In June, the Environmental Protection Agency announced the Clean Power Plan, which would require existing power plants to reduce greenhouse gas emissions. An analysis released today found that the EPA could go much further when it comes to the plan’s renewable energy targets, and that states can cost-effectively produce nearly twice as much renewable electricity as the EPA calculated.
The proposal from the Union of Concerned Scientists (UCS) found that the EPA’s calculation that renewables could comprise 12 percent of U.S. electricity sales by 2030 was only marginally more than business-as-usual projections from the Energy Information Administration (EIA), and that under their modified approach renewables could supply at least 23 percent of national power sales by 2030. Under their approach the national annual average for retail electricity prices rose a maximum of 0.3 percent above business-as-usual prices through 2030 — a cost of no more than 18 cents-per-month on a typical household’s electricity bill.
“The EPA was obviously feeling pressure from Congress and states over the rule and wanted to come up with something they thought would be defensible,” Steve Clemmer, director of energy research at UCS, told ThinkProgress. “I think they ended up erring too far on the side of being conservative about renewables. When the EIA — not an agency that’s seen as being optimistic about renewables — says we’re going to pretty much get to that level without the Clean Power Plan, that’s pretty pessimistic and unrealistic really.”
One of the reasons the impact on electricity prices is so small, according to Clemmer, is that renewable sources are mostly displacing natural gas that would have otherwise been developed. This puts downward pressure on the price of natural gas, with modeling showing that natural gas prices would be nine percent lower than without the increase in renewables. Natural gas prices often set the market price of electricity, so these lower rates would offset increases in electricity costs related to renewable deployment. Another reason for the marginal increase in cost is that renewable energy is becoming cost competitive with fossil fuel sources in many places. In the Midwest wind competes with natural gas and in the Southwest solar is getting more and more affordable.
The EPA’s draft rule requires existing power plants to cut carbon dioxide emissions by around 30 percent from 2005 levels by 2030. The UCS study states that while 30 percent cuts may seem like a lot, emissions were already 15 percent below 2005 levels in 2013, so the rule cuts only another 15 percent over the next 15 years — an unambitious goal and one far lower than climate scientists have determined is needed to prevent the most catastrophic impacts of climate change. The UCS study found that the Clean Power Plan could increase total emissions reductions from 30 percent below 2005 levels by 2030 to approximately 40 percent by updating the renewable energy targets.
The study was only looking at the renewable energy portion of the Clean Power Plan, which also includes sections on efficiency improvements at individual fossil fuel plants, nuclear power, shifting generation from coal to natural gas, and greater energy efficiency in buildings and industries. Clemmer said other parts of the plan could be strengthened as well, especially efficiency targets, and that this could lead to greater GHG cuts.
“If renewables end up replacing more coal, which could definitely happen, that would mean further cuts in GHGs,” said Clemmer.
According to the authors, the main shortfall of the EPA’s plan is greatly underestimating how successful renewable energy sources have been, and can be, in replacing coal and gas-fired power plants, which are responsible for nearly 40 percent of total U.S. CO2 emissions. They state that the cost of wind and solar energy has fallen around 60 percent in the last five years, and “as the renewable build-out continues, it’s a safe bet that costs will continue to drop due to technological innovation and economies of scale.”
UCS’s analysis found that seven states are already producing more renewable electricity than the EPA computed they could in 2030 under its draft rule. Additionally, 17 states have existing laws that require more renewable electricity than EPA’s targets. In formulating their plan, the EPA used state renewable energy generation levels in 2012 as the baseline. The UCS analysis uses data from the last five years to calculate an annual average growth rate. Clemmer said the five-year period was used for several reasons: to account for recent growth and cost reductions in wind and solar power, to average out some of the short-term fluctuations that have happened due to changes in federal tax credits and extensions, and to capture the impacts of some recent state-level Renewable Energy Standards (RES).
The UCS study also assumes a long-term annual growth rate for renewables of between 1 and 1.5 percent of electricity sales for individual states, while the EPA’s draft proposal assumed that renewables would grow by a fraction of a percent per year. Clemmer said the UCS’s rate is a conservative estimate consistent with other studies. He also said the EPA uses 2012 data but doesn’t assume any increases in rate by 2017, when the plan gets implemented.
“Some states have made major commitments and should be able to achieve what we’ve talking about while other states are not doing much,” said Clemmer. In the Southeast, North Carolina is the only state to have an RES, out of 29 total nationwide. Clemmer said that because of this program and the solar carve-out they are now one of the top five states in the country for solar power.
“So you can see the effect that these policies can have,” said Clemmer. “We think other states in the Southeast can do that as well. There’s new information showing there’s more land-based wind, more solar, more biomass, and offshore wind potential in the region. They certainly have the resources.”