Journal
ENERGY ECONOMICS
Volume 48, Issue -, Pages 7-17Publisher
ELSEVIER
DOI: 10.1016/j.eneco.2014.11.015
Keywords
Climate change; Co-firing; Biomass energy; Mathematical programming; Carbon tax; Feed-in tariff
Categories
Funding
- NSERC's Value Chain Optimization Network
- SSHRC
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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 emission 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 fiber 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. (C) 2014 Elsevier B.V. All rights reserved.
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