Reference no: EM131870947
Problem - As a test case, City A has decided to pursue regulatory approaches to controlling CO2 in B town, where CO2 emissions primarily come from local electricity generation. There are three power plants in B town, and each has submitted their estimated abatement costs for CO2.
Plant 1: Gas Plant releasing 2,400,000 tons of CO2/year
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Abatement Approach
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Tons Removed/Year
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Cost per Ton
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Carbon Sequestation
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30,000
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$20
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Heat Rate Improvement
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1,200,000
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$50
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Efficiency Improvement
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95,000
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$70
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Increase in lower emitting capacity
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2,500
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$190
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Plant 2: Gas Plant releasing 90,000 tons of CO2/year
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Abatement Approach
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Tons Removed/year
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Cost Per Ton
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Efficiency Improvement
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18,000
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$35
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Carbon Sequestrain
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12,000
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$45
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Fuel switching/construction of wind Capacity
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40,000
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$130
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Plant 3: Coal Plant releasing 2,740,000 tons of CO2/year
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Abatement Approach
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Tons Removed/Year
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Cost Per Ton
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Carbon Sequestration
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26,000
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$30
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Efficiency Improvements
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70,000
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$60
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Fuel Switching
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190,000
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$85
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Waste Heat Recovery
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540,000
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$140
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B wants to reduce CO2 emissions by 1,569,000 tons per year (approximately a 30% reduction). They are looking at alternative approaches to achieving this goal, and are interested in comparing the costs of command-and-control to the least-cost solution to achieving this abatement level.
a) Command-and-control: Each plant must reduce their annual CO2 emissions by 30%. Please complete the following table.
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Plant 1
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Plant 2
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Plant 3
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Total
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Eliminated Emissions(tons)
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Remaining emissions (tons)
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Total cost of abatement
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b) Least-Cost solution: What is the least cost at which the 30% abatement level could be achieved? Complete the following table to indicate how much each plant would abate and the costs of this abatement using least-cost methods.
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Plant 1
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Plant 2
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Plant 3
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Total
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Eliminated emissions (Tons)
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Remaining emissions (Tons)
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Total cost of abatement
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c) What policies might you recommend to arrive at the least-cost solution? What are some of the pros and cons of each?