate matter concentrations. Market-based programs, such as the Acid Rain Program (ARP) established by Title IV of the CAAA, and the Clean Air Interstate Rule (CAIR), have demonstrated flexibility, economic efficiency, and facilitation of technological improvements. Historically, such programs have been designed with limited time-differentiation, focusing primarily on achieving annual and/or seasonal emissions reductions; yet disparities in damages have been associated with factors such as meteorological conditions conducive to the formation of peak air pollution levels and population exposure patterns. Dynamic air quality management approaches that leverage capabilities in air quality forecasting and near real-time operational decisions may present incentives for achieving additional emissions reductions of ozone and fine particulate matter precursors at a finer temporal resolution. This study has developed methods to evaluate the air quality implications and costeffectiveness of time-differentiated pricing of NOx and SO2 emissions from power plants alone and in combination with other technology and season-wide market-based approaches. Dispatching algorithms account for real-world operational constraints, such as minimum load and ramping, and include endogenous decision capabilities regarding control technology installation. Two power systems that differ in generation fuel mix are considered, the Electric Reliability Council of Texas (ERCOT) and the Mid-Atlantic or Classic Pennsylvania-New Jersey-Maryland (PJM) grids. The objectives have been to examine (1) achievable emissions reductions and production costs under single pollutant, timedifferentiated pricing strategies for NOx or SO2 on high ozone days and summer-wide, alone and in combination with season-wide market-based programs; (2) opportunities for joint abatement of NOx and SO2 emissions through single or multi-pollutant time-differentiated price signals; (3) drivers for control technology installation decisions; and (4) implications for predicted regional ozone and fine particulate matter concentrations.

Progress Summary:

A novel two-stage method, the Control Technology Investment at Nash Equilibrium with Unit Commitment (CONTINU) model, has been developed to explore short- and long-term generator responses to time-differentiated pricing and other policies and the effects on emissions and producer costs within the Mid-Atlantic PJM and ERCOT systems during 2012. The unit commitment power system model minimizes total system dispatch cost, including the sum of operational and start-up costs across all generators and non-served energy costs. Real-world operational constraints on power plants are enforced in CONTINU, including ramping limitations, minimum load, and minimum uptime and/or downtime. In the first stage, coal-fired generators are simulated both with and without a post-combustion control technology if it is not yet installed in 2012. Two technologies have been considered to date as “dispatchable” strategies (such that generators could choose to operate or not): Selective Catalytic Reduction (SCR) for NOx emissions control and/or Flue-Gas Desulfurization (FGD) for SO2 control. Generators unilaterally examine their individual profit maximization under a given pricing policy to establish initial technology adoption decisions, then each is allowed to reconsider its decision given the decisions of all other generators in the system using open-loop Nash Equilibrium; this approach specifically captures dependencies in control technology installation decisions associated with market dynamics. In the second stage, the unit commitment is simulated for each week from May through October to determine system-wide emissions and producer costs at hourly time steps on high ozone days and over the season.

Emissions from each policy scenario are processed with the Sparse Matrix Operator Kernel Emissions (SMOKE) system and used within the Comprehensive Air Quality Model with Extensions (CAMx) to evaluate metrics for ozone and fine particulate matter concentrations. Annual air quality modeling with CAMx that was developed by the U.S. Environmental Protection Agency (EPA) for analyses of the Transport Rule and Cross State Air Pollution Rule (CSAPR) has been used with extensive updates. In order to reflect recent anthropogenic emissions in the regions of interest, while maintaining the relationship between emissions and meteorological conditions reflected in EPA’s 2005 base year configuration, inventories for non-point anthropogenic sources and stationary sources other than those in the Mid-Atlantic PJM and ERCOT power systems were replaced with the 2011v6 Emission Modeling Platform obtained from the EPA and Lake Michigan Area Director’s Consortium (LADCO). Emission estimates from stationary power generation sources within the ERCOT or Mid-Atlantic PJM grids were processed and evaluated separately within CAMx for each policy under consideration.

