The potential impact of rate-based or mass-based rules on coal-producing states under the Clean Power Plan

Godby, Robert; Coupal, Roger

doi:10.1016/j.tej.2016.07.006

Cited by 2 publications

(1 citation statement)

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“…However, the future baseline emissions are too high to be consistent with the national and international U.S. commitments (EPA, 2015a). In particular, several studies have shown how the CPP will influence the future electricity mix and technological transformation at both national and regional level with significant reduction in coal demand and a strong increase in the role played by renewable (Brown et al, 2016, Cullenward et al, 2016, Godby and Coupal, 2016a, Ross et al, 2015, and Lu et al, 2016.…”

Section: Introductionmentioning

confidence: 99%

An Economic Assessment of Low-Carbon Investment Flows in the U.S. Power Sector

Wang

Brown

2016

SSRN Journal

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Abstract:This study used the GT NEMS model to analyze how the proposed federal regulation on carbon emissions will impact investments in the U.S. electricity generating capacity at the federal and Census Division level for [2016][2017][2018][2019][2020][2021][2022][2023][2024][2025][2026][2027][2028][2029][2030]. Results show that in order to reduce emissions by 32% by 2030, cumulative investments will increase from 399 to 414 billion USD by 2030. Under the scenario which addresses carbon leakage -covering new and existing power plants -cumulative investment will reach 475 billion USD by 2030. Addressing carbon leakage will affect not only the size of the investments but also the direction: when only existing power plants are covered investments in natural gas remains almost unchanged (123 billion USD) relative to the Reference case; while under the scenario that covers all power plants, investment in natural gas will be 24% lower and the investments in renewable will be 64% higher than the Reference. Carbon regulation will produce not only losers and winners among energy sources but also among U.S. states. While the South and Midwest states will experience much higher increase in cumulative investments with respect to the national average; Northeast and West states will reduce their overall investments by 2030 under the policy scenarios. JEL: Q42, Q43, Q48, Q58Key words: Clean Power Plan, Climate change mitigation policy, Investment, Electricity, United States Highlights: The study analyzed how the proposed federal regulation on carbon emissions will impact investments in the U.S. electricity generating capacity at the federal and Census Division level for 2016-2030.  The magnitude of investments does not change significantly when the climate policy is introduced but investments in fossil fuels decline by 30% relative to the reference case.  When carbon leakage is addressed cumulative investment are 20% bigger than in the reference scenario by 2030. Covering existing and new units will require additional 62 billion USD cumulative investment for 2016-2030 with respect to the scenario that covers only existing units.  Under more aggressive energy efficiency assumptions, total cumulative investments in the power sector decrease by 24-29% in 2016-2030 depending on the policy scenarios.  At the regional level: South and Midwest states will experience much higher increase in cumulative investments with respect to the national average; Northeast and West states will reduce their overall investments by 2030 under the policy scenarios.2

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Section: Introductionmentioning

confidence: 99%