Implications of changing natural gas prices in the United States electricity sector for SO 2. and life cycle GHG emissions: Supplementary Information

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1 Implications of changing natural gas prices in the United States electricity sector for SO 2, NO X and life cycle GHG emissions: Supplementary Information Aranya Venkatesh, Paulina Jaramillo, W Michael Griffin, H Scott Matthews Table S1. Base case fuel prices and marginal prices of electricity production Plant type Unit Price Nuclear ($/MWh) 16.5 [1] Wind ($/MWh) 20 [1] Hydro ($/MWh) 10 [1] Biomass ($/MWh) 50 [1] Coal a ($/MMBtu) [2] Natural gas a ($/MMBtu) [2] Oil a ($/MMBtu) [2] a Ranges represent regional fuel prices Figure S1. Estimated short-run marginal cost curve (supply curve) for PJM. Each marker represents a power plant that is dispatched to meet load. Hydroelectric, nuclear and coal power plants supply much of the baseload power (up to about 140 GW). Natural gas is used to meet shoulder ( GW) and some peak load (above 180 GW), while more expensive oil plants are used to meet peak load. 1

5 [1] Wind ($/MWh) 20 [1] Hydro ($/MWh) 10 [1] Biomass ($/MWh) 50 [1] Coal a ($/MMBtu) 1.88 2.69 [2] Natural gas a ($/MMBtu) 4.26 5.13 [2] Oil a ($/MMBtu) 19.99 22.

2 Regional Electricity sector delivered natural gas price ($/MMBtu) Table S2. Validation of model with industry reported data on percentage electricity generation by type Generation type Percentage electricity generation by type in ERCOT Model results Industry reported [3] Percentage electricity generation by type in MISO Model results Industry reported [4] Percentage electricity generation by type in PJM Model results Industry reported [5] Coal 45% 40% 80% 76% 54% 49% Natural gas 36% 38% 3% 4% 9% 12% Nuclear 13% 13% 15% 15% 35% 35% Other 6% 9% 3% 5% 2% 4% 12 a)ercot: y=0.94x, R 2 = b)miso: y=0.96x, R 2 = c)pjm: y=1.14x, R 2 = U.S. Average Electricity sector delivered natural gas price($/mmbtu) Figure S2. Relationship between regional and U.S. average electricity sector delivered natural gas prices. Cross markers represent historical data, solid lines represent linear regression trend. Regression equations are also presented. 2

Percentage electricity generation by type in MISO Model results Industry reported [4] Percentage electricity generation by type in PJM Model results Industry reported [5] Coal 45% 40% 80% 76% 54% 49%

3 Figure S3. Boxplots representing plant-level combustion emissions at fossil fuel plants in ERCOT, MISO and PJM. The red lines represent median values, the blue boxes represent the 25 th and 75 th percentiles, the whiskers represent extreme values, while the red plus markers represent the outliers Explanation of how annual mean life cycle emissions were estimated at a power plant through an illustrative example: Mean natural gas upstream emissions: 16 g CO 2 e/mj = 59 kg CO 2 Combustion emissions at natural gas plant A in ERCOT: 500 kg CO 2 Annual electricity generated by plant A: 20 MWh Efficiency of natural gas plant: 40% Total upstream emissions per MWh = 59 kg CO 2 / 40% = 148 kg CO 2 Combustion emissions per MWh = 500 kg CO 2 Life cycle emissions per MWh = = 648 kg CO 2 Annual life cycle emissions due to plant A = 648 kg CO 2 *20 MWh = 12,960 kg CO 2 e Note that in this example, a single value of upstream emissions (mean) was used. In our model, this would be representative of a single draw from the probability distributions used in the Monte Carlo simulations. 3

of how annual mean life cycle emissions were estimated at a power plant through an illustrative example: Mean natural gas upstream emissions: 16 g CO 2 e/mj = 59 kg CO 2 Combustion emissions at

