A Probabilistic Production Costing Analysis of SO₂ Emissions Reduction Strategies for Ohio: Emissions, Cost, and Employment Tradeoffs

Abstract

A new approach for state- and utility-level analysis of the cost and regional economic impacts of strategies for reducing utility SO₂ emissions is summarized and applied to Ohio. The methodology is based upon probabilistic production costing and economic input-output analysis. It is an improvement over previous approaches because it: (1) accurately models random outages of generating units, “must-run” constraints on unit output, and the distribution of power demands; and (2) runs quickly on a microcomputer and yet considers the entire range of potential control strategies from a systems perspective. The input-output analysis considers not only the economic effects of utility fuel use and capital investment, but also those of increased electric rates. Two distinct strategies are found to be most attractive for Ohio. The first, more flexible one, consists of emissions dispatching (ED) alone to meet short run emissions reduction targets. A 75 percent reduction can then be achieved by the turn of the century by combining ED and fuel switching (FS) with flue gas desulfiirization, limestone Injection multistage burners, and physical coal cleaning at selected plants. The second is a scrubber-based strategy which includes ED. By the year 2000, energy conservation becomes a cost effective component of these strategies. In order to minimize compliance costs, acid rain legislation which facilitates emissions trading and places regional tonnage limits on emissions is desirable.