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Power sector CO2 emissions depend on status of Clean Power Plan

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Hydrocarbon Engineering,

Trends in carbon dioxide (CO2) emissions from electricity generation through 2040 depend significantly on whether or not the Clean Power Plan (CPP) rule issued last August by the US Environmental Protection Agency (EPA) is implemented. Analysis in EIA's Annual Energy Outlook 2016 (AEO2016) examines what the CPP could mean for the fuels used to generate electricity, especially coal. On 17 May, EIA released an annotated summary of two AEO2016 cases. The Reference case assumes implementation of EPA's final CPP rule, while the No CPP case assumes the rule, enforcement of which is currently on hold pending judicial review, does not ever come into effect.

The Reference case assumes the CPP is implemented using the mass-based option (controlling the amount of CO2 emissions) rather than the rate-based option (limiting the rate of CO2 emissions per unit of electricity). The mass-based standards are modelled using allowances, with cooperation across states at the regional level and all allowance revenues rebated to ratepayers. Other CPP-related scenarios to be released over the coming weeks will examine different implementation alternatives. Some results, such as electricity prices and the mix of fuels used to generate electricity, are likely to depend significantly on compliance strategies.

In the Reference case, power sector emissions are projected to be 28% lower than the 2005 level in 2022, when the initial mass-based standards are scheduled to begin. Final targets take effect in 2030 and remain constant thereafter, and the corresponding reduction in CO2 emissions compared with 2005 levels is about 35% from 2030 - 40. In the No CPP case, power sector CO2 emissions are 7% higher than in the Reference case in 2022 and about 25% higher in 2030 and beyond, but these levels still remain well below the 2005 level. Currently, the power sector accounts for 36% of total energy-related CO2 emissions, but its share falls to 31% by 2030 in the Reference case when power sector emissions fall below those of the transportation sector. In the No CPP case, the power sector emissions remain near 36% of total energy-related CO2 emissions throughout the projection period.

In the Reference case, reductions in CO2 emissions to comply with the CPP are primarily achieved by switching from carbon intensive fuels, especially coal, to less carbon intensive natural gas and to zero-carbon renewable technologies such as solar and wind.

Energy efficiency in the residential, commercial, and industrial end use sectors and in the power sector also contributes to lower fuel use and emissions as end use equipment becomes more efficient and as the use of relatively energy efficient generators increases.

Adapted from press release by Rosalie Starling

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