Economics of Co-firing Coal and Biomass: An Application to Western Canada
Date
2015
Authors
Johnston, Craig M.T.
van Kooten, G. Cornelis
Journal Title
Journal ISSN
Volume Title
Publisher
Energy Economics
Abstract
Co-firing biomass and coal in retrofitted power plants is an efficient means to reduce carbon dioxide emissions in the energy sector. Under IPCC reporting rules, the impacts of energy produced from biomass would not be reported in the energy sector, thereby effectively lowering the emissions intensity of a power plant. In this study, a carbon tax is compared to a feed-in tariff for incentivizing conversion of coal plants to co-fire with biomass. In the application, a model of the Alberta electrical grid with an intertie to British Columbia is linked to a fibre transportation model for these provinces. Results indicate that there is an upper threshold on a carbon tax after which retrofitting of coal plants is less efficient than increasing natural gas generating capacity. This is not the case with a feed-in tariff as it specifically targets biomass energy. Although the optimal generating mix achieved with a carbon tax leads to lower aggregate emissions than the mix achieved using a feed-in tariff, it will result in higher average generating costs. Results indicate that it is optimal for Alberta to retrofit approximately 500 MW of current coal capacity (8.6%) to co-fire with biomass, although Alberta wood pellet production acts as a constraint on further conversions
Description
Keywords
climate change, co-firing, biomass energy, mathematical programming, carbon tax, feed-in tariff
Citation
Johnston, C.M.T. & G.C. van Kooten, 2015. Economics of Co-firing Coal and Biomass: An Application to Western Canada, Energy Economics 48:7-17