Analysis of policy options to reduce carbon emissions form the electricity sector

In 2015, the U.S. Environmental Protection Agency (EPA) finalized the first-ever carbon emission standard for existing U.S. power plants, the Clean Power Plan. The Clean Power Plan, provided demand-side incentives to the States which promote energy efficiency and the use of renewables and natural gas to reduce carbon dioxide emissions from the power sector. The Clean Power Plan was to be the centerpiece of U.S. efforts in the global treaty of carbon dioxide emissions the Paris Climate Agreement. However, the Trump Administration pulled the U.S. out of the Paris Climate Agreement and has proposed an alternate approach to carbon emission management, which focuses on improvement of the heat rate efficiency of individual electrical generating units, called Affordable Clean Energy (ACE). Recently, the DC District court struck down ACE and the Biden administration is committed to rejoin the Paris Accord. We have established the Clean Energy Futures (CEF) project to examine the costs and benefits of alternative policies to decrease carbon dioxide emissions from the electricity sector. The CEF project is a multi-institutional research initiative with experts from Syracuse University; Center for Climate, Health, and the Global Environment at the Harvard T.H. Chan School of Public Health; Resources for the Futures; and Georgia Institute of Technology.

The CEF team is analyzing 12 leading policy approaches to reducing carbon dioxide (CO2) emissions from the electricity sector: (1) recent rules promulgated by the U.S. Environmental Protection Agency (EPA), (2) clean electricity standards, (3) national cap and trade policies, and (4) carbon prices in the electricity sector.  Each electricity sector policy is compared to a no-policy reference case (business as usual) to estimate changes in: (1) CO2 emissions; (2) electricity system generation sources and system costs; (3) co-pollutant emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury emissions; (4) air quality; and (5) air quality-related human and ecosystem health outcomes.

From this work we have learned:

  1. All policies produce net benefits. Total monetized benefits exceed policy costs by $300 to 640 billion for 2020-2050, and climate benefits alone outweigh policy costs.
  2. Many policy pathways exist for achieving low or zero carbon emissions in the electricity sector and costs are modest (~15% above baseline costs) (Figure 1).
  3. Moderate ambition policies achieve 75% of the carbon emissions reductions of high ambition policies at ~9% above baseline costs (attaining zero emissions only adds 6%).

Policy design is important to costs, timing of emissions reductions, local air quality, and health outcomes.

Figure 1. Present value of system cost as a function of cumulative reduction in carbon dioxide emissions by 2050 from electric utilities for 10 different policies (a) and percent increase in present value system cost for 10 policy options compared to a business as usual reference case (b).