-l.-l_l--_-^ -_-- 1 Ilii - tc~d St3 t.w (h*nc~ral -____ Accounting Office --- I-kport, t,o the Chairman, Subcommitke jl‘& on Energy and Power, Commit,tee on Energy and Commerce, House of Represent~atives _-~ FOSSIL FUELS May 1!I!)0 I Outlook for Utilities’ Potential Use of Clean Coal Technologies s lllll IIIW 141620 _.II- (AO/K( :EI)-9th 166 Resources, Community, and Economic Development Division B-239607 May 24,199O The Honorable Philip R. Sharp Chairman, Subcommittee on Energy and Power Committee on Energy and Commerce House of Representatives Dear Mr. Chairman: As you requested, this report presents information on the extent to which electric utilities plan to use clean coal technologies on their coal-fired power generating units and how such technologies could contribute to reducing acid rain. It also provides utilities’ perspectives on how they might react to different emission reduction requirements and compliance dates. The preliminary results of our review were presented in our Statement for the Record (GAO/T- HCED-90-3)submitted for your Subcommittee’s October 18, 1989, hearing on acid rain control provisions of the administration’s proposal to amend the Clean Air Act. We also testified on our preliminary results on March 28, 1990, before the Subcommittee on Economic Stabilization, House Committee on Banking, Finance and Urban Affairs (GAO/T-RCED-90-56). As arranged with your office, we plan to distribute copies of this report to the Secretary of Energy and other interested parties and to make copies available to others upon request. Please call me at (202) 2’751441 if you have any questions about this report. Major contributors are listed in appendix VI. Sincerely yours, Victor S. Rezendes 1 Director, Energy Issues Ekecutive Summary About 20 million tons of sulfur dioxide (SO,) emissions and about 20 Purpose million tons of nitrogen oxides (NO,) emissions are released into the atmosphere in the United States every year, contributing to the forma- tion of acid rain. Electric utilities burning fossil fuels-primarily coal- account for about two-thirds of the nation’s SO, emissions and about one-third of the NOXemissions. Continuing congressional debate has focused on acid rain control proposals that would require many utilities to significantly reduce powerplant emissions by specific deadlines. At the same time, Congress has authorized the Department of Energy (DOE) to institute a $2.75-billion Clean Coal Technology Program to share in the cost of industry projects demonstrating emerging clean coal technol- ogies that show promise of reducing SO, and NO, emissions. Concerned about the relationship between DOE'Sprogram and acid rain control proposals, the Chairman, Subcommittee on Energy and Power, House Committee on Energy and Commerce, requested GAOto examine (1) the extent to which electric utilities plan to use clean coal technolo- gies on their power generating units and (2) how such technologies could contribute to reducing acid rain. Using a questionnaire, GAOrequested information on utilities’ plans to use these technologies at a random sample of the nation’s fossil-fueled power generating units with 75 megawatt or greater capacity-and the extent that they would use such technologies at these units to meet four acid rain control scenarios that GAOdeveloped. GAOconsidered acid rain control bills in the 100th Congress in develop- Background ing its scenarios. The scenarios included both moderate and stringent SO, and NO, emission reduction requirements by 1997 and 2004 compli- ance dates. GAO'Sscenarios are generally more stringent than the emis- sion requirements in the Senate and House bills recently approved to amend the Clean Air Act. GAOreceived responses for 94 percent of the sampled generating units. Because utilities were primarily interested in the technologies for their coal-fired units, this report discusses responses for coal-fired units only. The results have been applied to the universe of coal-fired units and associated utilities from which the sample was drawn. Respondents to GAO'Squestionnaire indicated that enactment of acid Results in Brief rain legislation would provide a major impetus for considering using clean coal technologies. Utilities plan to use the technologies at only 5 Page 2 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Executive Summary percent of their coal-fired units. However, should acid rain controls be mandated, they would consider such technologies for as many as 50 per- cent of their coal-fired units to reduce SO, emissions and 75 percent of their units to reduce NO, emissions. Utilities indicated that their willing- ness to consider specific technologies depends on the severity of emis- sion reduction requirements, target dates for compliance, future power generation requirements, their confidence in the technologies, and cost considerations. Generally, the more stringent the requirements and the more lead time to comply, the more clean coal technologies were consid- ered viable options. They also indicated that they would favor other options-such as switching to low-sulfur coal-in three of the four sce- narios to achieve SO, emission reduction requirements. However, not all coal-fired units would need to reduce emissions because up to 21 percent already meet one or more of the scenarios. Despite their potential, clean coal technologies may not contribute much to the reduction of acid rain-causing emissions during the next 15 years. Uncertainty about the commercial availability of the new technologies is a key factor in determining when they could be widely deployed. Many are expected to be commercially available between the mid-1990s and 2000, but this time frame could be optimistic based on the problems and delays under the Clean Coal Technology Program in formalizing agree- ments with project sponsors and getting demonstrations underway. Even after the technologies are commercially available, utilities will likely test them on one unit before installing them on others, and lead time will be needed for ordering and manufacturing the technologies. Thus, it could take another 5 to 10 years beyond the date of commercial availability for the technologies to be widely deployed. Once they are proven and widely deployed, however, they could play a major role in combating acid rain. Principal Findings Technology Use Depends GAO'Ssurvey showed that utilities plan to use clean coal technologies at on Requirements only 6 percent of their existing coal-fired units by the year 2010. How- ever, should acid rain control requirements be mandated, utilities would give much greater consideration to using these technologies. Some units Y may not be affected because from 16 to 21 percent meet the SO, scena- rios, and from 6 to 18 percent meet the NO, scenarios. Page 3 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Executive Summary Utilities’ interest in clean coal technologies to meet SO, emission require- ments seemed to be linked more to the time frames for compliance than the level of reductions to be met. For example, utilities would consider using the technologies to achieve SO, reductions at up to 51 percent of their coal-fired units under a 2004 compliance date, but only at up to 25 percent of their units under a 1997 deadline. However, many utilities would also consider conventional options and technologies, such as switching to low-sulfur coal (at up to 46 percent of their units) and installing conventional flue gas scrubbers (at up to 36 percent of their units) to meet GAO'Sscenarios for reducing SO, emissions. Utilities’ interest in clean coal technologies for NO, control was more directly related to the severity of emission requirements than to the tim- ing of compliance dates. Utilities would consider such technologies to reduce NOXemissions at up to 67 percent of their coal-fired units under the moderate emission reduction scenarios and at up to 77 percent of their units under the stringent scenarios. This may stem from some utili- ties’ high level of confidence in the potential application of some of the NO, reduction technologies currently being pursued by industry. Demonstration Projects Although DOEand the coal industry believe clean coal technologies may Behind Schedule be less costly and environmentally superior to conventional technolo- gies, the new technologies have not been successfully demonstrated on a commercial scale. Utilities have expressed concerns about the technical feasibility and cost effectiveness of many of the technologies and whether they will be able to achieve expected emission reductions. According to utility and coal industry estimates, the new technologies should be demonstrated and available for commercial order between 1995 and 2000. These estimates generally assume that DOE'SClean Coal Technology Program will be fully funded and that the demonstration projects will be completed successfully and on schedule. However, some demonstration projects under DOE'Sprogram are behind schedule. DOEhas conducted three solicitations (rounds) for project proposals under its program and has two more planned. As of April 30, 1990, cooperative agreements had been completed for 19 of the 38 projects in the program, but only 3 projects had progressed to the demonstration phase. In March 1989, GAOreported that DOEexperienced major delays in negotiating agreements with round-one project sponsors, and three projects withdrew from the program because of sponsors’ difficulties in Page 4 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Executive Summary completing project financing and other business arrangements. GAO'Sfol- low-up work showed that these problems have continued under round two of the program. DOEhas recently taken steps to shorten the process. GAOalso reported that seven funded round-one projects were experienc- ing coordination, equipment, and financing problems that caused delays in completing project phases and extensions of some completion dates- which could delay the successful demonstration of some technologies. Two funded projects dropped from the program in June 1989 and Janu- ary 1990 because of financing problems. In March 1990 GAOreported that over half of the round-two projects were rated weak by DOEin their potential to reduce nationwide emissions. GAOsuggested that the Con- gress consider delaying the final two rounds of projects until DOEobtains more results from demonstration projects already in the program. This would allow DOEto target the remaining program funds to the more promising technologies. 5 to 10 Years Needed to According to DOEand utility and coal industry estimates, it may take 5 Deploy Technologies to 10 years for clean coal technologies to penetrate the market once they are proven and available for commercial order. This time span is needed for utilities to develop confidence in the new technologies and to provide the necessary lead time for ordering, designing, manufacturing, obtaining, and installing the technologies. Utilities’ willingness to invest in the new technologies could also be influenced by their concerns about whether they will be allowed to recover their investment costs. GAOis not making recommendations. However, the information in this Recommendations report should be useful during congressional deliberations on acid rain control proposals in providing some perspective on how utilities might react to different emission reduction requirements and compliance dates. GAOdiscussed the information in this report with DOEofficials and incor- Agency Comments porated their comments where appropriate. They generally agreed with the accuracy of the information presented relating to the Clean Coal Technology Program. However, as requested by the Chairman’s office, * GAOdid not obtain official agency comments on a draft of this report. Page 5 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Contents Executive Summary 2 Chapter 1 8 Introduction The Problem of Acid Rain and the Electric Utility Industry 8 The Clean Coal Technology Program 9 Proposed Acid Rain Control Legislation and Clean Coal 11 Technology Objectives, Scope, and Methodology 11 Chapter 2 15 Few Utilities Plan to Acid Rain Controls Would Increase Interest in Clean Coal Technologies 15 Use Clean Coal Potential Use of Clean Coal Technologies to Meet 20 Technologies, but Increased Demand for Electricity Conclusions 22 Many Would Consider Them to Meet Acid Rain Control Mandates Chapter 3 24 Clean Coal Technologies Need to Be Successfully Demonstrated Widespread Deployment May Take 5 to 10 Years After 24 26 Technologies Are Technologies Are Proven Unlikely to Contribute Other Concerns That Could Affect Utilities’ Willingness to 27 Significantly to Acid Invest in Clean Coal Technologies Utilities’ Views on Incentives for Using New Technologies 30 Rain Reduction in the Views of DOE Officials 31 Next 15 Years Conclusions 32 Appendixes Appendix I: Description of Clean Coal Technologies 34 Appendix II: Sampling Methodology 38 Appendix III: Copy of GAO’s Questionnaire Sent to 40 Utilities Appendix IV: Options That Would Be Considered at Coal- 53 Fired Units to Achieve SO, Reductions Under GAO’s Scenarios Appendix V: Options That Would Be Considered at Coal- 57 Fired Units to Achieve NO, Reductions Under GAO’s Scenarios Page 6 GAO/RCED-90-186 Potential Use of Clean Cod Technologies \ Contents Appendix VI: Major Contributors to This Report 60 Tables Table 1.1: Questionnaire Scenarios for Acid Rain Control 12 Requirements Table 2.1: Options That Utilities With Coal-Fired Units 21 Would Consider to Meet Demand Growth Table 3.1: Incentives That Would Most Encourage 31 Utilities With Coal-Fired Units to Invest in Clean Coal Technologies Table II. 1: Total Number of Utilities and Generating Units 39 in Each Stratum of GAO’s Sample and the Number Sampled Figures Figure 2.1: