Janusz Cofala

1. Janusz Cofala Air pollution control costs and emission reduction cost curves

2. Methodology, cost components • All costs in constant Euro 2005 • Net of taxes • Annual costs method • Costs based on international investment and operating experience • For developing countries – local components in investment costs included • Three levels of discount rate (under implementation) • 4% (social) • 10% (business) • 20% (private)

3. Cost coverage • Expenditures on emission controls include: • capital investments • fixed operating costs (related to capital investments), and • variable operating costs • GAINS calculates annual costs: • per unit of activity level • per ton of pollutant abated

4. Cost components • Cost parameters: • common (the same for all countries) • - unit investment costs, • - fixed O+M costs, • - extra demand for labor, energy, and materials • country-specific • - size of installation, • - plant factors, • - prices for labor, electricity, fuel and other materials, • - cost of waste disposal

5. Investment costs Stationary sources: I = (civ+ cif /bs)*v*(1+r) where: I – capital investments civ, cif – coefficients of investment function bs – boiler size v – relative flue gas volume (hard coal boiler =1) r – retrofit cost factor Mobile sources: I – Investment per vehicle

6. Annualized investments, fixed O+M costs Annualized investments (Ian): Ian = ann*I where: ann – annuity (annual payments that ensure that investments are paid off with interest at the end of the lifetime): ann = q/[1- (1+q)-lt] q – interest rate lt – lifetime of control equipment Annual fixed operation and maintenance (OMfix) costs: OMfix= I*f where: f – percentage of investments

7. Variable O+M costs OMvar = λl*cl /pf + λe*ce+ ef ∗η∗ (λs*cs+λd*cd ) where: η - emission removal efficiency, λl - labor demand (per thermal capacity unit), λe - additional energy (electricity and/or fuel) demand (per unit of fuel used), λS , λd - demand for sorbent and waste disposal (per unit of pollutant reduced), cl - labor cost, ce - energy price, cs - sorbent cost, cd - waste disposal cost, pf - plant factor (annual operating hours at full load), ef - unabated emission factor

8. Unit costs Per unit of activity (e.g., GJ fuel used): cact = (Ian + OMfix)/pf +OMvar Per ton of pollutant abated cpoll = cact/(ef * η) For some sectors (e.g., process sources) costs are given directly per unit of activity

9. Rules for reporting costs for multi-pollutant measures • GAINS optimization - "technology-based" approach: simultaneous effect of the measure on emissions of several pollutants included. Cost is associated with the measure, no cost allocation to pollutants necessary • Reporting tables: total cost reported under main pollutant. If a measure reduces NOx (and other pollutants), all costs are reported under NOx. If a measure reduces PM (and other pollutants but not NOx), all costs reported under PM

10. Average vs. marginal costs Average cost – cost per ton of pollutant removed with a given control option (from the unabated case) Marginal cost - extra cost for an additional measure per extra abatement of that measure (compared to the abatement with the option with lower efficiency) Stage 3 Slopes of red lines – average costs Slopes of blue lines – marginal costs Stage 2 Stage 1

11. An example cost curve for SO2 Cost curves describe how pollution control costs increase with increasing levels of emission reductions.

12. Cost curve for SO2 (model results - table) Categories of control technologies: A – can always be replaced with more efficient one; B – once installed cannot be replaced with more efficient one; Capacity classes: 1 – existing; 2 – new (post-2009)

13. Cost curve for SO2 (model results - graph)

14. Example of a cost curve (NH3) +Biofiltration +Housing Storage and application Urea subs.