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Ripe for Retirement The Case for Closing America’s Costliest Coal Plants Ripe for Retirement The Case for Closing America’s Costliest Coal Plants Rachel Cleetus Steve Clemmer Ethan Davis Jeff Deyette Jim Downing Steven Frenkel November 2012 ii UNION OF CONCERNED SCIENTISTS © 2012 Union of Concerned Scientists All rights reserved Rachel Cleetus is an senior economist with the Union of Concerned Scientists' Climate & Energy Program. Steven Clemmer is the research director of the Union of Concerned Scientists' Climate & Energy Program. Ethan Davis is an energy analyst formerly with the Union of Concerned Scientists' Climate & Energy Program. Jeff Deyette is a senior energy analyst and assistant director of energy research and analysis with the Union of Concerned Scientists' Climate & Energy Program. Jim Downing is a freelance science writer. Steven Frenkel is the director of the Union of Concerned Scientists’ Midwest office. The Union of Concerned Scientists (UCS) is the leading science- based nonprofit working for a healthy environment and a safer world. UCS combines independent scientific research and citizen action to develop innovative, practical solutions and to secure responsible changes in government policy, corporate practices, and consumer choices. More information is available about UCS at www.ucsusa.org. This report is available online (in PDF format) at www.ucsusa.org/ripeforretirement and may also be obtained from: UCS Publications 2 Brattle Square Cambridge, MA 02138-3780 Or, email [email protected] or call (617) 547-5552. Design: Catalano Design Cover photo: © Flickr/squeaks2569 RIPE FOR RETIREMENT iii Contents Acknowledgments ................................................................................................................................... v Executive Summary ................................................................................................................................. 1 The Economic Test: Can America’s Aging Coal Plants Compete? .................................. 1 The Ripe-for-Retirement Generators ........................................................................................ 2 Economic Variables ........................................................................................................................ 6 A Boon for Public Health .............................................................................................................. 9 A Reliable Transition ...................................................................................................................... 9 Our Clean Energy Future ............................................................................................................. 10 Recommendations ........................................................................................................................ 12 Chapter 1: Introduction: Pulling the Plug on Uneconomic Coal Plants ................................ 15 Box: Coal-fired Generation: An Introduction ........................................................................ 16 Box: How the Grid Works: A Simplified View ....................................................................... 19 Chapter 2: What Makes a Coal Generator Ripe for Retirement? ......................................... 21 Current Operating Costs ............................................................................................................. 22 Pollution Control Technology and Costs ................................................................................ 23 Comparing Coal against Cleaner Energy Sources ............................................................... 26 Alternative Scenarios ............................................................................................................. 27 Analysis of Announced Coal Generator Retirements ....................................................... 27 Chapter 3: Ripe for Retirement Results ......................................................................................... 31 National Findings .......................................................................................................................... 31 Public Health and Environmental Benefits of Retiring Coal ............................................ 36 America’s Most Ripe-for-Retirement Power Providers .................................................... 37 Box: What about Carbon Emissions and the Rest of the Coal-fired Generation Fleet? .......................................................................................................................... 37 State-level Findings ...................................................................................................................... 38 Findings from Alternative Scenarios ...................................................................................... 44 Limitations and Uncertainties .................................................................................................. 46 iv UNION OF CONCERNED SCIENTISTS Chapter 4: We Can Do It! .................................................................................................................. 49 The Good News ............................................................................................................................. 49 Change Is Already Under Way ................................................................................................. 50 Replacing Coal ................................................................................................................................. 51 Completing the Transition to Clean Energy .......................................................................... 59 Box: What Are the Risks of an Over-Reliance on Natural Gas? ..................................... 60 Chapter 5: Modernizing the Electric System ............................................................................... 63 Enact Strong EPA Power Plant Standards ............................................................................. 63 Adopt Strong State and Federal Clean Energy Policies .................................................... 64 Improve Resource Planning by Regional Grid Operators and Utilities ........................ 66 Conclusions .................................................................................................................................... 67 References ............................................................................................................................................... 69 Appendix A: Methodology ................................................................................................................. 73 Appendix B: EPA Pollution Standards for Power Plants ........................................................... 79 Appendix C: State Rankings Summary Tables ............................................................................. 81 Appendix D: Alternative Scenarios Summary Table ................................................................. 84 Appendix E: Plant-level Listings by State ...................................................................................... 85 RIPE FOR RETIREMENT v Acknowledgments This report was made possible by generous support from The William and Flora Hewlett Foundation, Scherman Foundation, NoraLee and Jon Sedmak, Wallace Genetic Foundation, Inc., and UCS members. The authors would like to express our gratitude to our external reviewers for their thoughtful and rigorous reviews of the entire report: Matt Baker, Bruce Biewald, Barbara Freese, Joshua Ulan Galperin, Rebecca Johnson, Nancy Lange, Bruce Nilles, Jennifer Perrone, Ulla-Britt Reeves, Jeremy Richardson, Jennifer Ruch, Chris Van Attan, and John Wilson. In additional to these external reviewers, the authors would also like to thank the UCS staff members who made important contributions to this report, including Angela Anderson, Jacqueline Ashmore, Nancy Cole, LuCinda Hohmann, Lisa Nurnberger, Elizabeth Perera, Megan Rising, Lexi Shultz, Ellen Vancko, and Marchant Wentworth. We particularly acknowledge the work of Synapse Energy Economics, Inc., whose prior work on this subject and core methodology served as the foundation for our analysis. We thank Trudy E. Bell for making the report more readable and Bryan Wadsworth for overseeing its production. The opinions and information expressed herein are the sole responsibility of the authors. RIPE FOR RETIREMENT 1 EXECUTIVE SUMMARY or decades, coal has powered America. Coal Closing old, inefficient, and mined from Wyoming to West Virginia is burned uneconomic coal plants is a Fin hundreds of power plants across the United States to generate electricity. In 2011, approximately historic opportunity to accelerate 42 percent of our nation’s electricity was produced by the transition to a cleaner burning coal (EIA 2012a). But today, more than three- energy future. quarters of U.S. coal-fired power plants have outlived their 30-year life span—with 17 percent being older than half a century. Most are inefficient, operating far paying for costly upgrades to keep their outdated coal below both their power generation potential and the plants running is a bad investment—particularly now most efficient coal units on the power grid. that there are many cleaner, lower-cost alternatives that They lack essential modern pollution controls, so can replace old coal units while maintaining the reliability they damage public health. The sulfur they emit causes of the electric system.