Utility Responses to Sulfur Dioxide Emission 17 Reduction Options Figure 2.2: Utility Responses to Nitrogen Oxide Emission 19 Reduction Options Abbreviations CCT Clean Coal Technology DOE Department of Energy EPA Environmental Protection Agency GAO General Accounting Office NO, nitrogen oxides NSPS New Source Performance Standards PSD Prevention of Significant Deterioration SO, sulfur dioxide Page 7 GAO/RCED-90-165 Potential Use of Clean Cod Technologies Chapter 1 , Introduction About 20 million tons of sulfur dioxide (SO,) emissions and about 20 million tons of nitrogen oxides (NO,,) emissions are released into the atmosphere in the United States every year. These pollutants contribute to the formation of acid rain. Although there has been a decrease in SO, emissions since the 1970s electric utilities burning fossil fuels account for about two-thirds of the nation’s SO, emissions. The combustion of automotive fuels accounts for the largest share of NO, emissions, but the utility sector NO, emissions increased by 40 percent from 1970 to 1983 and accounts for about one-third of NO, emissions. Clean coal technologies are a family of emerging technologies that are expected to reduce SO, and NO, emissions resulting from coal combus- tion Many of these technologies will have industrial applications, but their main contribution to emissions reductions will be at coal-fired gen- erators operated by electric utilities. Sulfur dioxide and nitrogen oxides undergo chemical changes in the The Problem of Acid atmosphere that convert them to their acidic forms. These acidic com- Rain and the Electric pounds are then returned to earth in rain or snow and as dry particles Utility Industry or gases, called acid rain. While the effects of acid rain have yet to be fully quantified, there is concern that it may be potentially harmful to the environment. For example, it is believed that acid rain may be dam- aging lakes and streams and causing the loss of gamefish and other spe- cies. A cause and effect relationship has not been proven between acid rain and forest damage, but growth decline and premature tree death have been documented in some areas where acid rain is present. Another concern is that building materials (marble, limestone, paints, and galvanized steel) can be eroded by exposure to acid rain. Finally, although acid rain has no known direct effect on human health, there is concern that acid rain can increase the levels of dissolved metals, such as lead and mercury, in water. The Department of Energy (DOE), electric utilities, and the coal industry see the adoption of clean coal technologies as a way for utilities to achieve long-term reductions in emissions that contribute to acid rain. Current technology-basically, conventional flue gas scrubbers-l effectively removes SO, emissions but is costly, labor intensive, and cre- ates waste-handling problems. Switching to natural gas or lower-sulfur ‘Conventional flue gas scrubbing describes a number of processes for capturing sulfur dioxide. Basi- cally, the utility’s flue gas is exposed to a wet lime or limestone compound which reacts with the sulfur in the gas, leaving the cleaned gas to be expelled through the smokestack. Page 8 GAO/RCED-!M-166 Potential Use of Clean Coal Technologies Cha)pr 1 Introduction coal may be a low-cost option for some utilities to reduce SO, emissions, but if done on a wide scale, it could have an adverse economic effect in areas that mine high-sulfur coal. Proponents of clean coal technologies consider these technologies to be the best hope for achieving significant emission reductions in the utility industry and for ensuring a continuing market for our nation’s high-sulfur coal. In 1984, the Congress set aside $750 million in the Energy Security The Clean Coal Reserve Fund to establish DOE’S Clean Coal Technology (CCT) Program. Technology Program The purpose of this government and industry cost-sharing program is to assist industry in accelerating the commercialization of new clean coal technologies by demonstrating that they burn coal more cleanly, effi- ciently, and cost-effectively than current technologies. Under the pro- gram, DOE can fund up to 50 percent of the cost of each project selected for assistance. Industry and other nonfederal sources are expected to provide the balance of project financing. In December 1985, the Congress authorized DOE to use $400 million from the Energy Security Reserve Fund for the first solicitation, or round one, of the program. DOE issued the first solicitation for project proposals in February 1986 and has 10 projects in the program from that solicitation. The objective of round one was to demonstrate the feasibility and com- mercial application of a broad slate of clean coal technologies to enhance the use of coal for all market applications. We issued two reports2 and testified twice” on round one of the program. In March 1987, the administration announced plans to expand the CCT Program on the basis of a January 1986 joint report by special U.S. and Canadian envoys that made several recommendations to reduce environ- mental problems associated with U.S. and Canadian transboundary acid rain.4 Among other things, the envoys’ report recommended that the United States implement a 5-year, $5-billion commercial demonstration program in which the federal government and industry would each pro- vide $2.5 billion to advance clean coal technologies that would be needed for future acid rain control programs. The administration endorsed this aFossil Fuels: Commercializing Clean Coal Technologies (GAO/RCED-89-80, Mar. 29, 1989) and Fossil Fuels: Status of DOE-Funded Clean Coal Technology Projects as of March l&l989 (GAO/RCEDF 166FS, June 29,1989). “Views on DOE’s Clean Coal Technology Program (GAO/T-RCED-88-47, June 22,1988) and Status of DGlWunded Clean Coal Technology Projects (GAO/T-RCED-89-26, Apr. 13, 1989). 4Joint Report of the Special Envoys on Acid Rain (Jan. 1986). Page 9 GAO/RCED-90-105 Potential Use of Clean Coal Technologies Chapter 1 Introduction recommendation by requesting $2.6 billion over a S-year period to demonstrate new clean coal technologies. The administration also announced that future demonstration projects would be selected, where possible, to reduce acid rain-causing emissions from fossil fuel-burning facilities. DOE issued its second solicitation for project proposals in February 1988 and selected 16 projects in September 1988 from the 66 proposals received. (One of the 16 projects subsequently withdrew from the pro- gram.) Following the recommendations of the joint U.S.-Canadian envoys’ report, the objective of the round-two CCT Program was to select projects that would demonstrate innovative clean coal technologies that are (1) capable of being commercialized in the 199Os, (2) more cost- effective than current technologies, and (3) capable of achieving signifi- cant reductions of SO, and NO, emissions from existing coal-burning facilities. We reported on the round-two selection process in March 1990.‘, The third solicitation was conducted in May 1989, and 13 projects were selected in December 1989 from the 48 proposals received. As of April 30, 1990, DOE and project sponsors had completed cooperative agree- ments for 19 of the 38 projects in the CCT Program. DOEexpects to com- plete the cooperative agreements for the 6 other round-one and-two projects by July 1990 and the 13 round-three projects by December 1990. The Congress has appropriated a total of $2.75 billion for the five rounds of projects planned for the CCTProgram ($400 million for round one, $676 million each for rounds two and three, and $600 million each for rounds four and five). The Department of Interior and Related Agen- cies Appropriations Act, Pub. L. No. 101-121, 103 Stat. 701 (1989) directs DOEto issue the fourth solicitation for project proposals by June 1, 1990, and the fifth (final) solicitation by September 1, 1991. It also directs DOEto select the round-four projects by February 1, 1991 and the round-five projects by May 1, 1992. “Fossil Fuels: Pace And Focus of the Clean Coal Technology Program Need to Be Assessed (GAO/ _90 -67, Mar. 19, 1990). Page 10 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Chapter 1 Introduction Legislation to combat acid rain-causing emissions from power plants and Proposed Acid Rain other sources has been a key issue of debate in congressional efforts to Control Legislation amend the Clean Air Act. Numerous acid rain control bills were consid- and Clean Coal ered in the 100th Congress, and several have been introduced in the 1Olst Congress. In July 1989, the administration proposed amendments Technology to the Clean Air Act that would require annual reductions of SO, emis- sions from fossil-fueled generators by about 10 million tons below 1980 levels and annual NO, emissions by 2 million tons below projected 2000 levels by December 3 1,200O. Several hearings have been held in both the House and Senate on the administration’s proposal and other acid rain control bills. Acid rain control proposals share a common goal with clean coal tech- nologies-the reduction of hazardous emissions into the atmosphere. However, the extent that clean coal technologies would contribute to emissions reductions, if acid rain control legislation were passed, is an open question. These are developmental technologies, and uncertainties remain as to (1) when they will be available, (2) whether they will be as effective as expected, (3) whether acid rain control legislation would promote or delay their development, and (4) how many utilities would use them if legislation is enacted. Concerned about the relationship between the CCT Program and poten- Objectives, Scope,and tial acid rain control legislation and the effectiveness of DOE’S strategy in Methodology demonstrating technologies that will reduce SO, and NO, emissions, the Chairman, Subcommittee on Energy and Power, House Committee on Energy and Commerce, requested that we examine (1) the extent to which electric utilities plan to use clean coal technologies, and (2) how such technologies could contribute to reducing acid rain. To assess the likelihood that utilities will use clean coal technologies, we developed a comprehensive questionnaire to collect information on (1) utilities’ current plans to use clean coal technologies on specific power generating units and (2) the options that would be considered for these units if acid rain controls were mandated. We also asked utilities to iden- tify incentives that would encourage them to invest in clean coal technologies. To determine how utilities might react to acid rain control requirements, we included four hypothetical SO, and NOXemission reduction scenarios in our questionnaire. We considered the acid rain control bills in the 100th Congress in developing the scenarios. The scenarios included both Page 11 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 1 Introduction moderate and more stringent emission reductions by 1997 and 2004 compliance dates. Our scenarios, which are summarized in table 1.1, asked utilities to indicate what options they would consider at specific generating units to reduce their systemwide SO, and NO, emissions by a specified percent below 1980 levels or to a target level stated in pounds per million British thermal units (lbs./MMBtus)--whichever requirement would be less stringent. Table 1.1: Questionnaire Scenarios for Acid Rain Control Requirements Compliance Emission reduction requirement’ Scenario date Sulfur dioxide Nitrogen oxide 1 Near-term moderate 1997 35% or to 1 .O 25% or to 0.6 IbsJMMBtus Ibs./MMBtus 2 Near-term stringent 1997 75% or to 0.8 5Oi or to 0.4 IbsJMMBtus IbsJMMBtus 3 Long-term moderate 2004 35% or to 1 .O 25% or to 0.6 Ibs./MMBtus Ibs./MMBtus 4 Long-term stringent 2004 75% or to 0.8 50% or to 0.4 Ibs./MMBtus Ibs./MMBtus aThe percentages refer to the extent that emissions would need to be reduced below 1980 levels. We distributed our questionnaire to utilities several months before the current administration announced its acid rain control proposal, Our scenarios for SO, emission reductions are more stringent than the admin- istration’s proposal, which essentially would require utilities to reduce SO, emissions from fossil fuel-fired steam electric generating units to 2.5 lbs./MMBtus after December 31, 1995, and to 1.2 lbs./MMBtus after December 31, 2000. The administration’s proposal does not specify NO, emission limits for generating units but would require the Administra- tor, EPA,to establish NO, emission rates for utilities’ coal-fired steam electric generating units to meet after December 3 1, 2000. The adminis- tration’s proposal would also grant a 3-year extension (until December 3 1, 2003) for generating units that will be repowered with a qualifying clean coal technology to comply with emission requirements. Our sce- nario 3 is the closest to matching the administration’s proposed SO, emission reduction requirement.F We obtained technical assistance from DOE, the Environmental Protec- tion Agency (EPA), two utility industry groups, and an environmental organization in developing our questionnaire and visited several utilities “In April 1990, the Senate approved amendments to the Clean Air Act (S. 1630,lOlst Gong., 2d Sess.),which contained emission reduction requirements that are generally consistent with the administration’s proposal. The emission requirements in the bill that the House approved on May 23, 1990, are also generally consistent with the administration’s proposal. Page 12 GAO/RCED-!WlSS Potential Use of Clean Coal Technologies Chapter 1 Introduction to test the clarity of our questions, We reviewed literature on clean coal technologies and consulted DOEin identifying the following categories of clean coal technologies for utilities to consider in