EIA Analyzes Power Sector Emissions Factors

Source: U.S. Energy Information Administration, Monthly Energy Review, September 2013, and the Annual Energy Outlook 2014
Note: GHG is greenhouse gases. The GHG10 case assumes a $10 per metric ton fee on CO₂ emissions, beginning in the year 2015. The GHG25 assumes a $25 per metric ton fee on CO₂ emissions beginning in 2015. Both cases escalate the CO₂ fee at a rate of 5% per year. The GHG10 case with low natural gas prices combines the assumptions of the GHG10 case with the High Oil and Gas Resource case, which results in lower gas prices and encourages greater natural gas use.

---

In 2012, almost 40% of total energy-related CO₂ emissions resulted from electricity generation. About three-fourths of those power sector emissions occurred from burning coal, the most carbon-intensive fuel. Policies to reduce CO₂ emissions could result in less consumption of coal in favor of natural gas, which emits about 40% as much CO₂ per kilowatthour as typical coal-fired generation when used in a combined-cycle plant, as well as increases in other low- or zero-carbon power generating technologies such as renewables and nuclear.

Earlier this week, the Environmental Protection Agency (EPA) issued a proposed rule  that would require reductions in CO₂ emissions from existing fossil-fueled electric power plants. The EPA proposal includes emission rate targets for each state, measured as pounds of CO₂ emissions per megawatthour of covered generation, as well as guidelines for the development, submission, and implementation of state plans. The emission rate targets vary significantly across individual states, reflecting the application of a series of common building blocks to states with widely different starting points in their respective electricity markets.

The Annual Energy Outlook 2014 (AEO2014) Reference case, which assumes current laws and regulations, does not include the EPA proposal. Currently there are two regional programs in the Northeast and California (the Regional Greenhouse Gas Initiative and Assembly Bill 32, known as RGGI and AB32, respectively) that include control policies for greenhouse gases (GHGs) from the power industry, which are also included in the AEO2014 Reference case. All existing final environmental rules, including the Mercury and Air Toxics Standard, are also included in the projections. After taking these existing environmental regulations into account, the projections for electricity generation and its resulting emissions are primarily determined by the relative operating costs of the different technologies. The AEO2014 Reference case projections show several CO₂-related trends, including:

• CO₂ emissions from the electric power sector increase from 2,035 million metric tons in 2012 to 2,271 million metric tons in 2040, an increase of 12%
• The share of power sector CO₂ emissions from natural gas increases from 24% to 27%, as natural gas-fired plants account for most of the capacity that is added to meet increases in demand and to replace retiring plants
• Few new coal plants are added, as uncertainty about future carbon regulations influences capacity decisions

While EIA does not assume the final structure of any proposed regulations, in order to represent policies that explicitly or implicitly place a value on GHG emissions, the AEO2014 includes alternative cases that impose a fee on energy-related CO₂ emissions. These side cases incorporate an initial CO₂ value of $10 (GHG10 case) and $25 (GHG25 case) per metric ton in 2015, rising by 5% per year. The GHG10 case is also combined with High Oil and Gas Resources, which results in lower gas prices and encourages greater natural gas use. In these side cases, EIA projects the following results as compared with the AEO2014 Reference case:

• 2025 power sector CO₂ emissions are 16% and 49% lower in the GHG10 and GHG25 cases with fees, respectively, and 23% lower when the GHG10 case is combined with the High Oil and Gas Resource case
• 2040 power sector CO₂ emissions reductions range from 36% to 82% across the three side cases, which is greater than the corresponding changes in other sectors and indicates that the electric power industry is typically the most cost effective sector to achieve reductions in response to economy-wide CO₂fees
• Natural gas-fired generation increases sharply beginning when CO₂ fees are assumed to be introduced in 2015, followed by more nuclear and renewable plant additions as the fees increase
• Natural gas-fired generation levels off around 2030 in the GHG10 case, and it begins to decline after 2025 in the GHG25 case
• In the High Oil and Gas Resource case without CO₂ fees, lower natural gas prices result in higher gas-fired generation and CO₂ emissions in the power sector as more new natural gas plants are built instead of nuclear and renewable capacity
• Natural gas-fired generation continues to increase through 2040 when the fees for the GHG10 case are combined with the lower gas prices from the High Oil and Gas Resource case

Source: U.S. Energy Information Administration, Monthly Energy Review, September 2013, and the Annual Energy Outlook 2014

---

Additional analysis can be found in the AEO2014 Market Trends discussion of emissions from energy use.

EIA Updates U.S. Emissions Trends

Source: U.S. Energy Information Administration, State Energy Data System (SEDS) 2014

---

U.S. energy-related carbon dioxide (CO₂) emissions in 2013 were 10% below the benchmark year of 2005. Emissions in 2013 were roughly 2% above their 2012 level and 1.5% below their 2011 level, when emissions were 8.6% below the 2005 level. Recently released state-level data through 2011, calculated from the State Energy Data System (SEDS) and aggregated here by Census regions, show different parts of the country generally experiencing this downward trend, but at variable rates by region.

Between 2005 and 2011, all four Census regions—West, South, Midwest, and Northeast—experienced emissions declines, with the Northeast experiencing larger emissions reductions than the other regions. Underlying state-level emissions changes spanned an even wider range, from a 20% emissions increase in Nebraska (Midwest) to a 33% decrease in Nevada (West). Regional and subregional spreads reflect differences in local energy economics, population distribution, and other factors.

Source: U.S. Energy Information Administration, State Energy Data System (SEDS) 2014

---

Drivers of faster, larger emissions declines in the Northeast include extensive urbanization, translating into denser, more energy-efficient population centers, and increasingly low-carbon electricity generation from natural gas, nuclear, and renewables, instead of coal. The Northeast includes the top-three lowest emitting states per unit of economic output (New York, Connecticut, and Massachusetts) and two of the top-five states with the cleanest electricity sources (Vermont and New Hampshire).

Compared to the Northeast, the other regions (Midwest, West, and South) have more diverse state-level characteristics, which contributed to relatively slower net emissions declines. Steep emissions reductions in some states were partially offset by escalating emissions elsewhere. For example, states like Wyoming (West), North Dakota (Midwest), and West Virginia (South) have more carbon-intensive energy production, higher and less efficient energy use in more sparsely populated areas, and heavily coal-reliant electricity generation compared to other states in those regions. Since 2009, factors driving the uptick in Nebraska's emissions profile included marked expansion of the biofuels (corn-based ethanol) industry, as well as increased production of crude oil and the temporary closure of the Fort Calhoun nuclear power plant. Conversely, Nevada's lower-bounding trend shows the effects of substantially decarbonizing its electric power sector—between 2005 and 2011, Nevada significantly reduced its coal use, while increasing solar and geothermal use.

Earlier this week, the Environmental Protection Agency (EPA) issued a proposed rule that would require reductions in carbon dioxide emissions from existing fossil-fueled electric power plants. The EPA proposal includes emission rate targets for each state, measured as pounds of carbon dioxide emissions per megawatthour of covered generation, as well as guidelines for the development, submission, and implementation of state plans. The emission rate targets vary significantly across individual states, reflecting the application of a series of common building blocks to states with widely different starting points in their respective electricity markets.

Source: EIA