On the Feasibility, Costs, and Benefits of an Immediate Phasedown of Coal for U.S. Electricity Generation

Stephen Holland, Matthew Kotchen, Erin Mansur and Andrew Yates

No 32235, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The phasedown of coal for electricity generation is considered vital to meeting global climate targets. Many countries have pledged to stop using coal, with some as early as 2030. While the United States has no target currently in place, several states do. In this paper, we examine the feasibility of phasing down U.S. coal-generated electricity given the existing fleet of power plants. In particular, we take consumption as given and evaluate how prioritizing natural gas generation over that of coal would change emissions and operating costs. To do this, we develop a replacement algorithm based on transmission regions and marginal cost comparisons. Using our preferred scenarios, we find that between 66 and 94 percent of coal generation could be replaced immediately, reducing electricity sector carbon dioxide (CO₂) emissions between 18 and 29 percent – equivalent to between 5 and 8 percent of total U.S. energy related emissions. The cost range is between $49 and $92 per ton of CO₂, where benefit-cost ratios are favorable in some scenarios considering local pollutant co-benefits alone. Despite the command-and-control nature of prioritizing natural gas generation, we find it relatively cost effective even in comparison to a Pigouvian tax. We examine sensitivity of the results to transmission regions, replacement cost conditions, natural gas pipeline capacity, and alternative fuel prices.

JEL-codes: Q40 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-ene and nep-env
Note: EEE
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