responding to our questionnaire: l coal cleaning and upgrading, 9 advanced flue gas desulfurization, l sorbent injection, . low-NO, combustion, . post-combustion NOXcontrol, . gas cofiring/reburning, 9 combined SO,/NO, control, l atmospheric fluidized-bed combustion, . pressurized fluidized-bed combustion, l slagging combustion, and . integrated gasification, combined cycle. (These technologies are described in app. I.) For our questionnaire survey, we randomly sampled 480 of the nation’s 1,503 fossil-fueled generating units that have at least 75 megawatts of generating capacity. The 1,503 units are operated by 190 utilities. Our sampled units included 307 coal-fired, 99 gas-fired, and 74 oil-fired gen- erating units operated by 138 utilities. We used a stratified sampling design to ensure that all of the utilities with a large number of units would be sampled, with a maximum of five units randomly selected for any one utility. (Our sampling methodology is discussed in more detail in app. II.) In January 1989, we sent our questionnaire (app. III) to the utilities that operated the sampled units. We received responses from 130 utilities, which provided us information on 94 percent of the sampled units. The responses showed that utilities would consider clean coal technologies primarily for coal-fired units. Therefore, this report discusses our sur- vey results for coal-fired units only. We received information from 99 utilities on 291 (94 percent) of the 307 coal-fired units in our sample. These responses have been analyzed to develop estimates for the 876 coal-fired units and 150 associated utilities in the universe from which the sample was drawn. To supplement the questionnaire data, we visited four utilities that have actively pursued clean coal technologies to discuss their experiences and interest in the technologies. We also met with DOEand EPAofficials and Page 13 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 1 Introduction representatives of environmental groups, including the National Resources Defense Council and Greenpeace, to discuss the potential use of the technologies for reducing acid rain-causing emissions at power plants and to obtain their perspectives on other issues. Our work was performed from June 1988 through December 1989 in accordance with generally accepted government auditing standards. We discussed the information in this report with DOEofficials and incorpo- rated their comments where appropriate. They generally agreed with the accuracy of the information presented relating to the CCTProgram. However, as the Chairman’s office requested, we did not obtain official agency comments on a draft of this report. Page 14 GAO/RCED-SO-166 Potential Use of Clean Coal Technologies Chapter 2 FevvUtilities Plan to Use Clean Cod Technologies,but Many Would Consider Them to Meet Acid Rah Control Mandates Our questionnaire survey revealed that few utilities currently have plans to use clean coal technologies at their existing power generating units to reduce emissions-or in building new power generation facili- ties to meet future demand growth for electricity. However, should there be a requirement to meet acid rain control mandates, utilities would consider adopting clean coal technologies for as many as 50 to 75 percent of their coal-fired power generating units. The utilities’ willing- ness to consider specific technologies depends on such factors as the severity of required emission reductions, the target dates for compli- ance, the utilities’ present and future power generation requirements, and cost considerations. Utilities indicated that they would also weigh the feasibility of other options, such as using conventional flue gas scrubbing technology or switching to low-sulfur coal, to meet acid rain controls. Some coal-fired units may not be affected by acid rain control requirements because about 16 to 21 percent would already meet our SO, emission reduction scenarios and about 6 to 18 percent would meet our NO, emission reduction scenarios. Information provided in response to our questionnaire indicated that Acid Rain Controls utilities have plans to use clean coal technologies at only about 5 percent Would Increase of their existing coal-fired generating units by the year 2010.1 Some of Interest in Clean Coal the technologies to be used on these units included low-NOX combustion, gas cofiring, advanced flue gas desulfurization, sorbent injection, and Technologies combined SO,/NO,control. We asked the utilities in our questionnaire survey whether they had explored emission control options for the generating units in our sample should acid rain control legislation be enacted. We asked those that had explored such options to indicate what options they would most seri- ously consider at the sampled units to meet the SO, and NO, emission requirements under each of our scenarios. Our questionnaire listed clean coal technologies as one of the options for reducing emissions. Some of the other options included using conventional technologies to meet the requirements, switching to low-sulfur coal, retiring the unit, or taking no action at the sampled unit if the utility’s system already met our scenario emission limits. Our analysis of questionnaire responses showed that utilities have explored emission control options at at least 80 percent of their coal- ‘This estimate could range from 2.4 to 7.2 percent (see app. II). Page 16 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 2 Few Utilities Plan to Use Clean Coal Technologies, but Many Would Consider Them to Meet Acid Rain Control Mandates fired units2 It also showed that many utilities would consider the future use of clean coal technologies if they were required to meet acid rain control requirements. Under our acid rain control scenarios, utilities would consider using clean coal technologies at as many as half of their coal-fired units to meet SO, emission limits and at as many as three- fourths of their coal-fired units to meet NO, emission limits. However, clean coal technologies were not the most frequently considered options to meet acid rain control requirements in three of our four SO, emission reduction scenarios, It should also be noted that in responding to our scenarios, utilities indicated options they would seriously consider, but their responses did not represent firm plans or commitments to use clean coal technologies or other options. Options That Would Be Not all utilities would need to take action to reduce SO, emissions under our scenarios. Questionnaire results indicate that about 21 percent of Considered to Meet SO, utilities’ coal-fired units would already comply under our moderate SO, Scenarios emission reduction scenarios, and about 16 percent would comply under our more stringent scenarios. As shown in figure 2.1, for those units where action would be consid- ered, switching to low-sulfur coal was the most often cited method of meeting the SO, emission reduction requirements in three of our four scenarios. Utilities would consider switching to low-sulfur coal at 46 percent of their coal-fired units under both of the moderate emission reduction scenarios, and at 39 percent of their units under both of the stringent scenarios. Only in our scenario of meeting stringent requirements by 2004 would utilities choose clean coal technologies more often than other options. Questionnaire results indicate that compared to conventional options, clean coal technologies would be utilities’ second most frequently chosen option to meet moderate reduction requirements for both 1997 and 2004 compliance dates, and third most frequently chosen option to meet strin- gent requirements by a 1997 deadline. Given this latter scenario, utilities indicated that they would switch to low-sulfur coal or use conventional scrubber technology more often than using clean coal technologies. 2This estimate could range from 76.5 to 85 percent (see app. II). Page 10 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 2 Few UtiRtleo Plan to use Clean coal Technologies, but Many Would Consider Them to Meet Acid Rain Control Mandates Figure 2.1: Utility Responses to Sulfur Dioxide Emission Reduction Option8 100 Perwnt ot Cosl-f%ed Generating Units That Would Consider the Options 90 so 70 so 40 30 20 10 0 Modorate Stringent Moderate Stringent Reductions by Reductions by Reductions by Reductions by 1897 1997 zoo4 2004 Hypothetical Emission Requirements and Compllancs Datss Adopt Clean Coal Technologies Switch to Low-Sulfur Coal Install Conventional Scrubber Retire the Unit Take No Action - Unit Meets Emission Targets For those utilities indicating an interest in using clean coal technologies to meet SO, emission requirements, the interest seemed to be linked more to the time frames for compliance than the level of reductions to be met. For example, our analysis showed that utilities would consider clean coal technologies for 41 and 51 percent of their coal-fired units under a 2004 compliance deadline, but only for 24 and 25 percent of their units under a 1997 compliance deadline. This suggests that utilities would be more apt to use clean coal technologies to meet SO, emission control mandates if they were given a longer time frame for compliance. The technologies most frequently cited as options for reducing SO, emis- sions were sorbent injection, advanced flue gas desulfurization, coal cleaning and upgrading, and combined SO,/NO, control. The level of interest in such technologies was not concentrated in any age group or size of generating units. Page 17 GAO/RCED-90-166 Potential Use of Clean Coal Technologies chapter 2 Few Utlllties Plan to Use Clean Coal Tecbnologiee, but Mauy Would Consider Them to Meet Acid l&in Control Mandate.9 Our survey results also indicated that utilities would consider the use of conventional technologies to meet SO, emission requirements. For exam- ple, utilities would consider installing conventional scrubber technology at 18 and 15 percent of their coal-fired units under the 1997 and 2004 moderate emission reduction scenarios and at 36 and 30 percent of their units under the 1997 and 2004 stringent scenarios. (App. IV includes more information on our estimates of the extent that utilities’ coal-fired units would be considered for various options to achieve the SO, emis- sion requirements in each of our acid rain control scenarios.) Officials at one of the utilities we visited have testified that acid rain control legislation could influence some utilities to abandon clean coal technology demonstration efforts and redirect funds that otherwise would have been used for such technologies to investments in conven- tional processes in order to meet SO, emission reduction requirements. On the other hand, an official from an environmental organization told us that acid rain control legislation could encourage some utilities to invest in clean coal technologies because they would have added incen- tive to explore all possible options for meeting SO, emission reduction requirements. Options That Would Be Our questionnaire responses showed that the extent of the utilities’ Considered to Meet NO, interest in clean coal technologies to control NO, emissions was more directly related to the severity of targeted reductions than to the timing Scenarios of the compliance dates. As shown in figure 2.2, utilities would consider using clean coal technologies to reduce NO, emissions at 53 percent of their coal-fired units under the moderate, near-term scenario and at 57 percent of their units under the moderate, long-term scenario. Given more stringent reduction goals, however, utilities would consider such technologies to reduce NO, emissions at 72 percent of their units under the near-term scenario and 77 percent of their units under the long-term scenario. The questionnaire results indicate that about 18 percent of utilities’ coal-fired units would already comply with the moderate NO, emission reduction scenarios, and 6 percent would meet the stringent scenarios. Page 18 GAO/lKXLHO-165 Potential Use of Clean Coal Teclmologiee I chapter 2 Few Utilities plan to Uee Clean Coal Teclmologle~, but Many Would Comider Them to Meet Acid Rain Control Mandatea Figure 2.2: Utility Responrer to Nitrogen Oxide Emirrlon Reduction Option8 100 Poreant of Cval-Flmd Qrnomting Units That Would Con&k the Optiona Moderato Stringent Modwat~ Stringent Roductlona by Radwtion8 by Reductionr by Reduotlona by 1987 1897 !am4 2004 Hypothottcal EmimmionRoqulromrnts and Comptlanca Data Use Clean Coal Technologies Retire the Unit Take No A&n - Unit Meets Emission Targets Low-NO, combustion technology was by far the most frequently consid- ered clean coal technology for reducing NO, emissions. Other clean coal technologies that utilities considered were post-combustion NO, control, gas cofiring/reburning, and combined SO,/NO, control. (App. V includes more information on our estimates of the extent that utilities’ coal-fired units would be considered for various options to achieve the NO, emis- sion requirements in each of our acid rain control scenarios.) Low-NO, combustion is not really a single technology, but rather a vari- ety of applications of related technologies-for example, low-NO, burn- ers and over-fire air, used independently or in combination. Questionnaire responses and discussions with utility officials revealed that some utilities consider certain low-NO, combustion applications to be currently available conventional technology, at least on newly con- structed boilers. Some utilities even indicated they would consider low- NOXcombustion a clean coal technology when applied to one of their units, while another application at a different unit would be considered Page 19 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Chapter 2 Few Utilities Plan to Use Clean Coal Technologies, but