Document Type:Technical Results
This Product is publicly available
The U.S. Environmental Protection Agency (EPA) released the Clean Power Plan (CPP) on August 3, 2015, under Section 111(d) of the Clean Air Act (CAA). The CPP would require states to create plans explaining how they would comply with state-specific carbon dioxide (CO2) emission reduction mandates for existing fossil-fueled electric generating units. This report summarizes Kansas’ possible options in CPP state plan development. Results using EPRI’s U.S. Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model assess potential electricity generation portfolio changes and relative costs of mass- and rate-based CPP compliance pathways across a wide range of scenarios, which represent potential developments of emission trading markets and other key uncertainties.
The analysis suggests that cases can be made for mass- and rate-based pathways. Results are driven principally by the comparative incentives of building new natural gas combined-cycle units relative to wind. When gas prices are high and/or wind costs are low, the economics of new wind capacity in Kansas are favorable even without the CPP due to the state’s high resource potential, and power market exports could increase considerably.
Encouraging trading of CPP allowances or credits lowers potential compliance costs for Kansas relative to scenarios that principally utilize in-state measures (that is, actions within the state’s borders). However, multi-state permit trading entails uncertainty about the pace of market development, liquidity, volatility, and exposure to actions outside of Kansas. The magnitude of cost reductions from access to markets depends on state pathway selections in other states. Based on gas prices and wind deployment, Kansas could be a net importer or net exporter of credits. Market participation may increase in-state coal generation, though CPP scenarios show increased retirements and lower utilization of coal assets relative to the reference scenario (without the CPP).
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