Tag Archives: Environmental Protection Agency

With new market structures and business models, consumers can help states reduce carbon emissions

July 8, 2014 |

 

On June 2, in a historic move towards addressing CO2’s climate impacts, the Environmental Protection Agency (EPA) released its Clean Power Plan proposed rule for regulating carbon emissions from existing power plants. The regulations encourage states to take advantage of a range of CO2-reducing methods, like energy efficiency and renewable energy, rather than requiring all emissions reductions to occur at the power plants themselves. Electricity consumers can play an important role in states’ plans to meet the regulations, if regulators can take advantage of all the resources they can provide. Fully utilizing consumers’ electrical resources may require the help of new market structures and business models.

The value that individuals, households, and businesses can provide to the electric grid could be quite significant. Technologies such as rooftop solar panels, “smart” thermostats, more efficient appliances, and electric vehicles, especially when combined with smart meters and other smart grid technologies, could enable consumers to reduce the demands on the grid at peak times and help absorb excess generation from renewable generation when demand is low. As CPI discusses in our Roadmap to a Low Carbon Electricity System, many factors are already conspiring to make these consumer-level resources more valuable and accessible.

Wise use of these so-called distributed energy resources could replace some of the fossil-fuel power plants that would otherwise be needed to balance a renewable-generation-heavy grid, creating cost-effective emissions reductions. They could even make the grid more resilient to future severe weather.

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The Clean Power Plan means changes for coal, but not the ones you might expect

June 18, 2014 |

 

Under President Obama’s recently announced Clean Power Plan, the Environmental Protection Agency (EPA) proposed that states cut greenhouse gas emissions from existing power plants by 30 percent from 2005 levels.

Commenters on both sides of the aisle say this rule means big changes for the coal industry.

But before we get fired up about the changes, it’s important to take a look at the facts: While states will need to retire coal plants at the end of their useful lives to meet the proposed limits, EPA’s rule would give states a great amount of flexibility to avoid coal asset stranding and still meet emissions reduction targets. In fact, valuing the right services from coal plants will prove the more important question for a low-cost, low-carbon electricity system.

Let’s look at why.

First, we need to understand what the rule really means for coal asset stranding. An asset is “stranded” if a reduction in its value (that is, value to investors) is clearly attributable to a policy change that was not foreseeable by investors at the time of investment.

In our upcoming analysis of stranded assets, Climate Policy Initiative finds that if no new investments are made in coal power plants and existing plants retire as planned (typically, 60 years for plants with pollution control technology investments and 40 years for plants without), the U.S. coal power sector stands to experience approximately $28 billion of value stranding from plants that are shut down. While that’s a big sounding number at first glance, it’s very small relative to the size of coal power sector. As the figure shows, that retirement schedule puts the U.S. coal power sector on track to come close to the coal power capacity reductions called for in the IEA 450 PPM scenario to limit global temperature increase to 2°C.

U.S. Coal Power w emissions (2)

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