Many Would Consider Them to Meet Acid Rain Control Mandates a conventional technology. Also, more than for any other clean coal technology, utilities cited a high level of confidence in low-NO, combus- tion as a reason for considering the technology for emission reduction. Some utility representatives indicated that this high confidence in low- NO, combustion was based on their experience with using the technol- ogy on some boilers. We asked the utilities in our questionnaire survey whether they Potential Use of Clean expected to experience demand growth by the year 2000 and, if so, how Coal Technologies to they would meet that growth. Nearly all of the utilities indicated that Meet Increased they did expect some increase in the demand for electricity; however, the use of clean coal technologies was not the most often cited option in Demand for Electricity expanding their capacity to help meet this growth. Table 2.1 shows the options we asked utilities to consider in answering this question. As indicated, 70 percent of the utilities with coal-fired units would be likely to rely on demand management and/or conserva- tion to meet demand growth-this was the most frequently checked option. The second and third most frequently checked options were to purchase power from a domestic provider and to build a new oil- or gas- fired unit. Building a new coal-fired unit using clean coal technology would be considered by 45 percent of the utilities and was the fourth most cited option. Twenty percent of the utilities would consider using clean coal technologies to increase capacity at existing units. (Some clean coal technologies are designed to replace a major portion of an existing plant, such as a boiler, with new power-generating equipment to extend the plant’s life, increase its capacity, and reduce its emissions.) Page 20 GAO/RCED-90-165 Potential Use of Clean Coal Technologies :, chapter 2 Few Utilitiee Plan to Use Clean Coal Technologies, but Many Would Coneider Them to Meet Acid Raiu Control Mandates Table 2.1: Options That Utilities With Coal-Fired Unite Would Consider to Meet Percent of utilities that Demand Qrowth Option would consider option0 Gly on demand management and/or conservation 70 Purchase power from a domestic provider 68 Build a new oil- or gas-fired unit 60 Build a new coal-fired unit using clean coal technology -_____ 45 Increase output at existing unit(s) that are operating below capacity 43 Increase capacity at existing units by means other than clean coal technology 33 Purchase power from a foreign supplier 21 Build a new coal-fired unit without &an coal technology 20 US;~CI~ coal technology to increase capacity at existing 20 aThe total exceeds 100 percent because many utilities indicated that they would consider more than one option. The numbers represent the percent of utilities that would be “very likely” or “fairly likely” to consider these options. The maximum sampling error is 6 percent. Although our questionnaire did not ask utilities to indicate why they would consider certain options over others in meeting demand growth, officials at some of the utilities we visited said that they expected demand growth in the next decade to be generally in the form of peaking demand (temporary periods of high demand) that would generally be met by purchasing power, construction of additional gas-fired turbines, and greater utilization of existing facilities. They indicated that there would be little need for construction of new coal-fired base-load capacity until after the year 2000. A June 1989 DOE report also concluded that there may be only limited need for construction of new coal-fired power plants through the year 2000.:’ The report cited excess nuclear- and coal-fired generating capac- ity, high capital costs of new plant construction, and relatively slow growth in electric power demand as reasons for this forecast, The DOE report indicated that, instead of constructing new coal-fired power plants, utilities are expected to meet demand growth by increasing use of existing plant capacity, purchasing electric power from non-utility sources, constructing gas-fired units, and refurbishing aging units to extend their working lives. An August 1987 DOE report also indicated that some utilities are planning to operate their older generating units beyond the normal retirement date and to bring an increasing number of “Annual Outlook for U.S. Electric Power 1989 (DOE/Energy Information Administration, June 26, lB39). Page 21 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Chapter 2 Few Utilities Plan to Use Clean Coal Technologies, but Many Would Consider Them to Meet Acid Rain Control Mandates gas turbines on line within the next decade.4 Other options include energy conservation and better load management. According to the DOE reports, these strategies would enable utilities to meet moderate or temporary demand increases with limited capital investment. For example, gas-fired units can be installed in relatively small increments of power and can be cost-effective even when operated intermittently. In contrast, the large scale and high capital cost of con- ventional coal-fired units makes them cost-effective only for continuous power generation. Our questionnaire responses show that while few utilities have current Conclusions plans to use clean coal technologies, as many as one-half to three- fourths of the utilities would consider using them on their coal-fired units to meet acid rain control mandates. Presently, utilities would be more inclined to use clean coal technologies to meet NO, emission requirements than SO, requirements. Given additional time to meet acid rain control mandates, utilities would probably make greater use of the technologies to meet SO, emission requirements. This appears to stem from utilities’ high level of confidence in low-NO, combustion, one of the clean coal technology options for NO, reduction, and utilities’ under- standing that clean coal technologies for SO, reduction are not yet proven but may be available in time to meet the long-term scenario requirements. In addition to potential acid rain legislation, increasing demand for power might stimulate the adoption of clean coal technologies in repowering applications and new construction. However, our question- naire responses indicate that utilities do not view clean coal technology as a primary tool for meeting increased demand in the near future. While the results of our questionnaire indicate that enactment of acid rain legislation will encourage utilities to consider clean coal technolo- gies, they should not be considered as indicative of the extent to which clean coal technologies or other conventional emission control options would be actually used at utilities’ coal-fired generating units. In responding to our questionnaire, utilities identified clean coal technolo- gies and other options they would consider in response to our emission control scenarios, but their responses did not necessarily represent firm 41nventory of Power Plants in the United States 1986 (DOE/Energy Information Administration, Aug. 11, 1987). Page 22 GAO/RCED-96-166 Potential Use of Clean Coal Technologies chapter 2 Few Willties Plan to Use Clean Coal Technologies, but Many Would Consider Them to Meet Acid Rain Control Mandates plans-nor a definite commitment-to use the technologies and other options. Furthermore, many other factors will affect how widely the technologies are actually adopted. As discussed in chapter 3, clean coal technologies have not been adequately demonstrated and may not be commercially available in time to meet the utilities’ needs. Page 23 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 3 Clean Coal TechnologiesAre Unlikely to ’ Contribute Significantly to Acid Rti Reduction in the Next 15 Years Although acid rain control legislation may encourage utilities to give much more consideration to using clean coal technologies, uncertainty about their commercial availability-which is contingent upon success- ful demonstrations-is a key factor in determining when the technolo- gies could be widely deployed. Many of the emerging technologies may be commercially available between the mid-1990s and 2000, however, it may take another 5 to 10 years beyond the date of commercial readiness for the technologies to penetrate the market. Consequently, at their cur- rent pace of development and anticipated time tables for widespread deployment, emerging clean coal technologies will probably not contrib- ute significantly to the reduction of acid rain-causing emissions during the next 16 years, Utilities’ willingness to invest in clean coal technolo- gies could also be influenced by their concerns about whether they will be able to recover the technologies’ costs and about what emissions stan- dards the technologies will need to achieve. Although DOE and the coal industry believe emerging clean coal technol- Technologies Need to ogies offer the promise of being both less costly and environmentally Ek Successfully superior to conventional technologies, the new technologies have gener- Demonstrated ally not been successfully demonstrated on a commercial scale. Several of the utilities we visited expressed concerns about the technical feasi- bility and cost effectiveness of many of the new technologies and about whether they will be able to achieve expected emission reductions. Industry spokesmen and reports have stated that a technology is not successfully demonstrated until it has undergone multiple commercial demonstrations addressing a wide range of boiler designs, fuel types, and other operating variables. According to industry officials, potential users of the technologies need a base of information and experience, gained through multiple demonstrations, upon which to judge costs, effi- ciency, reliability, and other issues when comparing clean coal technolo- gies with conventional alternatives for reducing emissions. In this regard, about 41 percent of the utilities with coal-fired units in our ques- tionnaire survey indicated that having multiple demonstrations of the technologies that seemed most promising was the best way to promote the commercialization of clean coal technologies, According to utility and coal industry estimates, the new technologies are expected to be available for commercial order between 1995 and 2000. The less complex technologies, such as sorbent injection, are expected by the mid-1990s, and the more complex technologies, such as Page 24 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Chapter3 Clean Coal Technologhs Are Uulilcely to ContrIbute Signlfkantly to Acid Raiu Rmhction in the Next 16 Years pressurized fluidized-bed combustion, are expected by 2000. These esti- mates generally assume that DOE’S CCT Program, which is a major effort to expedite the demonstration of clean coal technologies on a commer- cial scale, will be fully funded and that the selected demonstration projects will be completed successfully and on schedule. As of April 30, 1990,38 projects were in the CCT Program, including 16 that were being funded under cooperative agreements, 3 that were awaiting the completion of a 30-day congressional review period before their cooperative agreements could take effect, and 19 that were in vari- ous phases of DOE’S process for formalizing cooperative agreements with the project sponsors. Only 3 of the funded projects had progressed to the demonstration (operation) phase and none were completed. In our March 1989 report on the CCT Program, we pointed out that DOE experienced difficulties in negotiating cooperative agreements with round-one project sponsors, which delayed completing agreements for five projects by up to 9 months and resulted in the termination of nego- tiations for three projects.’ The delays were primarily attributable to the time it took to resolve sponsors’ problems with project financing and other business arrangements, including proprietary data rights, Recently, a round-one replacement project was withdrawn from the pro- gram because of the sponsor’s problems in completing agreements with project participants. DOE has also experienced delays of 4 to 6 months in completing round-two agreements, and one project withdrew because of financing and other problems. In December 1989, the Secretary of Energy directed DOE to streamline its review and approval process for completing cooperative agreements. The Secretary stated that the Department’s goal was to have the agreements completed within 1 year after a project is selected. Our March 1989 report and April 1989 testimony on the CCT program also pointed out that seven of the nine funded round-one projects were experiencing coordination, equipment, and financing problems that caused delays in completing project phases, cost overruns, and proposed project modifications.2 We stated that DOE had extended the demonstra- tion completion date for two of the projects and expected to extend the demonstrations of other funded projects that were behind schedule. ‘Fossil Fbels: Commercializing Clean Coal Technologies (GAO/RCED-89-80, Mar. 29, 1989). “Status of DOE-Funded Clean Coal Technology Projects (GAO/T-RCED-89-25, Apr. 13, 1989). Page 26 GAO/RCED-96-166 Potential Use of Clean Coal Technologies Chapter 8 Clean @aI Tecbnologles Are Unlikely to Contribute Significantly to Acid Rata Reduction in the Next 15 Years These problems could delay the successful demonstration of the technol- ogies. In fact, two of the funded round-one projects dropped from the program (in June 1989 and January 1990) because of financing problems. Therefore, industry estimates of the time frame when the new technologies should be commercially available may be optimistic for some technologies. Also, although the objective of the round-two CCTProgram was to place greater emphasis on demonstrating technologies that are capable of achieving significant reductions of SO, and/or NO, emissions, some of the round-two demonstration technologies may have limited potential for reducing nationwide acid rain-causing emissions. Our March 1990 report pointed out that 9 of the 16 round-two projects are to demon- strate technologies that were rated weak by DOE’S evaluation Board in their potential to reduce nationwide SO, and/or NO, emissions when used at existing coal-burning facilities.” Given the current status of the projects in the CCT Program, and in view of the nation’s current budget constraints, we suggested that the Congress may want to have DOEdelay the final two rounds of the program until it obtains additional demon- stration results from projects already in the program. This would allow DOEto target the remaining $1 billion that has already been appropri- ated for rounds four and five of the program to the more promising technologies and help ensure that program funds are used effectively and efficiently. Clean coal technologies would need to be widely deployed in order to Widespread achieve significant reductions in nationwide emissions from coal-fired Deployment May Take generating units. According to DOEand utility and coal industry esti- 5 to 10 Years After mates, it may take 5 to 10 years or more for the technologies to pene- trate the market once they are proven and available for commercial Technologies Are order. This time span is needed for utilities to develop confidence in the Proven new technologies and to provide the necessary lead time for ordering, designing, manufacturing, obtaining, and installing the technologies. Utilities are apt to move cautiously in applying the new technologies. For example, according to industry officials and reports, utilities will likely test the performance of a successfully demonstrated technology on a single unit before installing it on other units. Utilities will also need time to obtain the necessary state and federal permits and regulatory “Fossil Fuels: Pace And Focus of the Clean Coal Technology Program Need to Be Assessed (GAO/ -90 _67, Mar. 19, 1990). Page 26 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter a Clean Coal Technologies Are Unlikely to Contribute Signlflcantly to Acid Rain Reduction in the Next 15 Years approvals at the powerplant sites where the new technologies will be used. The demand for the new technologies will also affect their future mar- ket penetration. Currently, utilities’ emission control options are limited to conventional processes, including flue gas scrubbing, coal switching, and coal cleaning. Although these processes have limitations, they offer advantages to the user that clean coal technologies cannot yet offer- they are commercially tested and available, and they can reduce emis- sions. Once clean coal technologies are available for commercial order, utilities will have a broader range of emission control and power genera- tion options to choose from, but the demand for the technologies will be based on their efficiency and reliability, cost effectiveness, and emission reduction capability in comparison with conventional options. Utilities are concerned about whether they will be allowed to recover Other Concerns That the costs of emerging clean coal technologies and what emission stan- Could Affect Utilities’ dards the technologies will need to achieve. Willingness to Invest in Clean Coal Technologies Uncertainty of Cost and Although DOEexpects that the installation and operating costs for clean Cost Recovery coal technologies generally will be lower than conventional options, the costs of the new technologies have not yet been determined. This places a utility that chooses to use a clean coal technology at greater risk than one that decides on a conventional technology or option that has more established and predictable costs. The importance to utilities of choosing the lowest-cost option was reflected in their responses to our question- naire survey. About one-half of the respondents with coal-fired units indicated that lower capital, operating, and maintenance costs would be primary reasons to invest in clean coal technologies over conventional alternatives. Officials at one of the utilities we visited said that they would consider all available options but would only select a clean coal technology if it was shown to be the lowest-cost option. Utilities are also concerned about the uncertainty of recovering invest- ment in clean coal technologies. A utility’s decision to invest in a clean coal technology would need to satisfy the same criteria as any other Page 27 GAO/RCED-96-166 Potential Use of Clean Coal Technologies Chapter 3 Clean Coal Technologies Are Unlikely to Contribute Significantly to Acid Rain Reduction in the Next 15 Years investment in the generating plant for the public utility commission to authorize the utility to recover the cost of bringing the new technology on line. The utility would need to show that such investment was a pru- dent and cost-effective decision. Some utility officials we met with expressed concern that utilities planning to use emerging innovative clean coal technologies in place of conventional technologies face a greater risk that their costs may not be approved for recovery. One offi- cial believed that utilities demonstrating innovative clean coal technolo- gies should be allowed to receive an incentive rate of return on their investment that would be more commensurate with the higher risk taken for using unproven technologies in place of conventional technolo- gies to reduce emissions. Only a few states have developed specific incentives to allow utilities to recover demonstration costs for clean coal technologies, and none has specifically approved a cost recovery policy for commercial applications of the technologies. At least two states (Florida and Ohio) have devised programs to allow for an accelerated recovery of demonstration costs. Indiana has passed a law that allows utilities engaged in clean coal tech- nology demonstration projects to obtain preapproval of the prudency of expenditures and to qualify for accelerated depreciation and recovery of preconstruction costs, among other things. About 27 percent of the utili- ties with coal-fired units in our questionnaire survey indicated that increased flexibility by public utility commissions on cost recovery would be an incentive to invest in clean coal technologies. Concerns About Utilities are also concerned about the emission standards that existing Applicable Emission generating units will be required to meet if they install clean coal tech- nologies on the units and about whether the new technologies will be Standards able to achieve the required standards. EPAregulations require that fossil fuel-fired steam generating units of more than 73 megawatts that began construction after August 17,1971, must meet New Source Performance Standards (NSF'S)for controlling emissions.4 Generating units that began construction before that date are exempt from these standards but may become liable for meeting them if the units are modified. Generally, an exempt unit must meet NSF% 4New Source Performance Standards were established by EPA under the Clean Air Act Amendments of 1970, Pub. L. No. 91-604,84 Stat. 1676 (1970). Pursuant to the Clean Air Act Amendments of 1977, Pub. L. No. 96-96,91 Stat. 686 (1977), EPA promulgated more stringent regulations for fossil fuel-fired steam generating units of more than 73 megawatts that began construction after September 18, 1978. Page 28 GAO/RCED-96-166 Potential Use of Clean Coal Technologies Chapter 3 Clean Coal Technologiee Are Unlikely to Contribute Significantly to Acid Rain Reduction in the Next 16 Yeara if the unit’s physical structure or operation is changed and results in increased emissions, or if a substantial portion of the unit is replaced at a cost that exceeds 60 percent of the cost of building a comparable new unit. According to utility industry spokesmen, utilities are concerned that EPA may require previously-exempt generating units to meet NSF%and/or the emissions limitation requirements of the Prevention of Significant Dete- rioration (PSD)Program if the units are modified to demonstrate clean coal technologies.” Although DOEhas reported that emerging clean coal technologies offer the promise of being environmentally superior to con- ventional technologies, utilities are concerned that some technologies may not be able to achieve NSPSand PSD requirements. This concern over modifying existing units has been heightened by an October 14, 1988, EPAdetermination that the Wisconsin Electric Power Company would have to meet NSPSand PSD limitations at several units it planned to refurbish. Although this case does not involve clean coal technology, the utility industry views it as a potential precedent for requiring existing units refurbished with clean coal technologies to meet NSPSand PSD limitations. According to DOE and utility industry spokes- men, this concern could discourage some utilities from participating in the CCT Program or demonstrating clean coal technologies without fed- eral assistance. DOE advised a congressional subcommittee in August 1989 that several industrial participants in the CCTProgram had indi- cated that they would abandon their demonstration projects if it appeared that their efforts would become subject to NSPS and PSD requirements. According to DOE, uncertainty over the outcome of this case contributed to a first-round project being withdrawn from the CCT Program. The Wisconsin Electric Power Company appealed EPA’Sruling, and on January 19, 1990, a federal appeals court affirmed EPA’Sdecision that the company’s power-plant in question was subject to NSF%The court also held that EPAhad not properly supported its decision to impose PSD requirements on the units in question, The case was returned to EPAfor further consideration. “The PSD Program, which was established pursuant to the 1977 amendments to the Clean Air Act, can impose more stringent emission limitations on newly constructed or modified generating units than NSPS to prevent the deterioration of air quality. Page 29 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Chapter 3 Clean Coal Technologies Are Unlikely to Contribute Significantly to Acid Rain Reduction in the Next 16 Years EPAgranted an exemption from NS?Sand PSDrequirements in February 1989 for a powerplant unit demonstrating a clean coal technology and has indicated that it will continue to consider such exemptions on a case- by-case basis. However, the utility industry is concerned that generating units that are modified to demonstrate clean coal technologies will be subject to the more stringent emission standards after the demonstra- tions end, even if the technologies are removed. There is also concern that the EPAexemption does not protect a utility from legal action that private citizens might take under the Clean Air Act if emission levels should increase at the generating unit during or after the demonstration. The administration’s proposal to amend the Clean Air Act includes pro- visions that would exempt clean coal technology demonstration projects from meeting NSPSand PSDrequirements as long as emission levels do not increase above the generating unit’s predemonstration emission level. Utility officials are also concerned about whether clean coal technolo- gies used in new plant construction will be able to achieve NSPSor, if applicable, the best available control technology emission requirements of the PSDprogram. In addition, since the new technologies are still being developed, there is uncertainty as to what technologies will be used to establish the best available control technology emission requirements. Officials at a utility that had plans to demonstrate a clean coal technol- ogy on an existing generating unit told us that they experienced difficul- ties in negotiating emission levels that the unit would be required to attain. They said that the state and federal environmental agencies attempted to apply the best available control technology emission requirements of the PSDprogram to this unit, but the utility argued that the technology was experimental and there was no similar technology to use as a basis for establishing more stringent emission levels than those required under NSPS.According to these officials, before this issue was resolved, the utility cancelled its demonstration plans because of finan- cial reasons. This demonstration proposal had been selected as an alter- nate project under round one of DOE'SCCTProgram. We asked the utilities in our questionnaire survey to identify up to three Utilities’ Views on incentives from a list of choices that we provided that would most Incentives for Using encourage them to invest in a clean coal technology. The incentives that New Techn+ogies were indicated most often involved cost considerations, as shown in table 3.1. Page 30 GAO/RCED-30-166 Potential Use of Clean Coal Technologies Chapter 3 Clean Coal Technologies Are Unlikely to Contribute Signifkantly to Acid Rain Reduction in the Next 15 Years Table 3.1: Incentives That Would Most Encourage Utilities With Coal-Fired Unlta Percent of utilities that to Invest In Clean Coal Technologies would be motivated by Incentive incentivea Lower capital costs than conventional technologies 53 Lower operating and maintenance costs than conventional technoloaies 42 Extended compliance dates, if acid rain control legislation is enacted, for utilities using clean coal technology 35 Relaxed emission reduction targets, if acid rain control --- legislation is enacted, for utilities using clean coal technology 30 Public utility commission flexibility on cost recovery 27 Additional commercial demonstrations 21 Tax credits - 17 Less stringent NSPS standards for utilities using clean coal technology .