What is the fuel of the future? Prospects under the Clean Power Plan

Martin T. Ross and Brian Murray

Energy Economics, 2016, vol. 60, issue C, 451-459

Abstract: EPA proposed the Clean Power Plan (CPP) to regulate CO2 emissions from existing power plants. The CPP establishes state-by-state emission rate goals for affected fossil units, largely existing coal and natural gas combined cycle generators. A key element of the proposal is its flexibility mechanisms, including the ability of states to trade obligations with other states and to convert to mass-based targets. How states decide to take advantage of this flexibility may have significant impacts on fuel markets of the future. This analysis uses the DIEM economy/electricity model to examine the consequences of a range of these alternative choices for fuel demands across the United States. Key findings for the June 2014 proposal include: the CPP tends to continue an ongoing shift in fuel consumption by electricity generators from coal to natural gas, a rate-based approach to CPP leads to more gas use in the early years than a mass-based approach but the effect disappears over time as new more-efficient gas units are constructed, and there may be substantial regional variation and stresses in fuel markets, especially over the next five years.

Keywords: Electricity generation; Clean Power Plan; Natural gas; Emission rates (search for similar items in EconPapers)
JEL-codes: C68 Q4 Q42 Q43 Q47 Q48 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:60:y:2016:i:c:p:451-459

DOI: 10.1016/j.eneco.2016.09.021

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