Energy efficiency might slow coal’s bleeding under EPA CO2 plan

 Energy efficiency might slow coal’s bleeding under EPA CO2 plan

Natural gas combined-cycle generation is destined to benefit under the Environmental Protection Agency (EPA) Clean Power Plan, although the dash-to-gas won't be quite as severe if states make energy efficiency part of their compliance plan.

That's among the findings in an assessment of the rule by a research firm, Rhodium Group (RHG), supported by the Center for Strategic and International Studies (CSIS), a Washington, D.C. think tank.

The analysis used computer modeling to evaluate four scenarios under the EPA proposal to cut electric sector CO2 30% by 2030. Under each scenario use of natural gas combined-cycle [NGCC] power goes up.

“On the flip side, coal-fired power generation will likely take a hit, as will domestic coal production,” according to the report issued Feb. 9. The extent of the impact on natural gas and coal “will depend on any changes between now and the final and implementation decisions made by the states,” according to the report.

But in scenarios where energy efficiency [EE] is included the shift toward natural gas is much smaller, according to the report.

“NGCC generation increases more if states choose not to credit EE-as much as 660 terawatt hours (TWH) (a two-thirds increase in NGCC generation from current levels) above “business-as-usual” (BAU) levels projected in the EIA's 2014 Annual Energy Outlook on average from 2020 through 2030-while coal generation declines by 770 TWH,” according to the report.

“In scenarios where EE is included, the shift toward NGCC generation is much smaller, about 185 TWH on average in our National with EE crediting scenario (and 285 TWH in 2020 in the Regional w/ EE crediting case), and all but disappears by the end of the compliance period,” according to the report.

Shale revolution is already eating away coal share of generation

Thanks to the shale revolution, cheap natural gas prices have already begun transforming the U.S. power generation landscape. Between 2008 and 2012, average delivered natural gas prices at domestic power plants fell from $8.90/mmBtu to $3.50/mmBtu, according to CSIS/Rhodium.

As a result natural gas combined cycle plants out-competed coal plants in wholesale markets. In 2012, the share of total electricity generated by coal averaged 37%, down from 48% in 2008, while natural gas's market share grew from 21% to 30%.

“No matter which compliance option states choose to meet the EPA's emission rate goals, we expect a significant shift towards greater NGCC [natural gas combined-cycle] generation, largely coming at the expense of existing coal generation,” according to the report.

One big variable is the level of cooperation between states. “How cooperation changes implementation costs is a major question state officials are trying to answer as they choose how to implement the CPP,” according to the CSIS/Rhodium report.

Another major variable is whether or not energy efficiency is included in state implementation plans. Power sector air pollution regulations have historically focused on generation-side compliance options.

The earliest the rule could take effect is Jan. 1, 2020, though legal challenges could result in delays, according to the report. EPA is working through the 1.6 million comments they received on the proposal and is still targeting a summer release of the final rule.

EPA has been regulating CO2 emissions from various mobile and stationary sources since 2010, following a 2007 Supreme Court ruling that obligated EPA to regulate greenhouse gas emissions if it found that they posed a threat to public health and public welfare (EPA issued a so-called endangerment finding with regard to GHGs in 2010).

EPA first turned to CO2 emissions from the electricity sector in 2012, when it issued a proposed rule for new fossil-fired power plants under Section 111(b) of the CAA. That particular proposal was never finalized although it later issued a new version to address new power plants.

Rhodium authors of the report include Trevor Houser, John Larsen, Sarah Ladislaw, Michelle Melton, Whitney Ketchum, and Shashank Mohan.

This article was republished with permission from

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