A small carbon tax on coal could help drive shift to natural gas and reduce greenhouse gas emissions significantly

The Mojave generating station, near Laughlin, Nevada. PHOTO VIA WIKIPEDIA AND THE CREATIVE COMMONS.

Harvard study tracks energy use, emissions during the 2009 recession

By Summit Voice

SUMMIT COUNTY — A slight shift in the relative prices of coal and natural gas could pay big dividends in the quest to reduce greenhouse gas emissions, according to Harvard researchers who said that, when the United States fell into the 2009  recession, greenhouse gas emissions also fell, by 6.59 percent relative to 2008.

They said that, in the power sector, the recession was not the main cause. Instead, it was a decrease in the price of natural gas reduced the industry’s reliance on coal.

According to the econometric model developed by the Harvard School of Engineering and Applied Sciences, emissions could be cut further by the introduction of a carbon tax, with negligible impact on the price of electricity for consumers.

In the United States, the power sector is responsible for 40 percent of all carbon emissions.

“Generating 1 kilowatt-hour of electricity from coal releases twice as much CO2 to the atmosphere as generating the same amount from natural gas, so a slight shift in the relative prices of coal and natural gas can result in a sharp drop in carbon emissions,” said Michael B. McElroy, Gilbert Butler Professor of Environmental Studies at SEAS, who led the study.

“That’s what we saw in 2009,” he says, “and we may well see it again.”

Patterns of electricity generation, use, and pricing vary widely across the United States. In parts of the Midwest, for instance, almost half of the available power plants (by capacity) were built to process coal. Electricity production can only switch over to natural gas to the extent that gas-fired plants are available to meet the demand. By contrast, the Pacific states and New England barely rely on coal, so price differences there might make less of an impact.

To account for the many variables, McElroy and his colleagues at SEAS developed a model that considers nine regions separately. Their model identifies the relationship between the cost of electricity generation from coal and gas and the fraction of electricity generated from coal.

“When the natural gas prices are high, as they were 4 years ago, if the gas prices come down a little bit, it doesn’t make any difference,” said lead author Xi Lu, a postdoctoral associate at SEAS. “But there’s a critical price level where the gas systems become more cost-effective than the oldest coal-fired systems.

“If the gas price continues to drop, you’ll continue to go down this curve so that you’ll knock out not just the really ancient coal-fired power plants, but maybe some of the more recent coal-fired plants.”

The model also predicts that a government-imposed carbon tax on emissions from power generation would drive a move away from coal.

“With a relatively modest carbon tax—about $5 per ton of CO2—you could save 31 million tons of CO2 in the United States, and that would change the price of electricity by a barely noticeable amount,” says McElroy.

The initial model was developed by Jackson Salovaara ’11, an applied mathematics concentrator at SEAS. His work was recognized as the “best senior thesis” in the Harvard Environmental Economics Program, earning him the Stone Prize in May 2011.

Since then, the model has been “souped up,” incorporating more sophisticated regional data analysis, and producing not just the findings on 2009 but also predictions for more recent years.

“While the data from 2011 are not yet available, based on the gas prices, we’re making a confident prediction that there should be a continued shift from coal to natural gas in 2011 as compared to 2008,” says McElroy.

“That’s good news for the atmosphere.”

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5 Responses

  1. Interesting idea. Of course, if the demand for more gas occurs as a result, wont that lead to price increases, possibly negating the cost difference as well as carbon emissions? Also, what of the story about “Ozone” where the Fracking is taking place, that was highlighted in the denverpost.com article of 2-26-12? I wonder if that’s being factored into the equasion?

  2. This has merit and deserves study followed by implementation. I wonder if anyone has tried the idea of adding small amounts of natural gas to the coal-dust injection methods currently used to improve combustion? This might further reduce pollutants and increase efficiency. What works in a diesel engine may well improve the operation of a power plant.

    • Do you have a link to : “using coal dust as a fuel in diesel engines using natural gas to aid in the combustion of same”?

      • Google “coal dust diesel engine” – it’s all over the internet. Sounds like a good idea. Much better than trying it in an engine.

  3. Another idiotic tax…

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