In the graph below, we explore two important aspects of EPA’s Clean Power Plan.
- EPA’s state targets for CO2 emissions reductions for existing power plants are in terms of emissions rates—mass of CO2 emissions per unit of electricity generation (lb/MWh). An alternative way to measure emissions reductions (and what matters) is mass terms alone (lb or tons), independent of electricity generation. To examine this, we translate the rate targets into emissions reductions.
- The targets are composed of four building blocks and we show the reductions in these four components. The building blocks breakdown is meaningful because it shows emissions outcomes in the case where some building blocks don't survive legal challenge.
EPA gives states the option to convert their rate targets to mass targets. Whether states adopt rate or mass targets will be consequential. An emissions rate alone doesn’t pin down how much carbon will be emitted; that depends on the amount of electricity produced during the compliance period (2020-2030). A high rate of economic growth would likely lead to increased power generation. High penetration of electric vehicles would also drive increased generation. More generation means more emissions are possible while still holding the emissions rate constant. Therefore, emissions from the power sector depend on the sector’s growth if the states adopt the rate targets proposed by EPA.
The Energy Information Agency’s (EIA) Annual Energy Outlook (AEO) 2014 Reference Case provides a recent projection of business-as-usual electricity production, from which we can infer future emissions if EPA’s proposal isadopted. The calculation is simple: emissions = EIA generation x EPA emissions rate targets, aggregated across the states. The solid purple line in the figure below is the result. The orange line shows business-as-usual emissions (i.e. without EPA’s policy) from the AEO Reference Case. The difference between the two lines is the emissions reductions implied by EPA’s rate targets. Note that the AEO projections include generation and emissions from new natural gas combined cycle (NGCC) generators. EPA leaves it up to states to determine how new NGCCs will be treated in the regulations.
The slope of the solid purple line follows from the assumption that the states exactly meet the target emissions rate during the 2020-2029 compliance period in every year. EPA, however, allows states to meet the target on average over the decade. States will undoubtedly take advantage of this opportunity, so the slope of the line isn’t necessarily accurate, but the area under it, which represents total emissions during the decade, is. The emissions trajectory might vary from the line, but total emissions will need to be the same. The dashed purple line is one illustration of this, and any other trajectory that maintains the same total emissions is also possible.
The dashed grey line shows the commitment made by the United States in Copenhagen (17% below the 2005 emissions level by 2020, 30% below by 2025, and 42% by 2030)—assuming that the power sector follows the reduction pathway proposed for the economy as a whole. In reality, more cost-effective emissions reductions exist in the power sector than in other sectors, so it is likely that emissions from the power sector will need to be less than shown here for the whole economy to be on track to meet the Copenhagen commitment. The projected emissions pathway in the Copenhagen pledge is steeper than either of the EPA target pathways shown, but remember that the slope of the purple lines is just a guess. What is meaningful is that total 2020-2030 power sector emissions under EPA’s proposal are in the neighborhood of the Copenhagen commitment, even a little less.
The four blue regions show the components of EPA’s targets: the “building blocks”: 1) heat rate improvements at coal boilers, 2) redispatch to existing NGCC generators, 3) more renewables and retention of nuclear, and 4) demand-side energy efficiency. The top of the blue area shows total emissions if current emissions rates persist and EIA’s power generation projection prevails. These emissions are greater than those projected by EIA (orange line) because EIA predicts that the power sector’s emissions rate will decline somewhat even without EPA requirements. The emissions reduction contributions of each of the building blocks are shown in successively darker shades of blue moving down from the top of the area.
Comparing the building blocks shows that block #2 (shifting generation to existing NGCCs) makes the largest contribution. The other three blocks are of similar magnitude to each other. Remember that the building blocks are just used to create EPA’s targets—states are free to cut their emissions rates in other ways if they prefer. Breaking down the blocks is not just academic; EPA expressly intends the blocks to be severable under legal challenge. That means that if any of them are dropped by EPA or rejected by courts, then the emissions reductions attributed to those blocks won’t occur. EPA may need to revise targets, the states may need to be creative, and we’ll be watching to see how meaningful the emissions reductions will be across the sector.
