As the U.S. Environmental Protection Agency (EPA) moves forward with standards to reduce power plant emissions—which are due to be finalized in June 2015—many states are wondering how they will comply. WRI’s fact sheet series, Power Sector Opportunities for Reducing Carbon Dioxide Emissions, examines the policies and pathways various states can use to cost-effectively meet or even exceed future power plant emissions standards. This post explores these opportunities in Arkansas. Read about additional analyses  in this series.
Arkansas has already taken steps to reduce its near-term power sector CO2 emissions by implementing energy efficiency policies. And the state has the opportunity to go even further. In fact, new WRI analysis finds that Arkansas can reduce its CO2 emissions 39 percent below 2011 levels by 2020 by implementing new clean energy strategies and taking advantage of existing infrastructure. Achieving these reductions will allow Arkansas to meet moderately ambitious EPA power plant emissions standards, which are due to be finalized in 2015.
Electricity Generation Is On The Rise In Arkansas
Between 2005 and 2011, electricity generation  in Arkansas grew by 42 percent, and most of this growth came from fossil fuel resources. As a result, CO2 emissions from the power sector increased by 36 percent over the same time period. Coal generation increased 28 percent over this time period and two new coal plants were added in the past five years. Coal comprised 63 percent of in-state generation in 2011, while nuclear and natural gas comprised 18 percent and 10 percent, respectively.
Looking forward, Arkansas will need to reduce its power sector emissions to comply with EPA’s standards. The good news is the state has already implemented energy efficiency strategies that can reduce near-term emissions, and it has a number of other options available to achieve even greater reductions.
How Arkansas Can Meet Future Emissions Standards
As we discussed in a blog post in August  and as EPA Administrator Gina McCarthy stated  recently, states may have considerable flexibility in how they comply with EPA’s forthcoming power plant emissions standards. EPA could allow states to pursue a range of CO2 reduction opportunities—including greater use of existing lower-carbon power plants, increased use of renewables, and energy efficiency, among other strategies.
Our analysis found that Arkansas could use the following tools to reduce its power sector CO2 emissions:
Using more gas. Arkansas’ most efficient natural gas plants—combined cycle (NGCC) units—generated much less electricity than they were capable of producing in 2012. Running existing NGCC plants at 75 percent can cut power sector CO2 emissions by 30 percent in 2020 compared to 2011 levels.
Using more combined heat and power (CHP). Arkansas can build more CHP systems—which use waste heat to generate electricity more efficiently than the average power plant—at sites like universities, hospitals, and farms. Increasing the use of CHP by 33 percent above current levels can cut power sector CO2 emissions by 2 percent in 2020 compared to 2011 levels.
Increasing existing coal plant efficiency. Existing coal plants could save energy by upgrading their equipment and making other operational improvements. Increasing coal plant efficiency by 2.5 percent could cut power sector CO2 emissions by 1 percent in 2020 compared to 2011 levels.
Meeting energy efficiency targets. The state’s existing energy efficiency standard requires investor-owned utilities to implement programs that help customers save energy. If all Arkansas utilities met the state’s 2015 savings goal (0.9% of 2013 electricity sales) each year going forward, the state can cut power sector CO2 emissions by 7 percent in 2020 compared to 2011 levels.
Increasing use of renewable energy. Six percent of the state’s electricity came from biomass and hydropower in 2012. The state has the opportunity to encourage further development of renewable resources, including wind and solar power, by implementing new strategies (e.g., tax credits, rebates, or renewable energy standards). If 15 percent of the state’s electricity came from renewable sources by 2020, it could cut power sector CO2 emissions by 9 percent compared to 2011 levels.
Clean Energy Strategies Are Key
While increasing use of natural gas, installing more combined heat and power, and improving existing coal plant efficiency can significantly reduce emissions, our analysis shows the state also needs to pursue clean energy opportunities to meet forthcoming standards. The state currently has a ripe opportunity to continue its existing efficiency standards or to adopt even more ambitious standards currently under consideration  by the Arkansas Public Service Commission. Doing so would put the state in better shape to meet standards while saving money for electricity customers. A study  by Georgia Tech and the Nicholas Institute found that an 8 percent reduction in energy consumption in Arkansas in 2020 would lead to $1.8 billion in total energy savings in 2020, with the average household saving $303 on their annual energy bill.
Arkansas Can Build Off Progress Made to Date
While Arkansas’ energy efficiency policies are a good first step toward reducing emissions in the near-term, the state has the opportunity to go further. By implementing additional strategies to reduce emissions, such as the proposed increased efficiency standards, Arkansas can place itself in a better position to comply with forthcoming EPA standards for existing power plants and help prevent the worsening impacts of climate change.