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Impacts of EPA Power Plant Emissions Regulations on the US Electricity Sector

Qian Luo, Jesse Jenkins

Abstract

Taking aim at one of the largest greenhouse gas emitting sectors, the US Environmental Protection Agency (EPA) finalized new regulations on power plant greenhouse gas emissions in May 2024. These rules take the form of different emissions performance standards for different classes of power plant technologies, creating a complex set of regulations that make it difficult to understand their consequential impacts on power system capacity, operations, and emissions without dedicated and sophisticated modeling. Here, we enhance a state-of-the-art power system capacity expansion model by incorporating new detailed operational constraints tailored to different technologies to represent the EPA's rules. Our results show that adopting these new regulations could reduce US power sector emissions in 2040 to 51% below the 2022 level (vs 26% without the rules). Regulations on coal-fired power plants drive the largest share of reductions. Regulations on new gas turbines incrementally reduce emissions but lower overall efficiency of the gas fleet, increasing the average cost of carbon mitigation. Therefore, we explore several alternative emission mitigation strategies. By comparing these alternatives with regulations finalized by EPA, we highlight the importance of accelerating the retirement of inefficient fossil fuel-fired generators and applying consistent and strict emissions regulations to all gas generators, regardless of their vintage, to cost-effectively achieve deep decarbonization and avoid biasing investment decisions towards less efficient generators.

Impacts of EPA Power Plant Emissions Regulations on the US Electricity Sector

Abstract

Taking aim at one of the largest greenhouse gas emitting sectors, the US Environmental Protection Agency (EPA) finalized new regulations on power plant greenhouse gas emissions in May 2024. These rules take the form of different emissions performance standards for different classes of power plant technologies, creating a complex set of regulations that make it difficult to understand their consequential impacts on power system capacity, operations, and emissions without dedicated and sophisticated modeling. Here, we enhance a state-of-the-art power system capacity expansion model by incorporating new detailed operational constraints tailored to different technologies to represent the EPA's rules. Our results show that adopting these new regulations could reduce US power sector emissions in 2040 to 51% below the 2022 level (vs 26% without the rules). Regulations on coal-fired power plants drive the largest share of reductions. Regulations on new gas turbines incrementally reduce emissions but lower overall efficiency of the gas fleet, increasing the average cost of carbon mitigation. Therefore, we explore several alternative emission mitigation strategies. By comparing these alternatives with regulations finalized by EPA, we highlight the importance of accelerating the retirement of inefficient fossil fuel-fired generators and applying consistent and strict emissions regulations to all gas generators, regardless of their vintage, to cost-effectively achieve deep decarbonization and avoid biasing investment decisions towards less efficient generators.
Paper Structure (12 sections, 6 figures)

This paper contains 12 sections, 6 figures.

Table of Contents

  1. Introduction
  2. Results
  3. EPA power plant emissions rules reduce US power sector GHG emissions by 35% in 2040 but only some of the rules play a major role.
  4. Compared with proposed rules, final EPA power plant rules result in slightly more emissions in 2040 but a more efficient system and lower average cost of mitigation.
  5. EPA rules consistently reduce GHG emissions across sensitivities for renewable resource availability, fuel prices, and tax credit treatment.
  6. Alternative strategies to cost-effectively limit emissions from fossil fuel-fired generators may exist.
  7. Discussions
  8. Methods
  9. Power System Modeling
  10. Modeling EPA rules
  11. Alternative strategies
  12. Acknowledgement

Figures (6)

  • Figure 1: CO2 emission mitigation options in each modeling period for different generator types in GenX.
  • Figure 2: Total installed capacity (a), electricity generation (b), and CO2 emissions (c) by technology in each period. 2022 data is from EIA and other periods are modeling outputs.
  • Figure 3: Total installed capacity (a) and electricity generation (b) for natural gas and H2-fueled generators in each period. 2022 data is from EIA and other periods are modeling outputs. (Base: capacity factor $>$40%)
  • Figure 4: Annual CO2 emissions (a) and average abatement costs (b) under all scenarios. Abatement costs of "New Gas Only" are not listed because it has emission increase. Detailed descriptions of alternative strategy scenarios ("Final + Baseload Existing", "Final + All Existing", "CCS Only", and "CCS + H2") are included in Table \ref{['tab:caseDescr']}.
  • Figure 5: Annual CO2 emissions in each period (a) and emissions released from different types of natural gas or H2-fired generators in 2040 under the "Coal + New Gas" rules under different sensitivity scenarios. (Base: capacity factor $>$40%)
  • ...and 1 more figures