A Linear Programming Model for Acid Rain Policy Analysis

Abstract

This paper describes a new analytical model designed to explore the consequences of acid rain control strategies for coal-fired power plants in the 31 eastern United States. It employs a linear programming technique using newly developed models of coal transportation costs, minemouth coal prices, and power plant FGD costs to determine an optimum (least cost) strategy to achieve specified reductions in sulfur dioxide emissions, as proposed in several recent Congressional bills. Emissions trading among specified groups of states also can be treated in the model’s optimization framework. Results are presented for scenarios in which 1995 SO₂ emissions from coal-fired power plants in the 31-state region are constrained to levels that are 8, 10 and 12 million tons per year (MMtpy) below 1980 emissions. An extensive set of sensitivity analyses (95 cases) is used to explore the effects on FGD retrofit capacity, regional coal demand, and overall abatement cost of alternative assumptions regarding the future costs of coal, transportation, pollution control equipment and regulatory requirements. Cases involving a 10 MMtpy reduction were found to exhibit the greatest sensitivity to tradeoffs between coal switching and the retrofitting of FGD equipment.