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Study shows 18 states likely to emit more CO2 under Affordable Clean Energy plan

Highlights

'Policies can flip and then flop': Platts Analytics

Clean Power Plan has smaller emissions total by 2050

Houston — A new study concludes that the White House's Affordable Clean Energy program to replace the Clean Power Plan results in more carbon dioxide emissions in 18 of the nation's most energy-hungry states by 2030, which drew mixed reactions from observers Wednesday.

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In the Environmental Research Letters journal on Monday, researchers from the Resources for the Future think tank, the Science Policy Exchange, and the Boston, Harvard and Syracuse universities had a paper published entitled: "The Affordable Clean Energy Rule and the Impact of Emissions Rebound on Carbon Dioxide and Criteria Air Pollutant Emissions."

The paper compared emissions data from the US Environmental Protection Agency's own analysis of the Affordable Clean Energy program with expected emissions without any climate action plan, as well as with the Trump EPA's re-analysis of the impact of the Obama Clean Power Plan, focusing on the outcome in 2030 but also extending through 2050.

The "emissions rebound" described in the study's title refers to "a phenomenon in which facilities with high baseline emissions rates are made more efficient through investments to reduce their heat rates, and consequently operate more frequently and remain in operation for a longer period," the paper stated. "As a result, the ACE only modestly reduces national power sector CO2 emissions and increases CO2 emissions by up to 8.7% in eighteen states plus the District of Columbia in 2030 compared to no policy."

This latest report comes on the heels of a Rhodium Group study, released last week, indicating that US carbon dioxide emissions rose 3.4% in 2018 after three years of decline.

UNCERTAINTIES ABOUND

Roman Kramarchuk, managing director of global power, emissions and clean energy at S&P Global Platts Analytics, questioned the Environmental Research Letters article's assumption that ACE would be fully implemented through the modeling time horizon.

"[Where] is the guarantee that this policy will be in effect in 2021, let alone 2040?" Kramarchuk said in an email Wednesday. "Policies can flip and then flop. Which merchant generator will be willing to make that bet and spend $50 to $100 per kW on their coal units for improved heat rates? How many companies with regulated coal plants will either ask and then actually get approval from their [regulators] for investments prolonging the life of and increasing the utilization of their coal plants? My guess is not many."

The paper found that based on certain assumptions regarding heat rate improvements and a cost of $50/kW for such improvements, the ACE would cut CO2 emissions to 1,797 million short tons in 2030, compared with 1,811 million short tons with no climate action plan, a difference of 14 million short tons.

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In contrast, the EPA's original analysis of the CPP found that it would cut CO2 emissions by 415 million short tons, the paper stated. The top five states where CO2 emissions would be expected to increase in 2030 include California at 1.4 million short tons, Wisconsin at 1 million, Maryland and Texas with about 800,000 each, and Virginia at about 700,000.

Of these states, Texas is already by far the largest power sector CO2 emitter, at 247.5 million short tons in 2017, according to Platts Analytics data, and is the 16th largest, in terms of tons per capita, at 8,625 st/person, with Wisconsin ranked next, at 8,479 st/person.

Kramarchuk also noted that many of the states where increases might be expected have greenhouse gas targets "and more seem to be putting their sources under caps and committing to clean energy."

COMPARISON WITH CPP

In comparison with the Trump EPA's re-analysis of the results of the Clean Power Plan, ACE would reduce emissions in the year 2050, but the CPP would result in fewer emissions in every previous test year and in fewer cumulative emissions. The researchers note that the EPA's re-analysis "assumes coverage only for existing generation sources rather than existing and new sources and no incremental energy efficiency investments," which effectively reduces the CPP outcome somewhat.

Matthew Cordaro, a former Midcontinent Independent System Operator CEO who now resides in New York, cautioned that "even the best educated guesses and analyses are likely to be wrong" regarding emissions levels in 2030.

"With states like New York, California and Washington seeking to set their own carbon emission levels and the future of nuclear and coal power in flux, there are too many fluid and indeed unknown factors," Cordaro said in an email Wednesday. "In addition, the 2020 election could change U.S. carbon emission policy significantly."

Jim Carson, president of the Minneapolis-based RisQuant Energy consultancy, expressed skepticism about this latest research, adding that "Environmental 'climate change' policy has been badly corrupted by politics for two decades."

-- Mark Watson, markham.watson@spglobal.com

-- Edited by Jennifer Pedrick, newsdesk@spglobal.com