EIA: A Clean Energy Standard could reduce power sector CO2 emissions

Source: U.S. Energy Information Administration 

Source: U.S. Energy Information Administration, National Energy Modeling SystemThe Energy Information Administration (EIA) recently released an Analysis of Impacts of the Clean Energy Standard Act of 2012, pursuant to the request of Chairman Bingaman of the Senate Committee on Energy and Natural Resources. According to EIA's analysis, the proposed policy would reduce electric power sector carbon dioxide emissions 44% below EIA's Reference case in 2035 (see chart to right – click to enlarge). National average delivered electricity prices would increase 18% above the Reference case by 2035. However, for years before 2025, the national average electric power price increase due to the proposed policy is less than 5% above Reference case values.

A clean energy standard (CES) is a policy that promotes the use of clean energy in the electric power sector by requiring electricity providers to supply a specified share of their electricity sales from clean energy resources. CES policy specifications can vary substantially, including—but not limited to—factors such as the targeted clean energy level required, the types of energy resources that qualify as "clean", the credit level allocated to each qualifying resource, the exemption of certain types of electricity providers from the requirement, the extent to which generation from previously-existing capacity receives credits, and the inclusion of an alternative compliance payment mechanism.

The scenario specified in the Clean Energy Standard Act of 2012 (BCES12) awards full credits for renewable electricity generation online since 1992, and awards partial credits, according to the carbon intensity of generation, for plants that emit carbon dioxide at a rate lower than that of a supercritical (modern, efficient) coal plant. Generation from nuclear and hydropower plants built prior to 1992 does not receive credits, but is removed from the sales baseline when calculating a utility's required clean energy share. Small utilities are exempt from the CES requirement.

According to EIA's analysis, the BCES12 policy results in a significant reduction in electric power sector carbon dioxide emissions. They are 20% below the level in the Reference case by 2025 and 44% lower by 2035. Total energy-related carbon dioxide emissions are 8% below the level in the Reference case in 2025, and 18% lower in 2035 under the BCES12. The policy also results in a significant shift in the long-term electricity generation mix, with coal-fired generation in 2035 falling 54% below the Reference case level. The significant increase in coal retirements under the BCES12 policy is primarily offset by increased natural gas-fired generation through 2020, while increased nuclear and non-hydropower renewable generation plays a larger role between 2020 and 2035. In addition, total electric power generation falls slightly under the BCES12 policy. 

Source: U.S. Energy Information Administration, National Energy Modeling SystemElectricity prices are projected to increase under the BCES12, though the impact compared to the Reference case is not projected to exceed 5% until after 2025. By 2035, however, average delivered prices are projected to be 18% above the Reference case. Since electricity retailers with sales under a given level are exempt from the BCES12, the national average price impact does not reflect the potentially considerable divergence between the price impacts for customers of exempt versus non-exempt electricity providers. In addition, it does not capture the regional variation in price impacts, which may be significant based on factors including availability or scarcity of low-cost clean energy resources, current generation mix, existing local policies that already promote renewable energy, and the local regulatory structure for that region. Price impacts, as well as additional details about the BCES12, are provided in the report.



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