The Affordable Clean Energy Rule and the Impact of Emissions Rebound on Carbon Dioxide and Criteria Air Pollutant Emissions
Although the ACE reduces the emissions intensity of coal plants, it is expected to increase the number of operating coal plants and amount of coal-fired electricity generation, with 28% of model plants showing higher CO2 emissions in 2030 compared to no policy.
The Affordable Clean Energy (ACE) rule, the US Environmental Protection Agency's (EPA) proposed replacement of the Clean Power Plan (CPP), targets heat rate improvements (HRIs) at individual coal plants in the US. Due to greater plant efficiency, such HRIs could lead to increased generation and emissions, known as an emissions rebound effect. The EPA Regulatory Impact Analysis for the ACE and other analyses to date have not quantified the magnitude and extent of an emissions rebound. We analyze the estimated emissions rebound of carbon dioxide (CO2) and criteria pollutants sulfur dioxide (SO2) and nitrogen oxides (NOX ), using results from the EPA's power sector model, under the ACE in 2030 at model coal plants and at the state and national levels compared to both no policy and the CPP. We decompose emissions changes under a central illustrative ACE scenario and find evidence of a state-level rebound effect. Although the ACE reduces the emissions intensity of coal plants, it is expected to increase the number of operating coal plants and amount of coal-fired electricity generation, with 28% of model plants showing higher CO2 emissions in 2030 compared to no policy. As a result, the ACE only modestly reduces national power sector CO2 emissions and increases CO2 emissions by up to 8.7% in 18 states plus the District of Columbia in 2030 compared to no policy. We also find that the ACE increases SO2 and NOX emissions in 19 states and 20 states plus DC, respectively, in 2030 compared to no policy, with implications for air quality and public health. We compare our findings to other model years, additional EPA ACE scenarios, and other modeling results for similar policies, finding similar outcomes. Our results demonstrate the importance of considering the emissions rebound effect and its effect on sub-national emissions outcomes in evaluating the ACE and similar policies targeting HRIs.
Kathleen F. Lambert
Darius Gaskins Senior Fellow
Dallas Burtraw is a Darius Gaskins senior fellow at RFF. Burtraw’s research includes analysis of the distributional and regional consequences of climate policy and the evolution of electricity markets including renewable integration.
Jonathan J. Buonocore
Jonathan I. Levy
Charles T. Driscoll
Common Resources — Jun 19, 2023
Power-Sector Pollution Targeted by New Regulations from the US Environmental Protection Agency
Three new regulations have been announced by the US Environmental Protection Agency early this year to help achieve the policy goals of the Clean Air Act. The regulations target harmful air pollutants and greenhouse gas emissions.
Common Resources — Jun 1, 2023
Disclosing Wildfire Risks in Home Sales
New research finds that disclosing wildfire risks to potential homebuyers in California reduces sale prices.
RFF Live — May 19, 2023
Unplugging Emissions: Exploring New EPA Rules on Climate and Health
An RFF Live event examining three recent proposed and final rules on power-sector emissions from the US Environmental Protection Agency.