WASHINGTON—Between 2005 and 2015, US electricity sector emissions of nitrogen oxides, which harm human health and the environment, declined by two-thirds. At the same time, electrical generation shifted from coal-fired plants to natural gas-fired plants and renewables, with about one-third of coal-fired plants retired or to retire soon. Since then, a sharply contested policy question has ensued unresolved: Did emissions and coal-fired profits fall due to regulations or from economic shocks to markets like reduced energy consumption, wind generation, and gas prices?
Today, in a report posted by researchers from Resources for the Future (RFF), an analysis of that question is provided using new computational modeling. The researchers are RFF Senior Fellow Joshua Linn and Kristen McCormack of Harvard University. Their study is, The Roles of Energy Markets and Environmental Regulation in Reducing Coal-Fired Plant Profits and Electricity Sector Emissions. They use a new model of the eastern US electricity sector to compare the effects of environmental regulation with surprises in natural gas prices, electricity demand, and wind generation.
The authors find that decreases in electricity consumption and natural gas prices account for most of the decline in coal plant profitability and emissions. The stringency of regulation affects emissions, but had very little effect on coal plant profitability.