Date of Award:

5-2013

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Economics and Finance

Advisor/Chair:

Man-Keun Kim

Abstract

This research examines the physical and economic feasibility of 5% biomass co-firing in the coal-fired power plants of Utah. Transportation models is used to find out the physical feasibility of 5% biomass co-firing, as well as locate the supply zone for each power plant that would minimize the transportation cost. Additional cost required for 5% biomass co-firing and the economic benefits associated with biomass co-firing are calculated. The additional cost required for 5% biomass co-firing is estimated to be $34.84 million. Previous studies on CO2 emission reduction are used to compute the economic benefit attain from CO2 reduction by selling carbon credits in the carbon trading market. Based on 2010 emission record in Utah, 5% biomass co-firing might reduce 0.71~2.13 million metric tons of CO2 and, in turn, bring the annual economic benefit of $11.37~$34.10 million assuming $16/ton of CO2 in the emission trading market. The regression model is used to find the relationship between PM emission and the human health damage. The regression results show that decreases in 1% of PM25 emission improves the human health in U.S. by 0.65%~0.67% in value. Five percent biomass co-firing generates annual economic benefits of $6.72~$9.93 million in Utah depending on the emission reduction scenarios. Note that these might not be the precise economic benefit from the biomass co-firing in Utah because elasticities estimated in the regression are expected to be lower in Utah. This is because most of power plants in Utah are located in open areas. Altogether, the economic benefit from 5% biomass co-firing is estimated to be $38.55 million assuming the medium emission reduction scenario, moderate carbon price ($16/ton of CO2) which is higher than the additional cost of biomass co-firing to generate electricity ($34.84 million). The benefit cost ratio is calculated as 1.107. Five percent biomass co-firing is economically feasible when benefits from all the positive externalities are included. The findings of the research suggest that in order to make 5% biomass co-firing physically and economically feasible, Utah needs cooperation from Idaho and the price of carbon and biomass would have to be $16 and $20, respectively.

Comments

This work made publicly available electronically on 5/2013

Included in

Economics Commons

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