Association for Public Policy Analysis & Management

Reducing greenhouse gas (GHG) emissions in the United States is important to minimize the impact of climate change. The electricity sector contributes 28.4% of the GHG emissions in the United States, one of the highest. Fossil fuels contributes close to two thirds of the electricity generated in the United States, and about 30% of the total electricity in the US is generated by coal-fired power plants, with an average age of over 43 years. Coal power plants are the largest emitters of GHG and a number of them are expected to unprofitable either due to stricter regulations or due to competition from natural gas and renewable energy-based electricity generation. One of the primary drivers of growth in electricity generation from renewable sources has been state-mandated Renewable Portfolio Standards (RPS) which specifies utilities to procure a certain percentage of their electricity from renewable sources of generation.

Studies projecting US emission reduction potential in the future decades indicate that power sector, specifically coal power plant retirement and increased deployment of renewables tend to make the most significant contribution in reducing overall emissions. The literature on electricity sector transition pathways in order to make a substantial emission reduction feasible (generally consistent with the Nationally Determined Contribution target, the 2⁰C target, or the U.S. Mid-Century Strategy for Deep Decarbonization target) is generally focused on top-down analysis of the sector, and state-level breakdowns, if present are generally idealized results given emission targets at the national level. However, at best these results can be considered as guidelines and need to be evaluated against emission levels using a more bottom-up approach.

This study utilizes the Global Change Assessment Model (GCAM), an integrated assessment model that can be used to explore climate change mitigation policies and its effects on the economy and energy sector. Firstly, a long-term emission reduction scenario is modeled till 2050 for benchmark purposes, requiring 80% reduction from the 2005 levels of emissions at the national level as per the U.S. Mid-Century Strategy. Three decarbonization scenarios are modeled – the first essentially continuing a business-as-usual case as far as RPS is concerned, extending current targets to 2050 unless long-term targets already exist; while coal-fired power plants shit down if they are unprofitable for a significant amount of time. The second scenario is based on aggressive track record of states on clean energy, extending RPS targets to 50% by 2050 for such states (if a higher target does not exist) and retiring coal power plants over the average age plus one standard deviation of existing coal-fired power plants. The third scenario extends these actions to all participating states. Sensitivities are introduced in terms of GDP growth, cost of renewable energy technologies, and oil and gas prices. All three scenarios fall short of the benchmark, although the third scenario comes the closest. In addition to national results, state-wise results are also evaluated in terms of prices, emissions, and generation mix in order to determine which states perform better or worse than idealized benchmarked standards.