Thread by @jgkoomey

Yesterday I wrote a thread about why even small carbon dioxide charges can be useful for reducing emissions in certain sectors (but not others).

One of my colleagues rightly asked that I lay out my data and calculations, so this thread does that. If you find any issues with the calcs or data, please let me know.

The main claim (ignoring the peripheral questions about jet fuel) is that a carbon dioxide price of comparable size to those we've actually seen in real emissions trading systems is large enough to substantially affect both dispatch and shutdown decisions for existing coal plants

The exact same carbon dioxide price will have a modest effect on the retail price of gasoline to consumers, for reasons that I show below.

Typical coal plants in the US from 1996 to 2007 have HHV efficiencies of about 33%. Koomey, et al. 2010. See Table 1 in "Defining a standard metric for electricity savings." Environmental Research Letters. vol. 5 014017, no. 1 January-March. [iopscience.iop.org/1748-9326/5/1/…]

Not too many new coal plants were built after 2007 so that's still a decent average for the fleet. For emissions factors by fuel, you can access them from the EIA's website: eia.gov/environment/em…

I used the emissions factor for bituminous coal (the most prevalent coal used for electricity generation in the US). That assumes 100% combustion and yields 93.30 kg CO2 per million Btu of heat content.

Because old habits die hard, I like to convert such mixed units to grams of CO2 per kWh of fuel content (also a mixed unit but you'll see why I like it in a moment). That calculation yields 318 g CO2/kWh.f (the f is for fuel).

For the real numbers geeks, the conversion equation is 93.30 kg CO2/MBtu X MBtu/1,000,000 Btu X 1000 g/kg X 3412 Btu/kWh

Take the 33% efficiency (kWh.electricity out/kWh.fuel in) and invert it to get a heat rate (kWh.f/kWh.e) of 3.03, then multiply 3.03 X 318 g CO2/kWh.f to get an emissions factor at the busbar of 964 g CO2/kWh.e (not including T&D losses to get to the customer's meter).

To estimate cost/kWh at the busbar for a $10/tonne CO2 charge, we multiply 964 g CO2/kWh.e X 1 tonne/1,000,000 g X $10/tonne to get $0.0096/kWh. That's 1 cents/kWh (round #s). So each $10/tonne adds a penny per kWh to coal's operating costs.

I didn't calculate the exact current marginal cost of coal plants but remember numbers like 3-4 cents/kWh. That means that CO2 charges in the range of $30-40/tonne CO2 would roughly double the marginal fuel costs of coal, as I stated (ignoring O&M costs).

Now to gasoline for consumers. The EIA table says gasoline's emissions factor is 71.3 kg CO2/MBtu of fuel. EIA also says there are 121,000 Btu/gallon of finished gasoline. eia.gov/energyexplaine…

That yields 71.3 kg CO2/MBtu X 1 MBtu/1,000,000 Btu X 121,000 Btu/gal or 8.627 kg CO2/gallon of gasoline, which (for US folks) equates to 19 lbs of CO2 or 5.18 lbs of carbon per gallon.

There are 1000 kg per metric tonne so the effect on gasoline price of a $10/tonne CO2 charge is 8.627 kg CO2/gal X 1 tonne/1000kg X $10/tonne = $0.086/gallon, or roughly 10 cents/gallon (round numbers).

So the same $30-40/tonne CO2 charge would raise consumer gasoline prices in the US by 30-40 cents/gallon. Gasoline prices now are about $2.30/gallon (depressed because of the pandemic) so that's an increase of 13 to 17%.

So a $30-40/tonne CO2 charge roughly doubles the marginal price of coal plants, but increases consumer gasoline prices by roughly 15%. Such modest CO2 charges would have dramatic effects on coal in the electricity sector but only small effects on gasoline demand.

That's why even modest (ie typical current) CO2 charges are important for reducing emissions from certain sectors (like coal-fired electricity) but not others.

Please let me know if you see anything amiss with these calculations so I can update them if necessary! /fin