1. A power company is considering a new, 500 MW power plant and trying to decide

Question

1.      A power company is considering a new, 500 MW power plant and trying to decide between burning coal or burning natural gas. The company is concerned that they may have to pay a carbon tax of $10 per 2,000 lb ($10 per ton) of CO2 emitted by the new plant. Burning coal in the new plant will result in CO2 emissions of 500 lb/MWh (pounds of CO2 per megawatt-hour of electric energy produced), while burning natural gas will result in CO2 emissions of 300 lb/MWh.

a.      How much CO2 will be emitted by the coal burning plant in one year?

b.      How much CO2 will be emitted by the natural gas burning plant in one year?

c.       How much more carbon tax might the company have to pay each year if it chooses to burn coal instead of natural gas in the new power plant?

Explanation / Answer

a) As plant capacity is 500MW then total production in a year will be = 365*24*500=4380000MWh

then CO2 produced by burning coal will be = MWh produced* 500 lb/MWh= 2.19*109 lb

b) CO2 produced by burning natural gas in one year = MWh produced * 300 lb/MWh =1.314*109 lb

c) If coal is burned instead of natural gas,extra CO2 emitted is = 0.876*109 lb

so extra tax is = 0.876*109 lb *10/2000 = 4.38 *106 $

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