Carbon Emissions Constraints in the USA: Perspectives of the Power Sector

ABSTRACT:

Carbon Dioxide (CO2) emissions in the U.S. are projected to increase substantially over the next 40 years under the “business as usual” scenario. Dramatic emission reductions required under proposed legislation would require a shift in the nation’s energy systems to low-carbon and no-carbon technologies.

More than 50% of the electricity generation and 80% of the CO2 emissions from the power sector come from coal-fired power plants. Because there are no cost-effective CO2 control technologies currently available, the primary approach to achieve CO2 emission reductions in the near-term would result in switching fuel from coal to natural gas. Such a shift would cause major disruptions in all sectors of the economy and result in major cost escalations.

Lacking national climate legislation, various cities, states, and regions have initiated programs to limit emissions. These regulatory programs are not uniform, and such patchwork of regulations would lead to economic inefficiency and confusion for the regulated industries.

Assessment of potential emission reductions from existing technologies by the Electric Power Research Institute shows that significant emission reductions can result by utilizing a portfolio of action plans. However, considerable amount of time will be necessary to build the new infrastructure needed to meet the demand for the anticipated 30% increase in electricity and to substantially reduce CO2 emissions by 2030.

There is general consensus on the proposed economy-wide “cap & trade” program to regulate emissions. However, there is considerable disagreement on the specifics of that program including the choice of emission caps, timeframes to achieve them, distribution of “allowances,” utilization of proceeds from the auctions, use of CO2 offsets, impacts on global competitiveness, and integration of the U.S. program with international programs.

This paper assesses potential CO2 emission reductions in the U.S. over the next two decades, with special emphasis on the electric power generation sector.