4 Figure S4. Shifted short-run marginal cost curve (supply curve) for PJM, for natural gas price of $2.5 per MMBtu. When compared to the original supply curve for PJM in Figure S1, the blue markers indicating natural gas plants appear earlier than the coal plants, indicated by red markers, and nuclear plants, indicated by the green markers in the supply curve. As an example, about 90 natural gas plants are to the left of 120 GW in this figure, while this number is only about 30 in the original supply curve in Figure S1. Table S3. Estimated natural gas use and average capacity factors for base case, and Scenarios 1 and 2 No. Case a Coal use (million tons) Natural gas use (Bcf) Natural gas capacity factor (%) ERCOT MISO PJM ERCOT MISO PJM ERCOT MISO PJM 1 Base case Natural gas price of $ per MMBtu (Scenario 1) 3 Natural gas price of $ per MMBtu (Scenario 1) 4 Natural gas price of $ per MMBtu and nuclear as must-run (Scenario 1) 5 Natural gas price of $ per MMBtu (Scenario 2) 6 Natural gas price of $ per MMBtu (Scenario 2) 7 Natural gas price of $ per MMBtu and nuclear as must-run (Scenario 2) a Natural gas prices listed in this table represent the U.S. average delivered price and were updated to appropriate regionspecific prices using the regressions showed in Figure S4. 4

indicated by the green markers in the supply curve.

5 Figure S5. Annual reduction in SO 2 and NO X emissions due to change in natural gas price. Panels a) c) represent results for Scenario 1 where the minimum operating limit of coal steam plants is 50%. Panels d) f) represent results for Scenario 2 where the minimum operating limit of coal steam plants is lowered to 30%. Figure S6. A detailed explanation of how to read the figures representing fuel mixes for different scenarios (Figures 1 and S7) modeled in this study. Note that the numbers in boxes surrounding the bars are rounded off. 5

Panels d) f) represent results for Scenario 2 where the minimum operating limit of coal steam plants is lowered to 30%. Figure S6.

6 Figure S7. Percent electricity generation by energy source for the base case, compared to cases of varying natural gas price in for an additional scenario where the minimum-operating limit of coal steam plants is lowered to 0%. Dotted lines indicate percentage electricity generation by energy source for the base case (represented by heights of stacked bar to the farthest left in each panel). Total electricity generated in ERCOT: 320 quadrillion Wh, MISO: 590 quadrillion Wh, PJM: 710 quadrillion Wh. For a detailed explanation on how to read this figure, refer to Figure S6. 6

where the minimum-operating limit of coal steam plants is lowered to 0%.

7 Figure S8. Annual reduction in life cycle GHG emissions due to change in natural gas price for an additional scenario where the minimum-operating limit of coal steam plants is lowered to 0%. Error bars represent 90% confidence interval of change in life cycle GHG emissions. Note that error bars are estimted for all natural gas prices, although some are not visible in the figure because of their small magnitude Literature Cited 1. Newcomer A, Blumsack SA, Apt J, Lave LB, Morgan MG. Short Run Effects of a Price on Carbon Dioxide Emissions from Electric Generators. Environmental Science & Technology. 2008;42(9): U.S. Energy Information Administration. Average cost of fossil-fuels for electricity generation Available from: 3. Electricity Reliability Council of Texas Inc. ERCOT Quick Facts. Energy p Available from: Quick Facts - March 2011.pdf 4. Manitoba Hydro. Manitoba Hydro Undertaking # Available from: 5. Sotkiewicz PM, Helm MG. Coal Capacity at Risk for Retirement in PJM : Potential Impacts of the Finalized EPA Cross State Air Pollution Rule and Proposed National Emissions Standards for Hazardous Air Pollutants

Note that error bars are estimted for all natural gas prices, although some are not visible in the figure because of their small magnitude Literature Cited 1.

Implications of changing natural gas prices in the United States electricity sector for SO 2

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