1. Life-Time Emissions Budget for New Coal-Fired Power Plants By Hoff Stauffer at Climate Policy Initiative Center for Clean Air Policy November 8, 2007 Washington, DC

2. Coal In Power Plants Is The Largest Potential Source of Growth in Global CO2 Emissions

3. Limitations of Cap and Trade Does not work well on consumer purchases, such as cars, homes, and appliances. [The so-called discount rate problem.] Could work well for electricity generation But leverage is with new sources, not existing sources where cap/trade has worked well. Very hard to figure out the economic and environmental effects and/or agree on wealth transfers (allowance allocations). [Being used as a delay tactic by opponents of progress.] Would not interface well with rest of world.

4. Market-Based Approaches Are Not Limited to Cap and Trade There is a very heavy government hand in the design of a cap and trade system With performance standards, government sets the target and then steps back to let the market achieve it It has worked well in the past and has served to stimulate (force) new technologies

5. Hence, Options for Controlling New Coal- fired Power Plants Should Be Considered 1.Performance Standards For New Sources Are A Viable Option; 2.As Is A Life-Time Emissions Budget

6. Lifetime Emissions Budget for New Coal Plants Set a life-time CO2 budget (e.g., 60 years) for any new coal plant. Budget might be based on a plausible trajectory for best-performing low-carbon coal technologies (e.g., IGCC with increasing percentages of carbon capture and sequestration over time). However, the plant owner could meet the budget using a variety of compliance strategies, as shown below

7. The Key Design Elements of a Life-time Emissions Budget Are: Years of Life (assume 60 years) Capacity Factor (assume 75%) Controlled Heat Rate (assume 9300 with 25% control penalty) Controlled Emissions Rate (assume 85% removal) Result is 71 tons per KW over 60 years, versus 378 tons per KW uncontrolled

8. A Life-Time Emissions Budget Has Several Key Attributes The effect can be equivalent to a performance standard, but it provides increased flexibility It could interface well with a cap and trade system It would stimulate technology but does not require betting on any single technology, particularly one that is not fully demonstrated

9. Examples of Strategic Options for Compliance with a Life-Time Budget A.Control emissions from the beginning, such as with a performance standard B.Delay for five years and install advanced technology with lower heat rate penalty (15% versus 25%) and higher removal efficiency (90% versus 85%) C.Delay for ten years with lower capacity factor (65% versus 75% for ten years) and then install more advanced technology with lower heat rate penalty (10% versus 15%) and higher removal efficiency (95% versus 90%) And lots of other options

10. Each of These Options Will Comply With the Life-time Budget

11. Effect on Cumulative Emissions Is the Same

12. Some Design Subtleties Life-time budget can interface well with a cap and trade system. Life-time budget amounts to allocated emission allowances which can be traded, but probably want to limit total emissions to the life-time budget. Need to provide for what happens after 60 years. Could assign an on-going allowable emissions rate at a high removal efficiency or could require that allowances be purchased. Need to guard against sham plants designed only to be granted the allowances

13. Comments/Questions Please To Hoff Stauffer Managing Director Wingaersheek Research Group Gloucester, MA 01930 978-281-1674 hoff@hoffstauffer.com

14. For Elaboration on These Points Please See Other Articles By the Author The Conventional Wisdom Is Inhibiting Progress On Climate Change Mitigation, Second Meeting of the Montreal Group on Climate Stabilization, Berlin, Germany, September 27, 2006; A New Standard for Preventing Global Warming, (Silver City, NM and Washington, DC; Foreign Policy in Focus, October 4, 2006); "Climate Change: Is It Prudent to Wait?" (Silver City, NM and Washington, DC: Foreign Policy In Focus, February 21, 2007); Global Warming Myths, MIT Technology Review, May, 2007. New Sources Will Drive Global Emissions, Energy Policy, July, 2007

15. Appendix Other Interesting Slides which will not be presented

16. The Technologies Exist To Get Where We Probably Need to Be Globally Without Inhibiting Economic Growth

17. Draconian Measures Would Not be Required And there would not have to be a vast transfer of wealth from the developed to the developing world

18. The Leverage Is With The New Sources

19. Even For Coal-Fired Power Plants Need to Focus on Long-Lived Assets First: Power Plants and Buildings

20. Delay Is A Really Dumb Idea. With Delay, Draconian Measures Might Be Required.