Can CCS save coal fired power plants – The European perspective

• We provide a clear link between emission costs, fuel and IPP characteristics.
• We expand the existing equations for emission costs.
• We apply parametric estimation of technical and economic variables.
• Monte Carlo simulations show that a coal fired IPP is only marginally profitable.
• An IPP with CCS technology is completely unviable.

The purpose of this paper is to evaluate the carbon dioxide (CO2) emission costs of a coal fired independent power producer (IPP) operating in the European Union (EU). To meet its CO2 emission obligations the IPP has to choose between purchasing emission unit allowances (EUA) through EU Emission Trading Scheme and installing a CO2 capture and storage system (CCS). Since there are significant differences and inconsistencies in the existing studies, our goal is to clearly identify the key drivers behind CCS costs and to analyze the technical and economic viability of coal fired IPPs. An important question tackled in this paper is: at what EUA price level does an IPP with CCS technology become competitive in the current market?In this paper, we expand the existing equations for calculating cost metrics by directly accounting for the chemical properties of the feedstock. Instead of using a deterministic or a scenario-based approach, we apply parametric estimation of relevant variables. Our Monte Carlo simulations show that under the current regime of electricity and EUA price level, an EU based coal fired IPP is, at best, only marginally profitable while an identical IPP with CCS technology is completely unviable.