~~_. ___.. 14 Government cost-sharina 15 Government grants .---. 10 Other 7 aThe total exceeds 100 percent because utilities were asked to select up to three incentives. The maxi- mum sampling error is 6 percent. Next to lower capital, operating, and maintenance costs, utilities indi- cated that favorable treatment for using clean coal technologies to meet acid rain control requirements and for recovering costs would enhance the likelihood that they would invest in a new technology. As previously mentioned, the administration’s acid rain control proposal provides a 3- year extension to meet emission requirements for generating units that will be repowered with a qualifying clean coal technology. The adminis- tration’s proposal also includes other regulatory incentives to promote the development and use of clean coal technologies that limit power plant emissions. About 21 percent of the utilities would be encouraged to invest by more commercial-scale demonstrations of the technologies. Only 14 percent would be encouraged by less stringent NSPS standards. A few utilities indicated that direct government financial assistance in the form of grants, cost-sharing, or tax credits would provide added incentive for them to invest in a clean coal technology. In commenting on the results of our review, DOE officials said that the Views of DQE Officials emissions trading concept in the proposed legislation to amend the Clean Air Act would provide an economic incentive for some utilities to reduce their powerplants’ emissions as much as possible below the limitations Page 31 GAO/RCED-!MJ-165 Potential Use of Clean Coal Technologies I Chapter 3 Clean Coal Technologies Are Unltkely to ContrIbute Significsmly to Acid Rain Reduction in the Next 16 Years by using the cleanest technologies available so that they could accumu- late emission credits that could be used to expand their systemwide capacity or to sell to other utilities that may not be able to meet emission limitations. The officials indicated that the emissions trading concept could provide an additional incentive for utilities to adopt clean coal technologies and that if the utilities had known about this concept before completing our questionnaire, some may have responded differ- ently to the options they would consider for reducing their emissions. Emerging clean coal technologies have not been proven successful on a Conclusions commercial scale. As a result, their technical feasibility, cost effective- ness, and emission control capability relative to conventional options have not been established. Although industry estimates indicate that many of the new technologies should be proven and available for com- mercial order by the mid- to late-1990s, this time frame could be some- what optimistic based on the problems and delays experienced under DOE’sCCTProgram in formalizing cooperative financial assistance agree- ments with project sponsors and completing funded demonstration pro- ject phases. Five projects under the CCTProgram were withdrawn during the cooperative agreement formalization process, and two of the funded demonstration projects were dropped from the program because of financing and other problems. Utilities’ decisions to invest in emerging clean coal technologies will depend in large part on their confidence in how the new technologies will compare to conventional technologies and other options, whether they will be able to recover their investment costs, and the emission standards they will be required to meet. Because of the time needed for demonstration and deployment, emerg- ing clean coal technologies may play only a limited role in reducing acid rain-causing emissions from coal-burning power plants in the next 15 years. However, once the new technologies are successfully demon- strated and widely deployed, they could play a major role in addressing the acid rain problem. Page 32 GAO/RCED-99-165 Potential Use of Clean Coal Technologies Page 33 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix I Description of Clean Coal Technologies This appendix provides a brief description of emerging clean coal technologies. Coal-preparation and-cleaning processes upgrade the fuel by removing Coal Cleaning and sulfur from coal before the coal reaches the boiler. Physical and chemi- Upgrading cal cleaning are the two most common means of coal upgrading. Physical cleaning removes a portion of the ash and sulfur, and chemical cleaning is needed to remove organically bound sulfur and inorganically com- bined sulfur. The extent to which the ash and sulfur can be reduced depends on the characteristics of the coal and the way it is processed. The benefits of coal cleaning and upgrading go beyond emission reduc- tions. In some cases, the lowered sulfur and ash reduces scrubbing and waste disposal costs and mitigates the accumulation of ash in the boiler. The enhanced heating value and improved consistency benefit boiler operation and performance. Advanced flue gas desulfurization technologies are designed to remedy Advanced Flue Gas many of the problems associated with conventional scrubbers. With con- Desulfurization ventional scrubbers, sulfur oxides are removed from flue gas by “scrub- (Scrubbing) bing” the gas with an alkaline slurry. The advanced technologies include a process that has the potential to produce a salable byproduct rather than waste sludge and another process that, in addition to SO, reduc- tions, achieves NO, reductions. Sorbent injection includes a variety of proposed technologies for inject- Sorbent Injection ing dry sorbentsl into the furnace or into flue gas ducts to remove sulfur dioxide. Dry sorbent processes are expected to be less costly than scrubbers. The limestone injection multistage burner is expected to reduce sulfur dioxide by injecting dry limestone sorbent into the boiler above the burners. The calcium sulfate that forms travels through the boiler and is removed along with the fly ash in the existing particulate removal equipment. NO, formation is controlled by staged combustion. ‘Sorbents are chemical compounds which are used to react with pollutants to form a solid which is then removed from the system. Page 34 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix I Description of Clean Coal Technologies In-duct sorbent injection avoids the corrosion problems associated with furnace sorbent injection because it bypasses the furnace. A dry sorbent is injected into the flue gas where it combines with sulfur dioxide to be captured in the removal equipment. Low-NO, combustion involves redesigning burners or rearranging air Low-NO, Combustion flow through the furnace to reduce flame temperature, which reduces the formation of nitrogen oxides. Two low-NO, combustion techniques, low-NO, burners and over-fire air, can be used independently or in combination. Low-NO, burners reduce NO, emissions by promoting a more gradual mixing of fuel and air to reduce flame temperature, and they use a richer fuel-air mixture to reduce oxidation of nitrogen in the fuel. Over-fire air reduces NO, for- mation by removing some of the excess air from the burner flame zone and reintroduces it later in the combustion area, away from the high temperature flames. Other low NO, combustion techniques include fuel reburning and fuel biasing (readjusting the fuel mixture to different sections of the furnace to control NO, formation). Post-combustion NO, control may potentially achieve greater NOXemis- Post-Combustion NO, sion reductions than low-NO, combustion. The two primary approaches Control in this category are selective noncatalytic reduction and selective cata- lytic reduction. Selective noncatalytic reduction involves injection of nitrogen com- pounds into the flue gas, which causes NO, to be reduced to water and nitrogen. The selective catalytic reduction process is similar except that reactions take place in the presence of a catalyst. Selective catalytic reduction promises greater NO, reductions than selective noncatalytic reduction but at greater cost. Gas cofiring and reburning refer to processes that inject natural gas into Gas Cofiring/ the furnace to reduce SO, or NO, emissions. Reburning 1 In cofiring applications, natural gas is injected into the furnace along with pulverized coal, permitting a reduction in SO, emissions to the extent that less coal is being burned. Application of the technology is Page 35 GAO/RCED-90-165 Potential Use of Clean Coal Technologies , Appendix I Description of Clean Coal Technologies dependent upon the type of boiler in place and requires additional con- trols and maintenance. In gas reburning, fuel is bypassed around the main combustion zone and injected above the main burners to form a reducing zone in which NO, is converted to reduced nitrogen compounds. About 15 to 20 percent of the fuel is injected into this reburning zone. Combined SO,/NO, proposed. One approach would combine SO, and NO, removal by inject- Control ing a sorbent into the flue gas to reduce SO, and injecting ammonia into the boiler to control NO, formation. In another approach, heated flue gas and a small amount of ammonia would be combined in a reactor, converting the NO, to nitrogen and water vapor. The gas would then pass through additional processes in which SO, is ultimately converted into a saleable sulfuric acid by-prod- uct. Because no sorbents are used, no waste by-products would be formed. Atmospheric with a sorbent in a heated bed. The bed is fluidized-or held in suspen- Fluidized-Bed sion-by injecting air, causing the mixture to agitate much like a boiling Combustion fluid. During combustion, the coal reacts with the sorbent to reduce SO, emissions, and the low operating temperature reduces NO, formation. Another approach to fluidized-bed combustion technology is pressuriza- Pressurized Fluidized- tion of the furnace. Performing much like a pressure cooker, pressurized Bed Combustion fluidized-bed combustion produces steam more efficiently than an atmospheric fluidized-bed combustion unit. The pressurized system operates at higher pressures and therefore can be much more compact than the atmospheric system. Pressurized fluidized-bed combustion, which operates in a combined cycle configuration-using both a steam turbine and a combustion turbine-offers the potential for greater fuel efficiency. Slagging combustion technology uses cylindrical cyclone combustors Slagging Coltnbustion that are mounted on the furnace, replacing conventional burners. The combustor mixes coal, sorbent (limestone), and air; provides ignition; Page 36 GAO/RCED96-166 Potential Use of Clean Coal Technologies Appendix I Description of Clean Cd Technologies and removes ash before discharging the combustion products to the boiler. Sulfur oxides are controlled by limestone injection into the com- bustor, and NO, is controlled by staged combustion. - The integrated gasification, combined cycle process centers around two Integrated elements. First is a gasification plant which converts coal into combusti- Gasification, ble gas; other equipment purifies the gas. Second is a combined-cycle Combined Cycle power plant in which the gas fuels a combustion turbine whose hot exhaust gases are used to generate steam which drives a steam turbine. Page 37 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix II Sampling Methodology For our questionnaire survey, we collected information on utilities’ cur- rent plans to use clean coal technologies on specific fossil fuel-fired gen- erating units and the options they would consider for these units to meet the SO, and NOXemission reduction requirements of our four acid rain control scenarios. Our sampling approach enabled us to apply the results of our questionnaire responses to the universe of generating units and associated utilities from which the sample was drawn, This appendix describes how we selected our sample of utilities and generating units to include in our questionnaire survey. Working with the Energy Information Administration’s computer-gener- ated 1987 Annual Electric Generator Report, we identified 1,503 fossil- fueled (coal-, gas-, and oil-fired) generating units in the United States that have a name plate capacity of at least 75 megawatts. The 1,503 units were operated by 190 utilities. We limited our questionnaire sur- vey to generating units with at least 75-megawatt capacity because the larger units would be more likely to use clean coal technologies. To select our sample generating units, we first identified three groups, or universes, of utilities-those with coal-fired units, those with gas- fired units, and those with oil-fired units. Utilities that used more than one of these types of fuel were included in more than one universe. We then used a stratified two-stage cluster sampling methodology to select 138 of the 190 utilities and 480 of the 1,503 fossil-fueled generating units to include in our questionnaire survey. The 480 units included 307 coal-fired units, 99 gas-fired units, and 74 oil-fired units. For example, to sample 307 of the 876 coal-fired generating units in our universe, we first identified 150 utilities that had one or more coal-fired units. We then divided this universe into two groups, or strata. The first stratum consisted of utilities that had many (nine or more) coal-fired units, and the second stratum consisted of utilities that had fewer (eight or less) coal-fired units. We selected all of the utilities in the first stra- tum (41 out of 41) and then randomly selected two to five generating units for each of these utilities. We confined our sample to no more than five units per utility to limit the utility’s work in responding to our ques- tionnaire. We randomly selected utilities in the second stratum (65 out of 109) and then randomly selected one