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Cleaner and Cheaper: New NRDC Analysis Shows More Options and Deeper Cuts in Carbon Pollution at Lower Cost Possible Under EPA Power Plant Standards

Dan Lashof

Posted March 20, 2014 in Curbing Pollution, Solving Global Warming

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NRDC released an updated analysis of our 2012 proposal on how to cut carbon pollution from America’s power plants under the Clean Air Act at a news conference held today at the National Press Club.

NRDC’s new analyses shows that 470 to 700 million tons of carbon pollution can be eliminated per year in 2020 compared to 2012 levels. Doing so would yield $28 billion to $63 billion in health and environmental benefits, far outweighing the costs.

These are much greater emission reductions than found in our original analysis, which projected a 270 million ton reduction in 2020 relative to 2012.

The better outcomes result from updating the 2012 model to reflect recent trends in the electricity industry, including lower electricity demand than previously expected and reduced costs for wind turbines, and natural gas.

The analysis released today demonstrates there are various paths, not just one, to achieve dramatic reductions in the carbon pollution power plants release. The new analysis examines solutions that rely, to varying degrees, on energy efficiency, wind energy, and carbon capture and storage.     

The new analysis also incorporates a significantly improved approach to analyzing energy efficiency, which is now incorporated into the model as an option which is selected (or not) based on its costs compared with other resources (see the Additional Details box in the issue brief for the specifics).

The cases described in today’s report are the:

  • Reference case, which assumes no new policies and is updated to reflect the reference case of the Energy Information Administration’s Annual Energy Outlook, 2013  (Our prior report was benchmarked to EIA’s 2011 Annual Energy Outlook).
  • Moderate, Full Efficiency case, which assumes the same emission standards and the same achievable energy efficiency resources as in NRDC’s 2012 analysis.
  • Moderate, Constrained Efficiency case, which assumes the same emission standards and one-half the achievable energy efficiency resources as in NRDC’s 2012 analysis.
  • Ambitious, Full Efficiency case, which assumes more stringent emission standards and the same achievable energy efficiency resources as in NRDC’s 2012 analysis.
  • Ambitious, Constrained Efficiency case, which assumes more stringent emission standards and one-half the achievable energy efficiency resources as in NRDC’s 2012 analysis.
  • Ambitious, Constrained Efficiency, PTC case, which assumes more stringent emission standards and one-half the achievable energy efficiency resources as in NRDC’s 2012 analysis, plus an extension of the wind energy production tax credit until 2020.

The analysis shows that we could:

  • Cut power plant carbon pollution by 21 to 31 percent in 2020, and by 25 to 36 percent by 2025, compared to 2012 levels of pollution.
  • Reduce annual emissions by 470 to 700 million tons of carbon pollution by 2020.
  • Stimulate investments of $52 billion to $121 billion into cost-effective energy efficiency and renewable energy by 2020.
  • Prevent more than 17,000 asthma attacks annually, avoid more than 1,000 emergency room visits and prevent thousands of premature deaths by 2020.
  • Deliver benefits in lives saved, reduced illnesses and damage avoided from climate change that surpass the cost by $21 billion to $53 billion by 2020.
  • Achieve all these benefits without significantly affecting consumers’ electricity bills.

Like our 2012 report, the new analysis upends conventional wisdom. It shows that not only is it possible to use the Clean Air Act to reduce power plant carbon pollution significantly and cost-effectively, there are many pathways to do so without increasing our reliance on natural gas.  In fact, all of our policy scenarios involve less use of natural gas for power generation in 2020 than we actually used in 2012.

Figure 1 shows the projected generation mix in 2020 in the Reference case and five policy scenarios. Energy efficiency is projected to be the primary tool for achieving emission reductions if the full achievable energy efficiency resources is implemented by the states. If energy efficiency is constrained, then other emission reduction options play a larger role, such as increased reliance on wind power (particularly if the federal production tax credit is extended until the carbon standards kick in), retrofitting some coal plants to capture their CO2 for use in enhanced oil recovery, and a modest increase in the natural gas market share (although it remains below the 31% market share held by natural gas in 2012) .

 

Figure 2 shows the emission trajectories in each of the cases along with recent trends. Between 2005 and 2012 power sector emissions dropped by 16 percent. Emissions rebounded slightly in 2013 with rising gas prices, but expected coal retirements over the next few years are expected to result in 2020 emissions essentially equal to 2012 levels in 2020 in our Reference case. The Ambitious cases result in an additional reduction of about 30 percent below 2012 levels by 2020 (660-700 million tons), while the Moderate cases reduce emissions 21 to 24 percent (470-530 million tons).

 

Figure 3 shows the emission reductions relative to the reference case , not just for CO2, but also for SO2 and NOx. The reductions for all three pollutants are beyond what is expected from implementation of standards already in place, and the SO2 and NOx reductions are of the same magnitude as other options (such as Tier III vehicle and fuel standards) available to states for complying with ambient air quality standards.  

 

Figure 4 shows the overall costs and benefits. Even though the Ambitious cases have somewhat higher compliance costs than the Moderate cases, they also have higher net benefits because the benefits increase more than the costs. Net benefits are highest in the Ambitious Full efficiency case at over $50 billion, with total benefits more than 6 times the compliance costs.

 

Along with the Issue Brief, NRDC is publishing technical appendices consisting of tables containing detailed assumptions and model results for generating capacity, capital and operating costs, changes in wholesale electricity prices, carbon credit prices and other details (posted here).

But don’t get lost in those details.

The bottom line is clear: Ambitious standards could eliminate hundreds of millions of tons of carbon pollution, save thousands of lives and stimulate a surge in clean energy investments. Unlimited carbon pollution jeopardizes our children and future generations. We know where it comes from. Now is the time to get after it.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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