The EPA’s Clean Power Plan is a significant opportunity to accelerate a transition to a cleaner, more climate-friendly power system. But the final rule, due out this summer, must include improvements and safeguards that constrain the role of natural gas. The Natural Gas Gamble, a new UCS report released today, points out that deploying more renewable energy and energy efficiency can help limit the economic and climate risks of an over-dependence on natural gas.
The Clean Power Plan should emphasize more renewable energy, less natural gas
The EPA’s draft standard to limit carbon emissions from existing power plants sets emissions rate reduction targets for states which can be met via four “building blocks”: improving heat rates (or boiler efficiency) at existing coal-fired plants, shifting generation from coal to natural gas, generating electricity from low-carbon resources (including increasing renewable energy generation and preserving nuclear generation at risk of retiring), and increasing energy efficiency. States are free to combine these in a flexible manner to meet their overall target.
Unfortunately, the EPA’s draft proposal underestimates the role of renewables and energy efficiency can play in cutting carbon emissions cost-effectively. Instead, the EPA’s framework encourages a greater reliance on natural gas. As my colleague Jeff Deyette points out, many states are already on the verge of a risky over-dependence on natural gas. Rather than reinforcing this trend, the EPA and state decision makers should instead take advantage of truly clean, reliable, and affordable resources like solar and wind power and energy efficiency.
The draft Clean Power Plan does not accurately capture renewables deployment rates already achieved by many states or the likely continued growth and falling costs of renewable energy. UCS has developed a more realistic and ambitious proposal for ramping up renewable energy to meet the state targets in a cost-effective manner. The UCS “Demonstrated Growth Approach” is based on the real-world experience of states in deploying renewable energy, the latest available market data, and existing state commitments to deploy renewables.
If the EPA and states were to use the UCS approach to its full extent, they could achieve renewables deployment equaling 23 percent of national electricity sales by 2030. Greater use of renewable energy could also help increase the total emissions reductions achieved by the Clean Power Plan from 30 percent below 2005 levels by 2030 to approximately 40 percent.
Switching dependence from one fossil fuel to another is a dead end for clean energy and climate goals
The EPA’s proposal relies heavily on a switch from coal to natural gas as one of the pathways for state compliance with emissions rate reduction targets. The risks of this approach are especially aggravated by the proposal’s imperfect accounting for carbon emissions from new natural gas plants that may be built as states transition away from coal. While natural gas can help in our transition to a cleaner power system, this pathway can lead to an overreliance on natural gas in several states which can create significant price volatility and consumer risks.
Although natural gas burns cleaner than coal, it still does create carbon emissions. And the production process causes leakage of methane, another powerful heat-trapping gas. Given the urgent need for deep emission reductions, simply shifting dependence from one fossil fuel to another is a dead end from a climate perspective. As a recent study in Nature shows, an increased use of natural gas is not an effective substitute for climate change mitigation policy.
It would also lead to an excessive addition of long-lived gas infrastructure that would become “stranded assets” as utilities inevitably need to make the shift to low-carbon electricity.
Florida’s heightened risks from natural gas dependence
Florida is one state already at risk of over-dependence on natural gas, with 68 percent of its total electricity generation coming from natural gas in 2012 (the data year the EPA used to calculate the building blocks in its draft plan). Existing natural gas combined-cycle (NGCC) plants in the state were being run at an approximately 52 percent capacity factor in 2012. If Florida fully utilizes the coal-to-gas building block in EPA’s proposal and runs these NGCC plants at a 70 percent capacity factor, it will come to depend on natural gas for nearly 90 percent of its power.
Floridians would clearly face price risks even greater than those they face today. Recently proposed interstate natural gas pipelines could help meet this increase in demand and reduce potential supply constraints and price volatility, but they could also lock in additional carbon emissions and crowd out investments in new zero-carbon renewable and energy efficiency technologies in addition to posing other environmental risks.
More natural gas is a poor choice given that the state has other low-cost electricity options, including solar power. As my colleague, John Rogers, recently blogged: the Sunshine State can do a lot better and could reach a renewable energy share of 14 percent by 2030.
New analysis shows a better pathway to a clean energy transition
The Natural Gas Gamble shows that it is cost-effective to reach 27 percent renewables as a share of electricity sales by 2030. (This is actually a constraint in our scenario driven by a renewable electricity standard (RES) policy of 25 percent by 2025, which could be ramped up further). Together with increased energy efficiency, this higher level of deployment results in much greater emissions reductions than currently projected from the Clean Power Plan—58 percent below 2005 levels by 2030.
As Jeff’s post shows, this scenario brings net consumer savings of $59 billion by 2040, and would result in net societal benefits of nearly $170 billion in that timeframe.
Strengthening the Clean Power Plan
The Clean Power Plan is a significant step forward in curtailing the emissions that fuel climate change. The EPA should strengthen the Clean Power Plan and provide a cost-effective long-term pathway to a cleaner power sector by restricting the amount of natural gas that can be used to comply with the state targets and by providing a greater incentive for adding renewables and efficiency instead.
For their part, states should prioritize renewable energy and energy efficiency to help meet their emissions reduction targets. The Clean Power Plan is an opportunity for states to reap the economic, health, and climate benefits of cleaner generation resources. States that use carbon reduction programs that generate revenue, such as carbon caps or taxes, could also generate resources for transition assistance for workers that may be disproportionately affected by the transition away from coal.
On its own, however, a stronger Clean Power Plan is not sufficient to ensure the transition to a diverse supply of low-carbon power sources. Policy makers at all levels of government should adopt new or strengthened policies and programs aimed at hastening the deployment of renewable energy and energy efficiency.
These measures could include strengthening renewable electricity standards, improving energy efficiency resource standards, putting a price on carbon, and tightening regulations for fugitive methane emissions and hydraulic fracturing. Combined with a strengthened Clean Power Plan, these efforts can help lessen the risks of becoming over reliant on natural gas and move us toward a truly clean energy future.
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