to four generating units for each of the 65 selected utilities. We followed a similar procedure in selecting utilities with gas- and oil-fired generating units and in selecting units operated by those utilities to include in our questionnaire survey. Page 38 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix II sanlpling Mt3thodology A comparison of the total number of utilities and generating units in each stratum and the number included in our sample from each stratum are shown in table II. 1. Table 11.1:Total Number of Utilities and Oeneratlng Units in Each Stratum of Number of generating GAO’s Sample and the Number Sampled Number of utilities units Stratum in stratum sampled in stratum sampled coal (9 or more units) 41 41 532 158 Coal (1 to 8 units) 109 65 344 149 Oil (5 or more units) 14 14 112 43 Oil (1 to 4 units) 34 20 70 31 Gas (8 or more units) 21 21 320 64 Gas (1 to 7 units) 45 20 125 35 Total a a 1.503 480 aThese numbers total more than 190 and 138 because utilities that used more than one type of fuel were included in more than one stratum. We received responses from 130 (93 percent) of the 138 utilities that were mailed a questionnaire. The responses included information on 450 (94 percent) of the 480 generating units in our sample. Although oil- or gas-fired generating units can benefit from some clean coal technologies, our questionnaire survey indicated that utilities would be primarily interested in the technologies for their coal-fired units. We have therefore focused the discussion of our questionnaire survey in this report on utilities’ responses for coal-fired units. We received infor- mation from 99 utilities on 291 (94 percent) of the 307 coal-fired units in our sample. The responses were analyzed to develop estimates for the universe of 75megawatt-and-larger coal-fired generating units and asso- ciated utilities from which the sample was drawn. Because we reviewed a statistical sample of coal-fired generating units, each estimate developed from the sample has a measurable precision, or sampling error. The sampling error is the maximum amount by which the estimate obtained from a statistical sample can be expected to differ from the true value we are estimating. Statistical estimates were devel- oped at the 95- percent confidence level and are shown with the lower and upper confidence limits (see app. IV and V). This means that 19 out of 20 times the sampling procedure we used would produce a confidence interval containing the true value of the characteristic we are estimating. Page 39 GAO/RCED-96-166 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’s Questionnaire Sent to Utilities UaltedShtuGeaed AecoaatlagOfftcs Survey of Utilities’ Views of Clean Coal Technologies Ih’TRODUCf’f ON The U.S. Ckneml Accounting Office (GAO). an agency Fart 1 of this questiomtairespecifically addressesthe unit which conductsstudiesfor the Congmss.is surveying identified on the label below: patts2 and3 require utilities to obtain their views aboutclean coai naponaa for your entire system. technologies.The Subcommitteeon Energy andPower, HouseCommitteeon Sncrgy and Commerce.a&cd us to All answersfrom individual utilities wilt be kept detcmtincthe extent to which utilities would consider confidential. Your responseswilt be combii with usingckan coat technologieswith andwithout acid rain thoseof other utilities and mportcdin summaryform. No control legislation. We are also intcmstedin obtaining individual utility’s rcsponscswill hc idcmificd. utilities’ perspectiveson demandgmwth andincentives for commercialking clean coat technologies. Please.tctum the completedquestiomtaitein the enclosed self-addressed.postage-paidenvelope. Mailing your We am collecting information from utilities on possible mply within 2 weeksof receipt will help us avoid costly plansfor using clean coat technologieson selectedcoal-. follow-up mailings. lf the envelopehasbeenmisplaced. gas-.and oil-burning units. The unit we have selectedat plcaacmail the completedquestiomraircto: your utility is: Carole Buncher U. S. GeneralAcc&uuningOffice 10 west JacksonBoulevard t-PLACEUNlTLABEL HERE) Fifth floor Chicago,Illinois 606tM If you have questionsaboutthe survey,pleasecall Ms. Buncheror Daniel Feehanat (312) 353-0514.Thank YOU for your cooperation. 1 Page 40 GAO/RCED-96-166 Potential Use of Clean Coal Technologies Appendix Ill Copy of GAO’e QueetIonnaire Sent to UtWiea CLEAN COAL TRCHNOLOGIRS For the purposesof this questionnaire,we are defting clean coal technologiesasemergingtechnologiesdesignedto reduceemissionsof sulfur dioxide (SO2) and/ornitrogenoxides (NOx) from fossil-fuel-firedunits. As you complete the questionnaire.considerthe following as clean coal technologies. l Coal cleaningand upgrading(e.g., ultratine and advancedflotation, physical, andchemical) l AdvancedFGD (e.g.. “dry” scrubbersand scrubbers with regenerablesorbent) 9Sorbentinjection l Low-NOx combustion l Post-combustionNOx control l Gascoiiting/n9nuning l CombinedSOuNOx contml l Atmosphericfluidixed bed combustion l Pmssurizedfluidixed bed combustion l Slagging combustion l Integratedgasification,combinedcycle Page 41 GAO/RCED-90-106 Potential Use of Clean Coal Technologies I Appendix Ill copy of GAO’s Questionmire Sent to UtWtit% PART 1.1: Backgmundinformation for the unit httifid on page 1 1. N~epl~cepadtyOnMw) w 2. Year of Mdal operation 19- (,%I., 3. Type of Puelprincipally used(Check one) IW 1.0 Bhminouswai 2. cl subbituminml5 coal 3. Cl Lignite wai 4.0 Amhracitewsl 5.0 NtUUralg8S 6. 0 Oil -distillate 7.0 Oil-&dual 8. cl Dual-AIed 9. Cl Other (Pfew spec@) 4. Average sulfur contentof principal fuel lbs so2/MMBttt ww 5. IS the unit equippedwith a SO2 and/orNOx emissioncontml device?(Check one) m 1. Cl SO2 control only 2.0 NOx contml only 3.0 SO2 ad NOx controls 4. q Neither SO2nor NOx controls 3 Page 42 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’s Questionnaire Sent to Utilities Part 13: Your utility’s cumnt plans on cleancoal tednology usefor this unit 6. Is your utility cwmtly planning to usea cleancd technologybcfon the year 2010 for the unit identifiedon page l? (Check one) (all l.n Yea 2.0 No __3 Skip to Page 6 3.cl lJnwttahl - Skip to Page 6 7. Which of the following clean coal technology(ies)is your utility planning to useon this unit? For the technology(ies)your utility is planning for this unit pleaseenter the year your utility plansto bring it into service. (Check “no” or “‘y&for each technology; for each technology you check *>es”. enter year) a-1 Use technology 11. Integratedgasifk-don. combii cycle 12. Other (Please specb) 8. Doesyour utility have officially approvedplansto use(any of) the clean coal teclmology(ies)checkfd in question 7 above? (Check one) Qm 1.0 Yes 2.0 No 4 Y Page 43 GAO/RCED-f@165 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’s Questionnaire Sent to Utilities 9. How muchof a role, if any. have eachof the following factoff played in your utility’s plans to usethe cleancoal technology(ies)?(C&k onefor each factor) rcw Littleor no Great role Moderaterole Somerole role FACTORS (2) (3) (4) (5) 1. Additional capacity needed 2. Cbmtt federalenvironmental RgUltUiOlt5 3. Anticipated federalacid rain eonttol legislation 4. Stateenvironmentalngulations 1 I- I I I 5. Lalxt andspace charactetistics 6. Age or condition Of CUmN boiler requite replacement I I I 7. Size of boiler I I I 8. Fuelcosts I 9. Re$~re~~~nstallation 10. Low operating andmaintenance COStS 11. Lowcapitalcosts 13. Wastemanagement 14. High level of confidprce in technology 15. Capital availability 16. Other (Pleare specifvJ Y Page 44 GAO/RCED-90-166 Potential Use of Clean Coal Technologies - Appendix III Copy of GAO’s Questionnaire Eknt to UtiBtiea PART 13: Effect of acid r&t control legislation on the marketpenetratkmpotuttial of clean coal technologies A numberof bills wetc intmducedin the 100thCongressthat would have mquiredudlities to ttduce SO2 andNOx emissions.Someof t&e bills ptovided for phased-incompliancedates,bubbling, etc. GAO hasdesignedfour hypotheticalacid rain cotttml scenariosbasedon thosebills. However,our scenariosdo not provide for phasingin or bubbling becausethey have beensimplified for purposesof analysis. Someof the questionsin this sectionate based on thesescenarios,which are as follows. l Scenada 1: Utilities am requiredto reducesystemwideSO2emissionsby 35 percentandNOx emissionsby 25 percentfrom 1980levels or to a floor of 1.0lb/Mh4Btu for SO2and0.6 lb/MMBtu for NOx-whichever approachis lessstringent-by the year 1997. l Scenario 2:Utilities am requited to reducesysmmwideSO2emissionsby 75 percentandNOx emissionsby 50 percent from 1980levels or to a Boor of 0.8 lb/MIvlBtu for SO2and0.4 lb/MMBtu for NOx-whichever approachis lessstringent-by the year 1997. - Scenado 3: Utilities am requited to reducesystemwideSO2emissionsby 35 percentandNOx emissionsby 25 percentfmm 1980levels or to a floor of 1.0WMMBN for SO2 and 0.6 lb/MMBN for NOx-whichever appmachis lessstringent-by the year 2004. l Scenario 4: Utilhies am requited to nducc systemwideSO2emissionsby 75 percentandNOx emissionsby 50 percentfrom 1980levels or to a floor of 0.8 1bMMBtu for SO2and 0.4 lbIMh4B~ for NOx-whichever approachis lessstringent--bythe year 2004. For eachquestionthat nfers to the.somarios,the soenarioswill be duplicatedin table form as follows for easy nference: Utilities mquiredto makethe following systemwidenductions from 1980levels sccMr& so2 NOx Deadline :. ’ 75% 3S%orto or to 0.8 l.Olb/MMBN lb/hlh4BN 25% 50% or to 0.6 0.4 WMMBN ib/hfhfBN 1997 3 35% or to 1.01bMMBN 25% or to 0.6 WMMBN 4 75% or to 0.8 WMMBN 50% or to 0.4 lb/MtvfBN The responsesyou provide to the questionsin Part 1.3shouldapply only to the unit identified on page 1 of this survey. However,in respondingto the questions,you may needto consideryour systemwideplans. 10. Hasyour utility explored emissioncontrol options,that may affect this unit, for meeting the requirementsof acid rain control legislation, shouldit be enacted?(Check one) QB 1. 0 Yes 2.0 No d Skip to page I I 6 Page 46 GAO/RCED-90-166 Potential Use of Clean Coal Technologies . Appendix III Copy of GAO’s Questionnaire Sent to Utilities 11. For e8ch8cc.twio.what option@),if any, would your utilhy most twiously coruidef employing on this unit to meet the SO2 and NOx ttxydmnentsl (Check ot lea one option fir achlevlngSO2reductionsand at least oneopt&n jiw achlevlng NO% reductlotu u&r each scetrdo) *b-l w-l Udlider requiredto makethe following systemwidereductionsfrom 1980levels scenario so2 NOx Deadline : 35% or 75% or to 0.8 1.0lb/MMBtu 1bMtvlBh1 50% or 25% or tu to 0.6 0.4 WMh4Btu lb/MMBtu 1997 3 35% or to 1.01MklMBtu 25% or to 0.6 lb/MhIBtu 4 7S% or to 0.8 1WMMBtu 50% or to 0.4 lbMME3tu Scanart 1 Scanarlo 2 NOTE: If your utility is nut seriously considering using P clean coal technology on this unit (in, did not check option 6 in any columnr), SKIP TO QUESTION 15 7 Page 46 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’s Questionnaire Sent to Utffltier 12. UyarindicatedInthsprrcsdingquestionthetyourutilitywouldrrioudyconriderwinprtlurr~~~ technology, pleoa imiicate below w/&h cleancoal mgy(ies) that ia. (For each scemrb@r whfch you checked opdon 6 ln the preceding question, check that technology(les) which your udllty would most serlouriy consfder usfng) 6lm w1m Udlitica tcquircd tu makethe following systemwidereductionsfrom 1980levels Scenorfo so2 NOx Deadline 35% or to 1.Olb/?vMBtu 25% or to 0.6 lb&lMBtu 1997 : 75% or to 0.8 lbMh4Bt-u 50% or to 0.4 lb/MMBtu 3 35% or to 1.0lb/MMBtu 25% or to 0.6 lb/MMBtu ;E 4 75% or to 0.8 lb/MhIBtu 50% or to 0.4 Ib/MMBtu mo4 TECHNOLOGIES 1. Coal clcardngand upgrading 2. AdvanwdFGD 3. Sorbentinjection 4. Low-NOx combustion 5. Post-combustionNOx czmttol 6. Gascotidnglrcbuming 7. CombinedSOuNOx comrol 8. Abnosphcricfluidized bed cqbustion 9. Pmswuiwi fluidized bed combustion 10. Slaggingcombustion 11. Integrated gasification,combined cycle 12. Other (P&ate spec@) 13. N/A; would not USCa clean coal technologyunderthis scenario 8 Page 47 GAO/RCED-90-165 Potential Use of Clean Coal Technologkm ._ . .- . .-- .._---_.--.-_. _--.------- --.-._ ..-. Appendix IU Copy of GAO’6 Questionnaire Sent to Utilities 13. Pleaseindicate the primary reason(s)that your utility would sedouslyconsiderusingrk technology(ies)you indicated in the precedhg question. (Check no more than three in eachcolumn) wn.l Wlnl Utilities tquimd tu make the following systemwidereductionsfrom 1980levels Scenorfo so2 NOx Deadline : 35% or to 0.8 75% 1.01wMMBN 1bfMMBN 50% or to 0.6 25% 0.4 WMMBN lb/Mh%Btu 1997 3 35% or to 1.0lb/MMBm 25% or to 0.6 lb/IWvlBtu 2004 4 75% or to 0.8 lb/MMBtu 50% or to 0.4 lb/hMBm 2004 Scenario 1 Scenario 2 Scenario 3 16. Other(Please specify) Page 48 GAO/RCED-90-106 Potential Use of Clean Coal Technologies Copy of GAO% Que~tionnalre Sent ti Utilities 14. Will using a clean coal tcchtmlogy require your utility to make opemtiorul changed (e.g.. switch lb1 type)? If so. brielly explain. WI (SKIP TO NEXT PAGE) 15. Briefly explain why your utility would not seriously consider using a clean coal technology under any of the scauios. WI 10 Page 49 GAO/RCED-DO-165 Potential Use of Clean Coal Terhnolcq$i- Appendix III Copy of GAO’s Questionnaire Sent to Utilities PART 2: Systemwideperspectiveon demandgrowth 16. Will your utility, as a whole. likely experiencedemandgrowth by the year 2ooo1(Checkotu) l.cl Yes 2. q No-Skip w nertpagc 3. Cl Don’t know - Skip to next page 17. How much of an incnase in peak.base,andcycling demandwill your utility requireby the year 2OOO7(Ifyou eaprct no increase in a category(ies), enter 0) Mwpek -W base MW cycling W-32) 18. How likely or unlikely is it that your utility would usethe following methodsto meetdemandgrowthin your system? (Check one for each method) IIW 1 Very likely I Fairly likely I Faidyunlikely 1 VBN unlikely 1 METHODS -w iz, _ - (3) - (4) 1. Build a new coal-fired unit using clean coal technology 2. Build a new coal-furd unit without clean coal technology 3. Build a new oil- or gas-firedunit 4. Build a new non-fossil-find unit 5. use clean wal technologyto lncnasc capacity at an cxiating tit(S) 6. Increasecapacity at an existing unit(s) by meansother than clean coaltechnology ! I I I I 7. PurchasePowerfrom a domestic provider 8. Furchascimuomd oower 9. Rely on demand-side management/consenation I I I I I 10. Increaseoutput at existing unit(s) 11. Other (Pleasespecify) 11 Page 50 GAO/RCED-90-106 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’@Questionnaire Sent to Utilities PART 3: Syaremwideperspectiveon commercMixing 20. What doesyour utility considers8the bestways to cleancoal technologies commercialixecleancoal technologies?