Acid Rain: the Southern Company (a) Case Analysis
Acid Rain: The Southern Company (A) Case Analysis | Production Processes and Costs | | | |
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Executive Summary
In the year 1992, the Southern Company that held the Bowen plant, a coal-fired steam electric plant had to decide on the various options available to comply with the amendments in the Clean Air Act, effective 1995.
The Bowen plant was an unusually large plant with a capacity to serve the residential, commercial and industrial demands of 1 million people. The Bowen generators consumed 8.338 million tons of coal and generated 21,551 million kilowatt-hours of electricity. During 1990, Bowen plant emitted over 30 tons of sulfur dioxide per hour, an important precursor of acid rain. In 1990, Congress passes the Clean Air Act that aimed at controlling acid rain.
As per the Clean Air Act, beginning 1995 (Phase 1) all the coal-fired utility plants would be receiving allowances to emit 2.5 pounds of sulfur dioxide per million British Thermal Units (MMBtu) of coal consumed. In the year 2000 (Phase 2), all coal-fired utility plants, would get allowances worth 1.2 pounds per MMBtu of coal. The plants either had to reduce their emissions or purchase additional allowances from other firms.
The Bowen plant received allowances for 254,580 tons of sulfur dioxide for each if the five years, from 1995 till 1999. From year 2000, it would receive allowances worth 122,198 tons per year.
To comply with this new law, Southern Company had the following options: * Burn high sulfur Kentucky coal without scrubbing the exhaust gases, as in past, and buy the allowances from other firms. * Install scrubbers to remove sulfur dioxide from the exhaust gases of the generators. There were further two options available to be considered * Scrubbers could be installed from 1992 to 1994, to be ready for Phase one. * Install scrubbers from 1997-1999 and be ready for Phase 2. * Switch to low-sulfur coal from Kentucky or West Virginia. The
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Executive Summary
In the year 1992, the Southern Company that held the Bowen plant, a coal-fired steam electric plant had to decide on the various options available to comply with the amendments in the Clean Air Act, effective 1995.
The Bowen plant was an unusually large plant with a capacity to serve the residential, commercial and industrial demands of 1 million people. The Bowen generators consumed 8.338 million tons of coal and generated 21,551 million kilowatt-hours of electricity. During 1990, Bowen plant emitted over 30 tons of sulfur dioxide per hour, an important precursor of acid rain. In 1990, Congress passes the Clean Air Act that aimed at controlling acid rain.
As per the Clean Air Act, beginning 1995 (Phase 1) all the coal-fired utility plants would be receiving allowances to emit 2.5 pounds of sulfur dioxide per million British Thermal Units (MMBtu) of coal consumed. In the year 2000 (Phase 2), all coal-fired utility plants, would get allowances worth 1.2 pounds per MMBtu of coal. The plants either had to reduce their emissions or purchase additional allowances from other firms.
The Bowen plant received allowances for 254,580 tons of sulfur dioxide for each if the five years, from 1995 till 1999. From year 2000, it would receive allowances worth 122,198 tons per year.
To comply with this new law, Southern Company had the following options: * Burn high sulfur Kentucky coal without scrubbing the exhaust gases, as in past, and buy the allowances from other firms. * Install scrubbers to remove sulfur dioxide from the exhaust gases of the generators. There were further two options available to be considered * Scrubbers could be installed from 1992 to 1994, to be ready for Phase one. * Install scrubbers from 1997-1999 and be ready for Phase 2. * Switch to low-sulfur coal from Kentucky or West Virginia. The