12/7/2011
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
Dallas Burtraw
Resources for the Future
Outline
• State Role in Implementation
• Simulations
• Additionality under the Clean Air Act Regime
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
1. State Implementation
• EPA model rule approach may be less risky
• Alternative approach: More reliance on state planning
1
12/7/2011
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
2. Simulations
• We know something about cost but less about magnitude
• In simulations, we find flexibility will:
– Reduce the change in retail electricity prices by 60%
– Result in less retirement of coal; much more investment in efficiency
• We also find opportunities beyond the coal‐fired power plant source category.
– Cofiring with waste biomass
– Credit trading with NGCC
– Phased program design
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
Where Do Coal Power Plants Fit in?
“Cost‐Effective” Measures
Source Category
CO2e reduction (% of US total)
Iron and Steel
0.19
Pulp and Paper
0.2‐0.4
Cement Plants
0.02‐0.2
Boilers (industrial, etc.)
0.2‐2
Petroleum Refineries
0.03‐0.3
Boilers (electric power)
1.7‐3.1
*Coal‐Fired Efficiency
TOTALS
[0.56‐1.4]
2.34‐6.19
Source: REEP 2011 using EPA 2008 and other sources
2
12/7/2011
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
3. Additionality under the Clean Air Act Regime
Waxman‐Markey:
• Explicit preemption of Clean Air Act for stationary sources.
Further, an “ emissions cap is an emissions floor”:
• Effective preemption of subnational efforts
• Partial crowding out of emissions reductions due to fuel market or technology changes
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
35%
Non-market Offsets – 3%
30%
25%
20%
Comprehensive Target – 20%
Emission Reductions in 2020
from 2005 Levels
Under Waxman‐Markey
Cap Level – 17%
15%
10%
Domestic Mitigation– 10%
Non‐Market Offsets
International Offsets
Domestic Offsets
Domestic Reductions
5%
0%
Burtraw, Fraas and Richardson, 2011. Note: Waxman‐Markey EIA modeling results include banking
EIA 2009. Energy Market and Economic Impacts of H.R. 2454 ‐ Basic Case. <http://www.eia.doe.gov/oiaf/servicerpt/hr2454/excel/hr2454cap.xls>
3
12/7/2011
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
“Additional” Short‐Run Emissions Reductions by 2020 under the Clean Air Act Regime
mmtCO2
Clean Air Act for stationary sources
CAFE
Additional Emission Reductions under W‐M
0
Additional Emissions Reductions under CAA
442 (upper estimate)
2016 standards included.
2025 standards might be additional.
163
241
0
Assume no further state policies
California (Tighter RGGI?)
0
49
TOTAL Emissions
Reductions
743
(12.9% from 2005 levels)
732
(12.7% from 2005 levels)
Shale Gas
Renewable Policies
GHG Regulation for Power Plants under the Clean Air Act December 7, 2011
Resources for the Future
Conclusion
Climate policy under the Clean Air Act is like a freight train – it is slow but will be hard to stop. Emissions reductions under a Clean Air Act regime may approximate those under Waxman‐Markey. EPA’s decisions, starting with the electric steam boiler GHG rule, have historic relevance.
Thank you!
4