(C/reckno more than three) 19. Which of the following incendvts. if any, would warn) mostenbanwIhcUkellhood that your utility would 1. c] Contin~ DOE’s Clean Coal Technology invest in a clean coal rechnology?(Check no more Program(CCfP) ascmremly implemenred than fhree) 2.0 RedirectDOE’s CCfP to emphasii multiple 0 demonstrationsof technologiesthat seemmost 1. c] Extendedcompliancedate,assumingacid pmmisiig rain legislation is enacted,for utilities willing to usecleancoal technology 3. [7 RedirecrDOE’s CCTP to emphasii retrofit technologies 2. 0 Relaxedemissionreductiontargets,assuming acid rain legislation is enacted,for utilities 4. q RedirectDOB’s CClT to emphasii willing to useclean coal technology qowering techWlogieS 3.0 Tax credits 5. [7 RedirectDOE’s CCTP to emphasii NOx-conuol technologies 4.0 Federally establishedprice andloan gu-- 6.0 Legislateemissionreductiontarget levels and compliancedatesthat are compatiblewith the 5. 0 Governmentgrants availability andcapability of clean coal 6. 0 Cost sharing with govemment technology 7.0 Less stringent acw sauce performance 7.0 Chargeemittersfor exceedingesrablishedSO2 stmdardsfor udlhies willing to useclean coal andNOX emissionlevels tdlIlology 8. Cl Other(Pleasespec#I 8. 0 Increasedflexibiity by public utility commissionson COStrecovery andprudency 21. If acid rain wntml legislation is enacted,which 9.0 Additional commercialdemonstrations approachwould your utility considerto be mom conduciveto wmmercialixing clean coal 10. 0 Lower capital cosrsthan rhatof conventional technologies?(Check one) tcchnologia m 11.0 LoweropemtingandmahWnanweoststhan I. 0 Requiring emissionreductionsto be that of conventionaltechnologies acwmplished fn phases 12.0 Demonstratedshortconstructionlead times 2. 0 Requiring emissionreductionsto be. accomplishedby a single deadline 13. 0 Other (Please spec@) 3.0 Both approachesequally conducive 14. 0 None of the above Y Page 61 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Appendix III Copy of GAO’s Questionnaire Sent to Utilities 22. Thank you for your wopemdon. lf ynr have additional comment8 the topics coveml please feel fme to write them tKm. f-m II you would w to elhmte on the topics covered in this questionnaire, please provide your name and tclc~hc number: Name: 13 Page 62 GAO/RCED-99-166 Potential Use of Clean Coal Technologies . Ppe *&~~&s That Would Be Considered at Coal- F’ired Units to Achieve SO2Reductions Under GAO’s Scenarios Scenario la Percent of units for which option would be considered 95% confidence limits Option Estimate Lower Upper Use clean coal technologiesb 24 17 31 Sorbent iniection 18 IO 25 Coal cleaning and upgrading 9 3 14 Advanced flue gas desulfurization 7 2 11 Gas cofirina/reburnina 5 1 9 Use conventional technologies Switch to low-sulfur coal 46 39 53 Install a conventional scrubber 18 12 24 Switch type of fuel 5 1 8 Other options Take no action at this unit but reduce emissions elsewhere 34 27 41 Take no action at this unit as system already meets scenario 21 15 28 Retire the unit 11 5 17 Note: Based on questionnaire responses, we estimate that utilities have explored emission control options for 699 of their coal-fired units. The percentages in this appendix relate to these units. aUnder this near-term, moderate scenario, utilities would be required to reduce their systemwide SO, emissions by 35 percent below 1980 levels or to 1 .O Ibs./MMStus-whichever would be less stringent- by a 1997 compliance date. bWe are unable to provide meaningful estimates for combined SO,/NO, control and atmospheric fluid- ized-bed combustion technologies because only a few utilities selected them as options. Page 53 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Appendix IV Optiona That Would Be Considered at Coal- Fired Units to Achieve SO, Reductions Under GAO’s Scenarios Scenario 2a Percent of units for which option would be considered 95% confidence limits Option Estimate Lower User Use clean coal technologiesb 25 18 32 Sorbent injection 17 10 24 Advanced flue aas desulfurization 11 6 16 Coal cleaning and upgrading 9 4 15 Combined SO,/NO, control 8 3 13 Gas cofirina/reburnina 5 1 9 Use conventional technoloQies Switch to low-sulfur coal 39 31 47 Install a conventional scrubber 35 28 42 Switch type of fuel 7 2 12 Other optlons Take no action at this unit but reduce emissions elsewhere 19 13 26 Take no action at this unit as system already meets scenario 16 IO 22 Retire the unit 16 9 22 aUnder this near-term, stringent scenario, utilities would be required to reduce their systemwide SO, emissions by 75 percent below 1980 levels or to 0.8 Ibs./MMBtus -whichever would be less stringent- by a 1997 compliance date. bWe are unable to provide meaningful estimates for atmospheric Ruidized-bed combustion and pres- sunzed fluictized-bed combustion technologies because only a few utilities selected them as options they would consider. Page 64 GAO/RCEDBO-166 Potential Use of Clean Coal Technologies Appendix Iv Option6 That Would Be Considered at Coal- Nred Unite to Achieve SO, Reductions Under GAO’s Scenarios Scenario 3” Percent of units for which option would be considered 95% confidence limits Option Estimate Lower Upper Use clean coal technoiogiesb 41 33 48 Sorbent iniection 34 25 42 Advanced flue gas desulfurization 21 12 29 Coal cleaning and upgrading 13 6 19 Combined SO,/NO, control IO 4 16 Atmospheric fluidized-bed combustion 6 1 11 Slagging combustion 6 1 11 Gas cofiring/reburning ____ 5 1 9 Pressurized fluidized-bed combustion 5 1 9 Use conventional technologies Switch to low-sulfur coal 46 39 53 install a conventional scrubber 15 9 21 Switch type of fuel 5 1 9 Other options Take no action at this unit but reduce emissions elsewhere 37 30 44 Take no action at this unit as system already meets scenario 21 15 28 Retire the unit 13 7 20 ‘Under this long-term, moderate scenario, utilities would be required to reduce their systemwide SO, emissions by 35 percent below 1980 levels or to 1 .O Ibs./MMBtus-whichever would be less stringent- by a 2004 compliance date. bWe are unable to provide a meaningful estimate for integrated gasification, combined cycle technology because only a few utilities selected it as an option they would consider. Y Page 56 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix TV Optlona That Would Be Considered at Coel- FIred Units to Achieve SO, Reductione Under GAO’s Somarios Scenario 4’ Percent of unit8 for which option would be considered 95% confidence limits Option Estimate Lower Upper Use clean coal technologiesb 51 43 59 Advanced flue aas desulfurization 32 24 41 Sorbent iniection 32 23 41 Combined SOJNO, control 14 7 20 Coal cleanina and uoaradina 14 7 20 Pressurized fluidized-bed combustion 9 4 15 Atmospheric fluidized-bed combustion 8 3 13 Slagging combustion 6 1 12 lntearated aasification, combined cvcle 5 0 9 Use conventional technologies Switch to low-sulfur coal 39 32 47 Install a conventional scrubber 30 24 36 Switch tvoe of fuel 7 2 11 Other options Take no action at this unit but reduce emissions elsewhere 22 16 29 Retire the unit 16 10 23 Take no action at this unit as system already meets scenario 16 10 22 Qnder this longsterm, stringent scenario, utilities would be required to reduce their systemwide SO, emissions by 75 percent below 1980 levels or to 0.8 Ibs./MMBtus-whichever would be less stringent- by a 2004 compliance date. bWe are unable to provide a meaningful estimate for gas cofiring/reburning technology because only a few utilities selected it as an option they would consider. Page 56 GAO/~90-105 Potential Use of Clean Coal Technologies Options That Would Be Considered at Coal- Fired Units to Achieve NO, Reductions Under GAO’s Scenarios Scenario 1” Percent of units for which option would be considered 95% confidence limits Ootion Estimate Lower UDIG Use clean coal technoioaiesb 53 43 63 Low-NO, combustion 44 36 52 Post-combustion NO, control 12 4 19 Gas cofirina/reburnina 6 2 IO Other options Take no action at this unit but reduce emissions elsewhere 22 16 29 Take no action at this unit as system already meets scenario 18 12 24 Retire the unit 6 1 -lo Note: Based on questionnaire responses, we estimate that utilities have explored emission control options for 699 of their coal-fired units. The percentages in this appendix relate to these units. aUnder this near-term, moderate scenario, utilities would be required to reduce their systemwide NO, emissions by 25 percent below 1980 levels or to 0.6 Ibs./MMBtus-whichever would be less otringent- by a 1997 compliance date. bWe are unable to provide meaningful estimates for combined SOJNO, control, slagging combustion, atmospheric fluidized-bed combustion, and sorbent injection technologies because only a few utilities selected them as options they would consider. Scenario 2” Percent of units for which option would be considered 95% confidence limits Option .- Estimate Lower Upper Use clean coal technoioaiesb 72 65 78 Low-NO, combustion 61 54 67 Post-combustion -.- NO, control 21 13 30 Gas cofiring/reburning ~--------~. 12 6 17 Combined SO,/NO, control -- 8 3 12 Other options -____-- Retire the unit 11 5 17 Take no action at this unit but reduce emissions elsewhere 10 6 13 Take no action at this unit as system already meets scenario 6 2 11 aUnder this near-term, stringent scenario, utilities would be required to reduce their systemwide NO, emissions by 50 percent below 1980 levels or to 0.4 Ibs./MMBtus-whichever would be less stringent- Y by a 1997 compliance date. bWe are unable to provide meaningful estimates for slagging combustion, atmospheric fluidized-bed combustion, and sorbent injection technologies because only a few utilities selected them as options they would consider. Page 57 GAO/RCED-90-165 Potential Use of Clean Coal Technologies Appendix V Options That Would Be Considered at Coal. Pired Unita to Achieve NOx Reductions Under GAO’s Scenarios Scenario 3O Percent of units for which option would be considered 95% confidence limits Option ~__..-_--- Estimate Lower Upper Use clean coal technologiesb 57 48 -~_____---. 67 Low-NO, combustion 47 39 56 ____.- Post-combustion NOpntrol 17 a 25 Combined SO,/NO, control - a 2 14 Gas cofiring/reburning 6 2 10 -- ___-_____. Other options Take no action at this unit but reduce emissions elsewhere 23 16 30 Take no action at this unit as system already meets scenario ia --- 12 _________~ 24 ...-.- Retire the unit 7 2 12 Vnder this long-term, moderate scenario, utilities would be required to reduce their systemwide NO, emissions by 25 percent below 1980 levels or to 0.6 Ibs./MMBtus-whichever would be less stringent- by a 2004 compliance date. bWe are unable to provide meaningful esttmates for slagging combustion, atmospheric fluidized-bed combustion, pressurized fluidized-bed combustion, and integrated gasification, combined cycle technol- ogies because only a few utilities selected them as options they would consider. Page 68 GAO/RCED-90-166 Potential Use of Clean Coal Technologies Appendix V Optlone That Would Be Considered at Coal- Fired UnIta to Achieve NO, Reductions Under GAO’s Scenarios Scenario 48 Percent of unlta for which option would be conclidered 95% confidence limits Option Ertimate Lower UDDW Use clean coal technologiesb 77 71 a3 Low-NO, combustion 62 56 69 Post-combustion NO.. control 30 21 38 Combined SOJNO- control 14 a 21 Gas cofiring/reburning 11 6 17 Pressurized fluidized-bed combustion 5 1 9 Other options Take no action at this unit but reduce emissions elsewhere 12 7 16 Retire the unit 11 5 16 Take no action at this unit as system already meets scenario 6 2 11 YJnder this long-term, stringent scenario, utilities would be required to reduce their systemwide NO, emissions by 50 percent below 1980 levels or to 0.4 Ibs./MMBtus-whichever would be less stringsnt- by a 2004 compliance date. bWe are unable to provide meaningful estimates for slagging combustion, atmospheric fluidized-bed combustion, and integrated gasification, combined cycle technologies because only a few utilities selected them as options they would consider. Page 89 GAO/RCED-90-165 Potential Use of Clean Coal Technologks Appendix VI Major Contributors to This Report Resources, James A, Fowler, Assistant Director Community, and Marcus R. Clark, Jr., Assignment Manager Jonathan T. Bachman, Senior Social Science Analyst Economic Development Division, Brian T. McLaughlin, Evaluator Washington, D.C. John R. Richter, Regional Management Representative Chicago Regional Donald J. Kittler, Evaluator-In-Charge Office Carole S. Buncher, former Evaluator-In-Charge Francis M. Zbylski, Senior Operations Research Analyst John Zarem, Computer Programmer Analyst Daniel J. Feehan, Evaluator (aoe7ee) Page 60 GAO/RCED-90-106 Potential Use of Clean Coal Technologies 1 j.._. --..^---l------.--_ -..- _----.-..-.-_...-.. __
Fossil Fuels: Outlook for Utilities' Potential Use of Clean Coal Technologies
Published by the Government Accountability Office on 1990-05-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)