What is the fuel of the future? Prospects under the Clean Power Plan

EPA proposed the Clean Power Plan (CPP) to regulate CO2 emissions from existing power plants. The CPP establishes state-by-state emission rate goals for affected fossil units, largely existing coal and natural gas combined cycle generators. A key element of the proposal is its flexibility mechanisms, including the ability of states to trade obligations with other states and to convert to mass-based targets. How states decide to take advantage of this flexibility may have significant impacts on fuel markets of the future. This analysis uses the DIEM economy/electricity model to examine the consequences of a range of these alternative choices for fuel demands across the United States. Key findings for the June 2014 proposal include: the CPP tends to continue an ongoing shift in fuel consumption by electricity generators from coal to natural gas, a rate-based approach to CPP leads to more gas use in the early years than a mass-based approach but the effect disappears over time as new more-efficient gas units are constructed, and there may be substantial regional variation and stresses in fuel markets, especially over the next five years.

Duke Scholars

Author Brian Murray Environmental Sciences and Policy