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Memorandum

To: Clean Power Plan Docket

Subject: Comparison of building block costs to FGD costs

Date: July 2015

Introduction

In section V.A.4.d of the preamble, the EPA evaluates the cost reasonableness of the BSER 

determination of the final rule by comparing the estimated costs of reducing CO2 through the building 

blocks to two benchmarks. This memo summarizes the analysis supporting the evaluation of the first 

benchmark, which comprises costs that some affected EGUs incur to reduce SO2 through the installation 

and operation of wet or dry scrubbers. 

In order to perform this cost comparison, the EPA converted the average cost of CO2 removal ($/ton) 

through the building blocks and the average cost of reducing SO2 through installation and operation of a 

scrubber to the common metric of average cost per net megawatthour of electricity generated 

($/MWh). The assumptions supporting these calculations are detailed below.

Building Block Costs

As the basis for the costs of reducing CO2 through use of the individual building blocks, we use the 

average cost per ton of CO2 removed computed for each individual building block as described in 

sections V.C., V.D., and V.E. of the preamble and the GHG Mitigation Measures TSD. These costs are $23, 

$24, and $37 per ton of CO2 removed for building blocks 1, 2, and 3, respectively. 

In addition, as the basis for the cost of reducing CO2 at coal-fired steam EGUs through the use of all 

three building blocks combined, we use a weighted average of the costs of the individual building blocks. 

We weight the costs of the individual building blocks by the total estimated cumulative CO2 reductions 

for each of these building blocks over the 2022-2030 period. Those estimates are 556 million short tons 

for building block 1, 2,516 million short tons for building block 2, and 2,195 million short tons for 

building block 3.1

 The weighted average is the sum of the products of the average cost and reductions 

for each building block, divided by the sum of the reductions. This weighted average cost of the three 

building blocks is $30/ton.

CO2 Control Costs

To represent a typical coal steam EGU, we assume an average heat rate of 10,000 Btu/kWh. We also 

assume a 36% reduction in CO2 emissions from compliance with the uniform CPP emissions performance 

rate for fossil steam units, which is consistent with lowering the emissions rate of a typical unit from 

2,039 lbs/MWh2 to the 2030 emission performance rate of 1,305 lbs/MWh. At the weighted average 

cost for the three building blocks combined of $30/ton, the average cost of CO2 control for this typical 

coal steam EGU is about $11/MWh. See Table 1. At the individual building block costs of $23, $24, and 

 1 For building block 1, these cumulative reduction estimates are based on an annual average multiplied by 9 years 

(2022-2030). For building blocks 2 and 3, these cumulative reductions are a model-projected estimate over this 

time period. For more detail, see the GHG Mitigation Measures TSD. 2

Assumes coal is EPRI ILL#6, C = 61%wt, HHV=10,982Btu/lb
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$37 per ton, the average cost of CO2 control for this typical coal steam EGU is about $8, $9, and $14 per 

MWh for building blocks 1, 2, and 3, respectively. See Table 1.

To represent a typical NGCC EGU, we assume a heat rate of 7,800 Btu/kWh. We assume a 15% 

reduction in CO2 emissions, which is consistent with lowering the emissions rate of a typical unit from 

909 lbs/MWh to the 2030 emission performance rate of 771 lbs/MWh. Since blocks 1 and 2 do not 

apply to NGCC units, we assume a conservatively high $37/ton (the average cost of building block 3). At 

$37/ton, the average cost of CO2 control for this typical NGCC unit is about $3/MWh. See Table 1.

SO2 Control Costs

To estimate the cost of reducing SO2 at a typical coal steam EGU by installing and operating a scrubber, 

we assume the same 10,000 Btu/kWh heat rate as above and a 70% utilization rate. Additionally, we 

evaluate the costs of installing either a wet or dry scrubber over a range unit capacities (300 MW – 700 

MW). This range represents the range of unit sizes that have generally installed wet or dry scrubbers. 

We also assume that a wet scrubber achieves a 96% SO2 reduction, on average, and a dry scrubber 

achieves a 92% SO2 reduction, on average. The capital and operating costs that we assume over this 

range of capacities is summarized in the table below. Additionally, we annualize the capital costs using a 

13% capital charge rate. We find that, for a typical coal steam EGU, the annualized costs of installing 

and operating a wet scrubber are approximately $14 to $18 per MWh and the annualized costs of 

installing and operating a dry scrubber are approximately $13 to $16 per MWh. Capital, fixed O&M, and 

variable O&M cost inputs are documented in Chapter 5 of the Documentation for EPA Base Case v.5.13 

Using the Integrated Planning Model, which is available in the docket and also at: 

http://www.epa.gov/powersectormodeling/.
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Table 1. CO2 vs SO2 Control Costs, $/MWh

Note: This table, with the underlying calculations, is also available in the docket.