The US electricity sector is much cleaner than it was just 10 years ago. The eastern United States accounts for most US electricity sector emissions, and emissions reductions in this region have driven a large part of the national trend. Emissions of sulfur dioxide and nitrogen oxides from the East are about a third of what they were a decade ago, mitigating the environmental and health problems these pollutants cause. Over the same time period, carbon dioxide emissions fell by about 15 percent.
These changes lie at the center of the current debate over national environmental regulation of the electricity sector. Regulations for sulfur dioxide and nitrogen oxides, such as the Clean Air Interstate Rule, have become increasingly stringent over the past decade. Opponents of stronger regulations claim that existing rules have been extremely costly while producing little benefit. Supporters of current or stronger regulations argue that they haven’t actually been very costly because other factors—like technological progress and policies supporting natural gas, renewables, and energy efficiency—are largely behind the ongoing transition to a cleaner power sector. Here we shed some light on the fundamental question at hand: Why has the electricity sector gotten so much cleaner?
Electricity sector emissions originate from the combustion of fossil fuels, including coal, natural gas, and oil. Combustion occurs at individual generating units. The eastern United States contains about 900 coal-fired units and at least 3,000 natural gas–fired units. To identify the reasons behind the decline in electricity sector emissions that has been observed over the last decade, we define three broad factors that together characterize the downward trend in US emissions.
The first factor isolates the scale, or total amount, of fossil fuel–fired generation. A decrease in scale would represent a situation where total generation fell while each unit’s emissions rate and share of total generation were held constant—lower scale would mean lower emissions. Changes in scale may result from changes in aggregate electricity demand (e.g., due to the recession), energy efficiency, and generation from non-emitting sources (nuclear, hydro, and renewables).
The second factor, generation share, represents the share of total generation that comes from each emitting unit. Changes in this factor could indicate a shift to cleaner fuels (e.g., coal to natural gas) in response to changes in fuel prices or a shift to more efficient units. This factor isolates changes in unit-level generation shares while holding constant total fossil fuel–fired generation and the emissions rates of individual units.
Finally, the emissions rate factor refers to each unit’s emissions rate, and changes here are measured while holding fixed total fossil fuel–fired generation and generation shares. For nitrogen oxides, the adoption of combustion and post-combustion controls reduce emissions rates. For sulfur dioxide, the adoption of post-combustion controls as well as changes in the sulfur content of the coal used for combustion can reduce emissions rates.
Figures 1 and 2 illustrate the contributions of these three factors to the overall two-thirds drop in emissions of nitrogen oxides and sulfur dioxide that has been observed over the past decade. For both pollutants, changes in scale explain about 10 percent of total emissions reductions. We can see most prominently the scale effects of the 2008–2009 recession, which reduced fossil fuel–fired generation. Changes in generation share account for about 30 percent of the total emissions decline that occurred over this period. The decrease in natural gas prices after 2008 explains most of this effect—that is, low natural gas prices account for about one-third of the overall drop in emissions. Changes in emissions rates explain the remaining 60 percent of emissions reductions. Emissions rates have fallen throughout this period with the continued adoption of pollution controls, among other factors. For nitrogen oxides, pollution controls explain nearly all of the decline in emissions rates. Because units would not include emissions controls in the absence of regulation, environmental regulation accounts for most of the nitrogen oxides emissions reductions. The same is probably true for sulfur dioxide.
Figure 1. Nitrogen Oxides Emissions Reductions due to Changes in Scale, Generation Share, and Emissions Rate
Figure 2. Sulfur Dioxide Emissions Reductions due to Changes in Scale, Generation Share, and Emissions Rate
In contrast to nitrogen oxides and sulfur dioxide, Figure 3 shows that changes in scale and generation share account for roughly equal parts of the overall reduction in carbon dioxide emissions over the past decade. The drop in natural gas prices, the recession, and energy efficiency and renewables penetration in the market have all contributed to the reduction in carbon dioxide emissions. Changes in the emissions rate factor for carbon dioxide are practically nonexistent because a unit’s carbon dioxide emissions rate, which depends on its heat rate (efficiency), varies much less across units than the emissions rates of sulfur dioxide or nitrogen oxides. The effects of the 2008–2009 recession are also more visible for carbon dioxide than for the other two pollutants.
Figure 3. Carbon Dioxide Emissions Reductions due to Changes in Scale, Generation Share, and Emissions Rate
Overall, changes in emissions rates explain most of the overall decline in sulfur dioxide and nitrogen oxides emissions. Because regulations are the primary driver of changes in emissions rates, this decomposition suggests that regulation, rather than changes in market forces such as the price of natural gas and cost of renewables, explains most of the emissions reductions over this period.
However, this doesn’t mean that the regulations have been responsible for a comparable portion of the costs of emissions reductions. The costs and benefits of regulation depend on the interactions among overlapping state and federal regulations—and on the influences of factors such as innovations in renewables technologies and increases in energy efficiency. We’ll return to these points in future blog posts.