Coal is the primary fuel for production of electric energy in the United States in part because of its abundance, mature extraction and combustion technologies, and corresponding economic competitiveness. However, particulate air pollution from coal-fired power plants has been implicated as a controllable cause of cardiovascular and respiratory disease in the United States and elsewhere. Electric steam generating stations based upon coal gasification is a low pollution alternative to conventional pulverized coal facilities. Coal gasification plants utilize an integrated gasification combined cycle (IGCC) technology that yields combustible gases from coal, cleans the gas of sulfur and other materials that form acid precipitation and particulate matter, and then burns the resulting synthesis gas to form steam, operate turbines, and generate electricity.
Although IGCC plants produce less pollution than conventional coal-fired power plants, the greater cost of power produced by IGCC facilities currently limits their competitiveness. For example, a utility in Wisconsin recently estimated the capital costs of a new super critical pulverized coal (SCPC) plant to be $1.3 million per megawatt (MW) and a new IGCC to be $1.7 million/MW. However, the lower air pollutant emissions of IGCC compared to pulverized coal correspond to fewer cases of air pollution-related disease and lower public health costs to society. Therefore, the public health benefit of reduced air pollution has the potential to make coal gasification more economically competitive with pulverized coal, although the magnitude of the benefit has yet to be determined. EH&E recently completed a comparative study of the potential public health costs incurred over the lifetime of a state-of-the-art SCPC plant and an IGCC plant of the same size. The results of this analysis demonstrate how information on pubic health damages can be used to inform decisions about meeting future demands for electricity.
Study Overview
The societal costs of fossil fuel-based energy production are a function of the capital and operating costs of power plants as well as the economic externalities of the production process. Economic externalities of energy produced by fossil fuel combustion include the public health impacts of air pollutant emissions. The U.S. Environmental Protection Agency has conducted several benefit-cost analyses of air pollution in support of regulatory decisions made under the Clean Air Act. The EPA studies indicate that particulate matter less than 2.5 microns in aerodynamic diameter (PM2.5) contributes a significant fraction of the total health damages associated with emissions from electric generating stations.
EH&E used a mathematical approach known as a damage function to compare the cost of public health damages of PM2.5 levels in outdoor air resulting from operation of a 1,230 megawatt (MW) state-of-the art electric power plant fueled by pulverized coal and IGCC. The damage function has three principal components: (1) estimation of PM2.5 concentrations in outdoor air associated with emissions from each electric power plant; (2) determination of the number of premature deaths and cases of cardiovascular and respiratory disease associated with the PM2.5 levels from the power plants; and (3) calculation of the societal cost of the power plant-related premature mortality and morbidity.
We conducted the analysis of PM2.5 impacts for alternative electric steam generating stations of equal size located in Oak Creek, Wisconsin, approximately 30 kilometers (km) south of Milwaukee. The analysis was performed for a 560,000 km2 (220,000 square mile) modeling region centered in Northern Illinois that encompasses significant portions of Wisconsin, Illinois, Indiana, and Michigan and lesser portions of Minnesota, Iowa, Ohio, Missouri, and Kentucky. Emission parameters and control technologies of each plant were developed from air permits and environmental impact statements of facilities actually proposed for construction in Wisconsin, thus providing a realistic set of scenarios for this comparison. EH&E used an air dispersion model recommended for long range transport by the EPA to calculate PM2.5 concentrations over the Midwest modeling region as a result of emissions from each facility. Results of the most scientifically rigorous air pollution epidemiology studies were used to estimate the number of premature deaths and non-fatal disease associated with PM2.5 pollution from each plant. The health outcomes that we considered were premature mortality, infant mortality, hospital admissions, nonfatal myocardial infarctions, emergency room visits, chronic bronchitis, acute bronchitis, asthma attacks, lower respiratory symptoms, and minor restricted activity days. Costs of those health outcomes were derived from a recent benefit-cost analysis conducted by the EPA that in turn are based on scientific studies published in the health policy and economics literature.
Results
The estimated annual regional damages associated with the pulverized coal scenario is $151 million, while damages attributable to the same size IGCC facility are estimated to be approximately 50% lower (Table 1). Reduced ambient concentrations of particulate sulfate account for approximately 60% of the public health benefit of the IGCC over pulverized coal. Assuming a 40-year lifespan of the project, a fixed population, and a 5% annual real discount rate, the pulverized coal plant would cost approximately $2.6 billion in health-related environmental externalities to the modeled region compared to $1.2 billion for the coal gasification facility.
To put these costs in context, we expressed the public health damages of each plant on a per MW basis and added those costs to the capital costs of each plant to estimate the societal cost of both scenarios. The capital cost for the pulverized coal plant was estimated by a Wisconsin public utility to be $1.3 million per MW, while we estimated lifetime public health damages of $2.1 million per MW for the same facility, yielding a total project cost of $3.4 million per MW. In contrast, the estimated total project cost for the same-sized IGCC is $2.7 million/MW ($1.7 million/MW for capital costs and $1 million/MW for public health damage). Therefore, when capital costs and public costs are considered together, IGCC is economically superior to pulverized coal as a means of meeting future demands for electricity.
Currently, a number of states recognize IGCC as a Best Available Control Technology (BACT) under the Clean Air Act because of its low pollutant emission rates compared to conventional coal facilities. However, the greater cost of IGCC has limited wider use of this potentially important new source of electricity generation. Our analysis demonstrates that IGCC presents lower costs to society than state-of-the-art pulverize coal technology, thereby providing regulators and the commercial sector with information needed to evaluate the merits of each technology more fully.
Table 1: Annual regional cost of public health damages
|
Scenario |
Annual health-related damages (Year 2004$) |
|
Percentage of damages from primary PM2.5 |
Percentage of damages from secondary sulfate particles |
Percentage of damages from secondary nitrate particles |
|
Pulverized Coal |
$151 million |
|
31% |
44% |
25% |
|
Coal Gasification |
$71 million |
|
35% |
15% |
50% |
If you would like more information concerning the details of this study, please contact David MacIntosh, Sc.D. at dmacintosh@eheinc.com.
