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Coal-Biomass Co-firing within Renewable Portfolio Standards: Strategic Adoption by Heterogeneous Firms and Emissions Implications

Author

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  • Brayam Valqui
  • Mort D. Webster
  • Shanxia Sun
  • Thomas W. Hertel

Abstract

As electricity from coal declines, co-firing coal plants with biomass has been proposed to extend coal unit life, increase production, and reduce carbon emissions. Previous studies reach conflicting conclusions on whether coal biomass co-firing would result in a net increase or decrease in carbon emissions. We explore whether biomass co-firing would decrease emissions using a novel framework that includes two critical features of electricity markets: strategic adoption decisions by firms and intertemporal constraints on power plant operations. We apply this framework to a case study based on the Midwestern U.S. electricity market and show that profit maximizing firms will retrofit mid-efficiency coal units, rather than the most or least efficient units. We demonstrate that, contrary to expectations, this strategy leads to a net increase in system-wide carbon emissions under high carbon prices because of the other generators displaced by co-firing units.

Suggested Citation

  • Brayam Valqui & Mort D. Webster & Shanxia Sun & Thomas W. Hertel, 2023. "Coal-Biomass Co-firing within Renewable Portfolio Standards: Strategic Adoption by Heterogeneous Firms and Emissions Implications," The Energy Journal, , vol. 44(5), pages 115-148, September.
    • Handle: RePEc:sae:enejou:v:44:y:2023:i:5:p:115-148
    DOI: 10.5547/01956574.44.4.bval
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    References listed on IDEAS

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