Big News: 39 States and Their Utilities Write Plan for Deep CO2 Reductions

, senior energy analyst, Climate & Energy Program | February 8, 2016, 6:59 am EDT
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A new UCS-commissioned report shows that, prior to the EPA’s Clean Power Plan, a major collaboration between officials from 39 states and 26 major utility companies created a technical report showing how the eastern U.S. could cut carbon 42% by 2030 and reach 30% renewable energy in the electricity supply.

With renewable energy costs 40-50% lower than 2011 (when the collaborative’s original findings were completed), this work can aid states and utilities looking for least-cost means to comply with the EPA rule.

States and utilities made transmission and power plant plans for CO2 reductions that exceed the EPA Clean Power Plan requirements?

The 42% Carbon Reduction and Business-as Usual scenarios have nearly equal building and operating costs, as estimated through Eastern Interconnection Planning Collaborative modeling and Synapse calculation of total costs to consumers. Source: Fagan, B., J. Fisher, and B. Biewald 2013

The 42% Carbon Reduction and Business-as Usual scenarios have nearly equal building and operating costs, as estimated through Eastern Interconnection Planning Collaborative modeling and Synapse calculation of total costs to consumers. Source: Fagan, B., J. Fisher, and B. Biewald 2013

That’s right. By consensus, the representatives from every state between Montana, Maine, Texas, and Florida directed a detailed study to “reduce economy-wide carbon emissions by 42% from 2005 levels in 2030 and 80% in 2050, combined with meeting 30% of the nation’s electricity requirements from renewable resources by 2030 and significant deployment of energy efficiency measures, and other low-carbon technologies.”

Our new report takes a fresh look at the economics of the transmission needed for Clean Power Plan compliance, emphasizing the Midwest and mid-Atlantic states. The 26 collaborating utilities began this effort to improve joint grid planning on a regional basis, and included transmission and operations studies for reducing CO2 42% below 2005 from the utility sector in 2030, a goal beyond what the EPA Clean Power Plan requires in 2030 (which nationally is about 32% below 2005 levels).

What is in this plan for 42% CO2 reductions, created before positions hardened on the Clean Power Plan?

The engineering design replaces most coal burning with clean energy, including a 600% increase in wind farms and energy savings replacing 20% of energy use in 2030.

The collaborating utilities (including American Transmission Co., Duke, Entergy, International Trans. Co., ISO New England, Midwest ISO, the Municipal Electric Authority of Georgia, New York ISO, PJM, PowerSouth Energy Coop, South Carolina Elec. & Gas, Santee Cooper, Southern Company, Southwest Power Pool, and Tennessee Valley Authority) provided the transmission plan and costs. Follow-on studies, the focus on today’s release, examined how the savings in fuel and upkeep on old plants pays for new wind and transmission over 25 years.

What are the costs and savings from this plan?

When the engineers ran the cost numbers, and the expenses were compared over 25 years, the results showed the costs for building and operating with deep CO2 reductions comes out within 2% of a Business As Usual future.

What can we do with this?

States can see what can be accomplished with a regional approach, one selected by a formal council (the Eastern Interconnection States Planning Council) made up of two representatives per state including one commissioner and a designee of the governor.

Officials from 39 states came to consensus on the policies and the cost assumptions used by the utilities. This original work was done in quarterly meetings and workshops over the course of three years, establishing the tools for use today.

Utilities, state officials, and other stakeholders can find ample illustration here that they can meet or exceed the carbon-reduction requirements of the Clean Power Plan with essentially no additional costs to the electric power system at least through 2040.

What do we know about the costs changing?

The Carbon Reduction Scenario reduces carbon dioxide emissions 80 percent by 2030 compared to the level reached in the Business-as-Usual Scenario. Source: Data from EIPC, graph from Synapse

The Carbon Reduction Scenario reduces carbon dioxide emissions 80 percent by 2030 compared to the level reached in the Business-as-Usual Scenario. Source: Data from EIPC, graph from Synapse

It is always hard to predict future costs for energy. The regulators agreed on a set of fuel and clean energy technology costs based on what they knew then.

Today gas prices are much lower, but wind and solar costs are much lower as well. (Comparing 2011 to 2015, natural gas prices are down 35%, solar costs are down 50%, and wind costs are down 40%, which means carbon reductions are even less expensive than projected.) Today’s report acknowledges cost have fallen, but does not re-run the numbers.

We also have analysis of how much the transmission cost estimates are a fraction of expected new gas pipeline costs. While the gas industry sees need for pipeline investments of $641 billion ($30 billion per years over next 20 years) in the U.S. and Canada, the cost for transmission in the EIPC scenario for 42% carbon reduction in 2030 is only $100 billion (in 2010 dollars).

Where did the CO2 reduction goal come from?

The assembled stakeholders worked through a number of “futures” and selected three cases for 2030. In addition to the carbon reduction scenario, the other two were Business As Usual and a regionally implemented national Renewable Portfolio Standard (meaning limits on inter-regional transfers of energy, such that locally produced renewable energy is heavily utilized, but possibly at a higher cost in some circumstances).

UCS was an active participant, and we championed the deep carbon reduction scenario as a follow-up on a CO2 reduction blueprint we had released previously.

When was this?

This unprecedented collaboration on transmission between states from the Plains to the east coast and south to the Gulf was primarily from 2010 through the end of 2012. Important to note, this was before the EPA issued rules for reducing CO2 from existing power plants.

Today, the final Clean Power Plan strongly encourages regional coordination in accomplishing its goals, and the EIPC effort provides a successful example of large-scale regional planning that can potentially meet and exceed the Clean Power Plan’s targets.

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