Clean Power Plan doing decisions impact CO2 emissions and electricity prices

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The U.S. Environmental Protection Agency’s (EPA) Clean Power Plan (CPP) regulates CO dioxide (CO2) emissions during existent fossil-fueled electric energy plants, though a ultimate energy-related emissions outcome depends to an critical border on how a order will be implemented by states. Because a CPP provides a coherence to select opposite correspondence options for shortening CO2 emissions, EIA has constructed an Issues in Focus research that considers several correspondence paths.

Image credit: U.S. Energy Information Administration

Image credit: U.S. Energy Information Administration

One of a many poignant options is a correspondence metric itself. States might select between mass-based standards, that levy an comprehensive top on a volume of CO2 allowances, or rate-based standards, that extent a volume of CO2 per section of electricity generated. Each state’s choice might have implications for other states, as a CPP provides a coherence for states selecting a same correspondence choice to cooperate. For example, for dual states complying with mass-based standards, a state with partially low correspondence costs could revoke CO2 emissions next a aim turn and sell a additional allowances to another state with partially high correspondence costs.

Instead of displaying any state individually, EIA’s research considers 22 electricity marketplace regions, that simulate electricity markets improved than state borders.

In terms of CPP compliance, a AEO2016 Reference case assumes that a CPP is implemented according to report and that states approve with a mass-based standard.

The CPP Rate case assumes all regions select rate-based standards instead of mass-based standards.

The CPP Interregional Trading case uses mass-based standards as in a Reference box though allows stipend trade within a Eastern Interconnection and within a Western Interconnection, a dual largest interconnections of a North American electric grid, covering radically all of a United States solely most of Texas.

The CPP Allocation to Generators case assumes that a mass-based allowances are allocated to a generators that furnish a energy instead of to load-serving entities that sell a energy to a end-use customers. The Reference box assumes that a allowances are allocated to a load-serving entities, and these revenues yield a remission on consumers’ bills. Allowances allocated to generators might outcome in a cost of a stipend issuing by to consumer prices.

The CPP Extended case serve reduces mass-based targets after 2030 instead of progressing a consistent turn as specified in a CPP. In this case, power-sector CO2 emissions are compulsory to be 45% next 2005 levels in 2040, compared to 35% in 2030.

The No CPP case assumes a CPP, that is now on reason tentative legal review, is henceforth voided.

In general, power-sector CO2 emissions are top in a No CPP box and lowest in a CPP Extended case, during 19% and 45% next 2005 emissions levels in 2040, respectively. From an emissions assets perspective, all other scenarios are identical to a Reference box by 2030, where power-sector CO2 emissions are about 35% next 2005 levels. In a CPP rate case, CO2 emissions start to arise after 2030 as both electricity era and ensuing emissions increase. In a CPP Interregional Trading case, CO2 emissions are somewhat aloft than in a Reference box as a few regions have some-more difficult existent programs ensuing in additional CPP allowances that can be sole to other markets.

Because a correspondence paths have implications for correspondence costs, a several CPP cases outcome in somewhat opposite sell electricity prices. EIA projects aloft sell electricity prices in a CPP cases essentially since of increases in fuel costs compared with changeable to healthy gas-fired era and collateral costs compared with renewable ability additions. Price effects are identical in a Reference and CPP rate cases where a normal electricity cost from 2022 by 2030 in both cases is 2% aloft than in a No CPP case, and 3% aloft on normal from 2030 by 2040.

In a CPP Extended case, serve reductions in CO2 emissions after 2030 over a levels specified by a CPP need some-more renewable and healthy gas-fired generation. The ensuing electricity cost in this box in 2040 is 3% aloft than in a Reference box and 6% aloft than in a No CPP case. In a CPP Allocation to Generators case, a allowances are distributed to generators instead of to load-serving entities and a cost of allowances is enclosed in extrinsic prolongation costs instead of rebated to consumers. As a result, a normal electricity cost from 2022 by 2040 in a CPP Allocation to Generators box is 1% aloft than in a Reference box and 4% aloft than in a No CPP case.

More research about a Clean Power Plan and minute formula for all of a CPP cases are enclosed in the Annual Energy Outlook 2016 Issues in Focus article.

Image credit: U.S. Energy Information Administration

Image credit: U.S. Energy Information Administration

Source: EIA