Environmental costs resulting from the use of hard coal to electricity generation in Poland

¹ Ph.D. Eng., The Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Wybickiego 7A, 31-261 Cracow, Poland
² D. Sc., Eng., Associate Professor; The Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Wybickiego 7A, 31-261 Cracow, Poland

^⁎ Corresponding author: kszlugaj@min-pan.krakow.pl

Abstract

In the world's fuel mix used for generating electricity, the most common fossil fuel is coal. In the EU, coal combustion and electricity generation entail the need to purchase emission allowances (EUA) whose purchase costs affect the costs of electricity generation significantly. The research described in the article shows how current market conditions shape the profitability of generating electricity from coal and how Clean Dark Spread (CDS) changes as a function of changes in energy and coal prices at the assumed levels of emission and prices of EUA allowances. The article compares the results of CDS calculations in two variants. Areas have been highlighted where prices of both coal and EUA allowances cause CDS to assume values at which the prices of generated electricity do not cover the costs of fuel (i) and CO2 emission allowances, cover all costs (ii), or constitute positive prices (iii), but still do not cover all fixed costs. With higher power plant efficiency, CO2 emissions are lower (0.722 t/MWh). The costs of purchasing fuel required to generate 1 MWh of electricity are also lower. In such case—even with relatively high prices of coal—a power plant can achieve profitability of electricity generation.