2005 to 2045 (Wise et al., 2007). The two carbon price (CP) scenarios modeled by PNNL assumed future market prices for CO2 allowances growing at different rates. In one case (called CP1), allowance prices per tonne of CO2 increased from an initial $12 in 2015 to $20 by 2035 and $25 in 2045. The second case (CP2) started at the same $12 per tonne in 2015, but increased more sharply to $32 by 2035 and $52 in 2045. Each CP case was combined with two fuel price (FP) cases based on EIA’s Annual Energy Outlook. The “base case” fuel prices (FP1) were the same as EIA’s Reference Case values, while the second case (FP2) represented EIA’s “constrained supply” case in which natural gas prices for power generation rise to $7 to $9 per million Btu (MBtu) by 2030 (compared with $5 to $7/MBtu for the base case). Figure 2.4 shows the resulting CO2 emissions from U.S. power plants for the four scenarios, and Figure 2.5 shows the impact on utility coal use, expressed in terms of the installed capacity of coal-fired power plants. Also shown is a “business-as-usual” reference case, which uses the EIA’s base case energy prices but does not impose any CO2 emissions control policy (CP0FP1).
Figures 2.4 and 2.5 show that the lower CO2 allowance prices (up to about $25 per tonne of CO2) result in reduced CO2 emissions, as well as decreased use of coal, relative to the base case, as in the EIA cap-and-trade scenarios shown earlier. However, for higher natural gas prices (FP2 cases), coal use actually exceeds the reference case value, even with higher carbon prices. In these scenarios, carbon capture and sequestration (CCS1) plays an increasingly important role in reducing CO2 emissions and enabling coal to remain economically viable. The combination of high carbon prices and high natural gas prices (scenario CP2FP2) brings about the largest long-term reduction in CO2 emissions as well as the greatest increase in coal use—exceeding even the business-as-usual (CP0FP1) reference case scenario projections. In large part, this is because the PNNL scenarios have much smaller increases in the use of nuclear and renewable energy for power generation compared to the earlier EIA Cap-Trade 4 scenario. Most of the fuel substitutions in the PNNL cases occur between coal (with and without CCS) and natural gas (Wise et al., 2007).
This section summarizes results of scenarios developed by a number of different organizations to estimate future international coal production and use. Again, results are intended to be illustrative of the range of technical, economic, and policy variables that will influence future coal production and use.