1 Technical Support Document (TSD)

for the Transport Rule

Docket ID No. EPA

- HQ

- OAR

- 2 009

- 0234



## Coal

- to

- Gas Conversion (C2G)

U.S. Environmental Protection Agency

Office of Air and Radiation

March 4 , 201 12 Coal

- to

- Gas Conversions (C2G)

Sect ion V in the preamble to the Toxics Rule discusses coal

- to

- gas conversion (C2G) as a retrofit technology option to reduce air pollutant emissions. C2G is provided

as a retrofit option to all coal boilers larger than 25 MW in EPA ’s IPM modeling of the To xics Rule . Th is retrofit option is comprehensively modeled with explicit retrofit capital and O&M costs, pipeline extension costs

, and heat rate penalties. As mentioned in the preamble, the C2G option was not selected in IPM as an economic choice for coal boilers to comply with the Toxics Rule. This TSD provides a brief explanation of the main reasons why C2G was not an economic choice.

The Toxics R ule requires all EGU coal boilers larger than 25 MW to achieve significant reductions in mercury

, HCl , and total PM emissions. In addition to the C2G conversion option

, there are other retrofit options available in IPM to reduce these emissions. The y include activated carbon injection ( ACI ), flue gas desulfurization (FGD), and dry alkali sorbent injection (DSI) , any of which can individually or in combination make a significant reduc tion in such emissions.

Table 1 shows the calculated cost

- of

- electricity (COE) based on characteristics of

a representative actual “model plant” in the Proposed Toxics Rule p olicy modeling . The model plant represents a 303 MW existing coal unit . The performance and incremental
costs of the various retrofit options are based on the parameters of actual retrofits offered to such a unit in the IPM model.

Table 1

– Incremental cost

- of

- electricity for r etrofit o ptions on a typical model plant Retrofit Options Base Unit DSI Dry FGD ACI C2G Unit size (MW) 303 303 303 303 303 Heat Rate (Btu/kWh) 10,502 10,539 10,656 10,506 11,027 Capital Cost of Retrofit ($/kW) including pipeline 47 507 11 323 Fixed O&M of Retrofit ($/kW) 0.8 8.5 0.0 -8.9 Variable O&M of Retrofit ($/kW) 4.49 1.48 1.83 -0.33 Capital Charge Rate (%) 11.3% 11.3% 11.3% 11.3% Capacity Factor (%) 80% 80% 80% 80% 80%

Fuel Coal Coal Coal Coal Gas Fuel Price ($/MMBtu) 2.13 2.13 2.13 2.13 5.74
Incremental Fixed Costs (mills/kWh) 0.9 9.4 0.2 3.9 Incremental Variable O&M Costs (mills/kWh) 4.5 1.5 1.8 (0.3) Base and Incremental Fuel Costs (mills/kWh) 22.4 0.1 0.3 0.0 40.9 Total Incremental Cost-of-Electricity (mills/kWh) Base 5.4 11.2 2.0 44.5

Note that while the combined capital cost and O&M costs for a C2G r etrofit could be less than that of a combined retrofit with ACI and either DSI or FGD , the greatly increased fuel costs of C2G cause its total incremental COE ($44.5/MWh) to be between 4 to 22 times the COE impact of the other retrofit options available . The C2G option for3 this case is therefore uneconomic under the relative fuel cost projections in IPM modeling of the Toxics Rule

. The COE comparison allows consideration of the relative cost

- effectiveness of using C2G to obtain beyond

- the

- floor reductions in the emission rates of toxic air pollutants. For example, DSI is assumed to achieve 90% reduction of HCl in the Toxics Rule modeling , whereas switching the boiler to gas

- fired generation would effectively reduce 100% of previous HCl emissions. Therefore, for each 100 tons of uncontrolled HCl emissions, DSI would capture 90 while C2G would increase that capture further by 10 to ns, which is about an 11% increase in capture

– however, the COE impact increases by 724%. For a similar comparison on mercury, ACI is assumed to capture 90% while C2G would effectively capture 100%, and this 11% increase in capture would be coupled with a 2,125% increase in that unit’s COE impact.

For these reasons, EPA does not believe it is cost

- effective to require beyond

- the

floor emission reductions from coal

- to

- gas fuel switching in the Toxics Rule.