Twenty-one policies have been evaluated for each system to date (i.e., 42 total simulations). Time-differentiated pricing was implemented as a cost per ton of emissions applied over the entire 24-hour period on high ozone days. Averaged across all monitoring site locations, days with predicted maximum daily average 8-hour ozone concentrations greater than 60 ppb were defined as high ozone days. The numbers of predicted high ozone days in the Mid-Atlantic PJM and ERCOT systems were 51 and 29, respectively, during the May through October time period. Six policies considered time-differentiated NOx prices on high ozone days ranging from $1,000/ton to $150,000/ton, and another six considered time-differentiated SO2 prices across the same range. Four season-wide pricing polices, in which a flat price of $1,000/ton or $5,000/ton was assessed for each ton of NOx or SO2 emitted over the entire summer, were evaluated for comparison, in addition to a season-wide baseline policy that represented allowance prices in 2012 and another that anticipated prices under CSAPR. Three policies evaluated the “layering” of a season-wide program, in this case CSAPR, with single- or joint-time-differentiated pollutant prices of $5,000/ton on high ozone days. All differences described below are relative to the baseline policy.

Substantial emissions reductions on high ozone days were evident with time-differentiated NOx price signals. For example, a $5,000/ton NOx price resulted in Mid-Atlantic PJM system-wide average NOx reductions of 38% on high ozone days. NOx emissions declined by 53% in the ERCOT and 80% in the Mid-Atlantic PJM systems with a time-differentiated NOx price of $50,000/ton. Although no SCR installations were observed in ERCOT with any of the time-differentiated NOx prices considered, 10 coal-fired generators selected to install SCR at a time-differentiated NOx price of $100,000/ton and 15 at a NOx price at $150,000/ton in the Mid-Atlantic PJM system. Redispatching from coal- (and biomass in Mid-Atlantic PJM) to gas-fired generation was the primary reason for emissions reductions in both systems regardless of SCR installation choices at higher price signals. The incremental costs per ton of NOx emissions reductions were higher in ERCOT than in the Mid-Atlantic PJM system reflecting differences in the reliance on coal for baseload power generation and the higher average NOx emission rate of generators within the Mid-Atlantic PJM system.

SO2 price signals implemented alone on high ozone days resulted in a co-benefit of reduced NOx emissions (and vice versa) but of different magnitude and incremental cost per ton than a comparable NOx price signal. In the Mid-Atlantic PJM system, a $50,000/ton SO2 price yielded NOx reductions of 63% ($10,350/ton NOx reduced) on high ozone days; in contrast, a $50,000/ton NOx price yielded reductions of 80% ($6,710/ton of NOx reduced). The incremental costs associated with NOx reductions achieved by SO2 policies alone were more pronounced in ERCOT. Demand met by generators with relatively higher SO2 emissions must be replaced by an increased reliance on natural gas-fired generation, especially within ERCOT, which had higher associated energy costs. With a time-differentiated NOx price of $50,000/ton on high ozone days, SO2 emissions were reduced by 50% in ERCOT and 75% within the mid-Atlantic PJM grid. Collectively, the findings indicated that single pollutant time-differentiated pricing policies have multi-faceted environmental benefits.

On high ozone days, emissions reductions and production costs incurred from time-differentiated pricing were competitive with those of a season-wide program at the same price level. In contrast, season-wide pricing achieved greater cumulative emissions reductions over the entire summer season at a comparable cost per ton than did time-differentiated NOx pricing at the same level. These findings suggested the utility of considering time-differentiated pricing as a complement to a season-wide program such as CSAPR. The benefits of such an approach were evident in both systems; with a layered time-differentiated single pollutant policy, NOx emissions were reduced by an additional 10% - 15% in ERCOT and 20% - 25% in the Mid-Atlantic PJM system relative to CSAPR alone on high ozone days. A layered joint pricing strategy enhanced reductions of NOx emissions achieved by CSAPR alone (by approximately 25% in ERCOT and 30% in the Mid-Atlantic PJM system) and the layered single pollutant pricing strategies.

Attainment with the National Ambient Air Quality Standard (NAAQS) for ozone is determined as a 3 year average of the annual fourth-highest maximum daily average 8-hour (MDA8) concentration at ambient monitoring sites. The CAMx episode spanned May through October encompassing the ozone season in Mid-Atlantic PJM and ERCOT states. At the locations of EPA’s Air Quality System (AQS) sites within the Mid-Atlantic PJM region, median reductions in the 4th highest MDA8 ozone concentration were -1 to -1.3 ppb with time-differentiated NOx prices of $20,000/ton or higher. Individual sites had reductions in the 4th highest MDA8 ozone concentration exceeding -4 ppb and in daily MDA8 ozone concentrations of almost -15 ppb. The median difference in the 4th highest MDA8 ozone concentration due to the implementation of CSAPR alone was -0.13 ppb; layering CSAPR with a joint price of $5,000/ton for both NOx and SO2 emissions resulted in a reduction of -0.6 ppb. Median reductions in the 4th highest MDA8 ozone concentrations at sites within ERCOT that were spatially distributed throughout Texas were markedly less than in the Mid-Atlantic PJM system.

