1. Title 4 Compliance Options ©2002 Dr. B. C. Paul

2. Band aide Approach  Buy Credits –Have been abundant because of aggressive compliance – could be running out Likelihood may hinge of CO2 control  Fuel Switch –Illinois Mid Sulfur - get about 2.4 lb/MMBTU coal for perhaps slight premium –Can buy Eastern Low Sulfur Coal at about 1.5 to 1.8 lb/MMBTU but shipping premium will be about $7/ton –Can buy low sulfur PRB coal at 0.75 to 1.2 lb/MMBTU with a transportation premium but coal is cheap –Deep Clean Coal but only about 2.5 lb/MMBTU

3. PRB Coal Issues  Coal Slacks and Spontaneous combusts –Will cost about $40/KW to adapt to handle  PRB Coal is low BTU, high moisture - plant bottlenecks all over and has to be derated up to 20% on capacity –light coaled ash reflect heat from boiler tubes –fans can’t handle higher air volumes –pulverizers can’t grind enough tonnage –feed systems can’t feed enough

4. PRB Coal Costs  Equipment can minimize derate to about 2% but cost for total retrofit is about $87/kw  PRB coal will have long rail lines and only 2 carriers are available –possible risk of future price gouging  PRB reserves are low cost because of low stripping ratio but after 2010 almost certain to rise

5. Motivation and Risk of Band Aide  1990s Regulatory Uncertainty –Deregulation paralyzing to industry that was built as a regulated monopoly  Ultimately Clean Plants likely required –Title 4 may become moot point

6. A Return to Regional Regulation  Clean Air Act built on Market Mechanism Approach  Mentioned Blame Other People for Title I Problems –North East non-competitive, blamed on Midwest –EPA issued a SIP call based on models Created a framework of regional regulation for others –Supreme Court Upheld in 2001 –Most implementation likely to be in NOX

7. Particulate and Regional Haze Issues  Plants fine particle emissions being regulated –Opacity issue at Great Smokey NP –Fine Particulate Health Issues  Nox and Sox may condense into aerosol particles after emission into air –ESPs can’t get particles that don’t exist –May need very tight NOX and SOX limits far beyond the framework of Title 4 original intent  Mercury regs likely to force scrubbers and SCRs

8. SO2 Compliance Options  Install Scrubbers to reduce emissions –Dry scrubbers cost about $80/KW to install and about $120/ton SO2 removed with about 70 to 80% removal possible –Wet scrubbers cost about $110/KW to install and about $90/ton SO2 removed and can remove 95 to 98% of SO2

9. Other Compliance Alternatives  Repower the unit - Common Alternatives –Repower to Fluidized Bed Combustor Can run about $850/KW –Repower to IGCC Can run about $1500/KW –Repower to Natural Gas Can run about $300 to $600/KW depending on Turbine or Combined Cycle –Allowed early compliance credits

10. Other Alternatives  Retire dirtier power plants and transfer credits to cleaner units - could also involve shifting generation  Buy Electricity –Coal by wire from a plant located closer to source to avoid transportation for fuel switch –Go outside the Cap - Buy from Independent Power Producers that have BACT obligations but are not in the emissions trade program

11. Radical Choices  Coal processing –Chemical Cleaning needed for Organic Sulfur Processes never set commercially and appear to run about $325/ton of sulfur dioxide avoided –Physical Cleaning requires fine grinding - but already done at Power Plant - Clean at Power Plant - may be able to get 1.5 to 2.4 lb/MBTU from high sulfur - may be only about $20/KW and about $5/ton of avoided SO2 won’t meet phase II limits