Our work addresses the interaction between CO_2 policy and coal technology over the next 25 years. Coal power is a particularly attractive sector from which to seek CO_2 emission reductions because the emissions are from large point sources and several strategies are available to lower emissions. The electric industry currently contributes approximately 40% of global CO_2 emissions, and the coal electric industry about 30% of global CO_2 emissions. We develop a linear programming formalism that allows a high-level analysis of three kinds of competition: 1) between several kinds of new coal plants with and without CO_2 capture, each becoming more efficient and cheaper over time; 2) between retiring old coal plants, retrofitting them and constructing new ones; and 3) between building CO_2 capture capability into a new coal plant in two stages (the first stage being a "capture-ready" plant) and building the capability all at once. These competitions are examined under three matched pairs of trajectories of the CO_2 tax that result in three tax levels in 2030 ($100/tC, $200/tC and $300/tC): "sudden-change," where the tax is increased suddenly at around 2020, and "gradual-change," where the tax is increased gradually from 2005 to 2030 (fig. 1). We find that: ⅰ) a "sudden-change" carbon tax induces more retrofitting of vintage plants than a policy with "gradual-change"; ⅱ) all retrofit options considered appear at least once in the scenarios explored; ⅲ) the case for capture-ready plants is weak with current cost numbers available from literature.
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