For both systems, layering single- or joint-pollutant time-differentiated policies provided additional benefits for reducing regional mean MDA8 ozone concentrations on high ozone days above what was achievable by CSAPR alone. Relatively modest ($5,000/ton) time-differentiated NOx or SO2 policies reduced mean MDA8 ozone concentrations in both systems but reductions were spatially more widespread in Mid-Atlantic PJM. Reductions exceeded -0.5 ppb on most high ozone days of the season in both systems at time-differentiated price levels of $50,000/ton or greater. An important distinction between the two systems was the considerably greater spatial heterogeneity in the locations of benefits as well as their proximity to existing ambient monitors within the ERCOT region, regardless of the policy implemented. Reductions in MDA8 ozone concentrations primarily occurred in northeastern Texas coincident with the location of much of the coal-fired generation in the state. Increasing the levels of time-differentiated prices reduced emissions from these generators and, in particular for the SO2 policies, shifted emissions to other areas within ERCOT where natural gas-fired generation predominated.

Although time-differentiated price signals are triggered based on an ozone concentration threshold in this study, widespread regional reductions in PM2.5 concentrations and benefits at the locations of ambient monitors were evident in the Mid-Atlantic PJM system on high ozone days as well. Regional reductions in PM2.5 concentrations in response to policies were in general spatially coincident with those for ozone. The spatial extent and magnitude of PM2.5 reductions were greater under time-differentiated SO2 than NOx policies, although both resulted in benefits on high ozone days in the two systems. Attainment with the NAAQS for 24-hour average PM2.5 concentrations is based on the 3-year average of the 98th percentile concentrations at ambient monitoring sites. During the episode period, 24-hour average PM2.5 concentrations at the location of AQS sites are frequently but not always correlated with MDA8 ozone concentrations in the two systems. Conditions of conducive regional meteorology and common sources of precursor emissions affect both ozone and PM2.5 concentrations, but distinctly targeted time-differentiated price signals may be required to fully address peak concentrations of both.

These findings suggest that policy goals must be carefully considered. Season-wide market-based programs have the overall goal of reducing continental-scale pollution and transport to downwind areas. If a specific objective is to achieve reductions in emissions on days conducive to the formation of high pollution levels, then a season-wide program is less cost-effective than a time-differentiated program because of its untargeted application. In this study, time-differentiated pricing incurred costs only on high ozone days, although some “carry-over” benefits were evident on days subsequent to those identified as high ozone days. Co-benefits of reductions in 24-hour PM2.5 concentrations were evident with the implementation of time-differentiated price signals for NOx and/or SO2 on high ozone days, but full realization of reductions in peak concentrations may require distinct time-differentiation. Sufficient flexibility existed in two electricity grids with marked differences in demand and fuel generation mix to accommodate such time-differentiated approaches for emissions reductions. The utility of considering time-differentiated pricing as a complement to a season-wide program such as CSAPR is particularly pronounced for the Mid-Atlantic PJM system, which relies more heavily on coal- rather than natural gas-fired generation such as in ERCOT. A time-differentiated scheme could be implemented as a higher redemption ratio of emissions permits on high ozone days or as an entirely separate trading program layered with a season-wide policy.

Future Activities:

A 1-year no-cost extension was requested and granted, which will allow additional simulations to be conducted. We are considering examining population-based metrics, uncertainty in high ozone day forecasts, and spatial constraints on dispatching under time-differentiated pricing to limit potential increases in generation in ozone nonattainment areas.


Journal Articles on this Report : 1 Displayed | Download in RIS Format

Other project views: All 11 publications 2 publications in selected types All 2 journal articles
Type Citation Project Document Sources
Journal Article McDonald-Buller E, Kimura Y, Craig M, McGaughey G, Allen D, Webster M. Dynamic management of NOx and SO2 emissions in the Texas and Mid-Atlantic electric power systems and implications for air quality. Environmental Science & Technology 2016;50(3):1611-1619. R835216 (2014)
R835216 (Final)
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  • Supplemental Keywords:

    electricity generation, emissions trading, ozone, particulate matter, Texas, CAMx;

    Progress and Final Reports:

    Original Abstract
    2012 Progress Report
    2013 Progress Report
    Final Report