Analysis of alternative mercury control strategies

Monthly Energy Review, April, 2005

In the fall of 2004, the U.S. Senate Committee on Environment and Public Works asked the Energy Information Administration (EIA) to analyze the impacts of different approaches for removing mercury from the emissions of coal-fired electric power plants. Specifically, the committee asked EIA to evaluate the consequences of:

* The Environmental Protection Agency's (EPA) proposed cap-and-trade system;

* EPA's proposed mercury maximum achievable control technology (MACT); and

* A 90-percent MACT approach under which 90 percent of mercury emissions would be removed.

The Committee also requested that EIA assume compliance with nitrogen oxide (N[O.sub.x]) and sulfur dioxide (S[O.sub.2]) emission limits in EPA's proposed Clean Air Interstate Rule (CAIR), and that only commercially demonstrated mercury removal technologies be used.

"Analysis of Alternative Mercury Control Strategies" is EIA's response to that request. The report includes a reference case and five alternative cases prepared using the EIA's National Energy Modeling System, with projections through 2025. The reference case was based on EPA's proposed CAIR and on EIA's Annual Energy Outlook 2005.

There is significant uncertainty about the degree to which mercury can be removed from some coals. Currently, there are two main approaches to controlling power plant mercury emissions:

* Using technologies primarily designed to remove S[O.sub.2], NOx, and particulate emissions (often referred to as "co-benefit reductions");

* Using technologies specifically designed to reduce mercury, the most common of which is activated carbon injection (ACI). ACI systems have been widely deployed in other industries, but their performance in coal plants is uncertain.

Because of uncertainty about the availability and performance of mercury removal technology, EIA's analysis included five mercury control cases, with two of the most stringent cases incorporating alternative mercury control assumptions. Each of these cases assumes the same conditions as the reference case plus the specified differences.

1. EPA's proposed cap-and-trade program for mercury, assuming a 34-ton cap in 2010 and a 15-ton cap in 2018;

2. EPA's proposed MACT standard for mercury taking effect in 2008;

3. 90-percent MACT in 2008 with ACI technology able to achieve up to 90-percent removal of mercury for all coals;

4. 90-percent MACT in 2008, assuming maximum achievable mercury removal of 80 percent for plants using subbituminous and lignite coal;

5. 90-percent MACT in 2008, assuming ACI technology is unavailable through 2025.

EIA's analysis finds that EPA's cap-and-trade strategy reduces emissions over the forecast period to a greater extent--with lower impacts on electricity prices and fuel markets--than the basic MACT strategy. Neither approach is expected to lead to large changes in the fuels used to generate electricity or electricity prices to consumers. Other findings include:

* Mercury emissions in 2025, estimated to reach 44 tons with CAIR imposed, range from 40 tons to less than 9 tons in the other cases.

* Under the cap-and-trade and basic MACT scenarios, the impact on the national average electricity price is projected to be small, with prices generally less than 1 percent higher than in the baseline scenario.

* The 15-ton mercury emissions target for 2018 in the cap-and-trade program is not expected to be reached because the safety valve limit (a maximum cost for mercury emissions reduction) is expected to be triggered.

* The near-term impacts of a 2008 90-percent MACT requirement without proven commercialized technology could be very large, requiring rapid changes in coal use patterns and the development of new natural gas and renewable supplies.

"Analysis of Alternative Mercury Control Strategies" presents tables detailing the impact of each case on emissions of mercury, nitrogen oxides, and sulfur dioxides. Other tables illustrate the impacts on total energy supply and disposition; energy consumption and prices; electric generating capacity; supply, disposition, and prices of natural gas and coal; and renewable energy generating capacity and generation.

"Analysis of Alternative Mercury Control Strategies" (SR/OAIF/2005-01) is available on the EIA Web site at http://eia.doe.gov. Under "Forecasts" select "Responses to Congressional/Other Requests" and then this publication. Questions about the report should be directed to J. Alan Beamon, Office of Integrated Analysis and Forecasting, at JBeamon@eia.doe.gov or 202-586-2025. For general information about energy, contact the National Energy Information Center at infoctr@eia.doe.gov or 202-586-8800.