The Eu Emissions Trading Scheme by Sonja Butzengeiger

Author:Sonja Butzengeiger [Butzengeiger, Sonja]
Language: eng
Format: epub
ISBN: 9781138179165
Google: DBSJnQAACAAJ
Goodreads: 39222455
Publisher: Routledge
Published: 2017-04-30T08:39:32+00:00

4. The interaction between CO2 and SO2/NOx constraints

The LCPD sets new limits for combustion plants with a capacity greater than 50MW for the emission of sulphur dioxide (SO2), nitrogen oxides (NOx) and fine dust particles. Rate limits apply to all ‘new’ plants. These rates would require flue gas desulphurisation (FGD) and selective catalytic reduction (SCR) to be fitted on PC plant to control SO2 and NOx emissions, respectively. For plants that were already commissioned or licensed before 1 July 1987, defined as ‘existing’ plants, the new rate limits are not binding until 2016. Before this date each Member State has two options: to implement transitional rate limits defined in the LCPD on all units – the emission limit value (ELV) approach -or implement a cap-and-trade scheme – the national emissions reduction plan (NERP).8 Under the NERP scheme, NOx and SO2 emission allowances will be allocated annually in the period 2008–2015. The number of allowances allocated free of charge is calculated as the product of the relevant ELV and thermal input averaged over the period 1996–2000 inclusive, and no borrowing or banking will be allowed.9 In addition, under either scheme, an ‘existing’ plant can choose to opt-out of the requirements for a maximum of 20,000 operational hours in the period 2008–201510 after which it must either close or install clean-up equipment that matches the new build standard.

A number of studies have considered the relative advantages of both cap-and-trade and rate-cap schemes in the UK context (ENTEC, 2003; Crookes et al., 2003; OXERA Consulting, 2003). To better capture the interaction between CO2, SO2 and NOx abatement costs in a market environment, we have modelled the NERP option. To assess the interaction between SO2/NOx and CO2 policies on the power system emission levels we have simulated the development of the UK power market under four different scenarios:

• BAU – as defined above

• CO2 only – carbon-constrained case with CO2 emissions allowances trading at €10/tCO2 and €20/tCO2

• SO2/NOx only – policies consistent with meeting the NERP requirements as described above

• Combined CO2 and SO2/NOx policies – combined impact of EU ETS with allowances at €10/tCO2 and €20/tCO2 together with NERP implementation of the LCPD.

The BAU case still defines the capacity expansion path until 2012 in all cases. Since beyond 2012 the model is allowed to optimise capacity expansion and retirement decisions in a manner that minimises the NPV of system costs, the resulting capacity mix in 2020 will differ between scenarios. In 2010, the results will be based on applying alternative policies to the same capacity mix. Therefore, the 2010 results give a feel for the impact of policies without taking dynamic efficiency into account, whilst the 2020 results will allow such effects to take root.

Our simulation results are summarised in Figure 2. Emissions of CO2 in the BAU were estimated to be 238.4 million tonnes in 2010. Assuming a CO2 allowance price of €10/tCO2 reduces the generation from coal plants significantly and this is accompanied by a reduction in CO2 emissions of 22.9 million tonnes.

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