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 Pennsylvania. Read about additional analyses in this series.
Pennsylvania is generating more electricity than it has in the past, but the good news is that it’s doing so while emitting less carbon dioxide pollution. In fact, new WRI analysis finds that Pennsylvania can reduce its CO2 emissions 21 percent below 2011 levels by 2020 just by complying with current policies and taking advantage of existing infrastructure. Achieving these reductions will allow Pennsylvania to meet moderately ambitious EPA power plant emissions standards, which are due to be finalized in 2015.
Pennsylvania’s Power Sector Has Been Getting Cleaner
Between 2005 and 2011, electric generation in Pennsylvania grew by 3 percent, while CO2 emissions from the power sector declined by 10 percent. This is mostly because coal-fired generation in the state fell by almost 20 percent, while electricity generated from cleaner-burning natural gas and renewable sources more than doubled. However, coal still comprised the largest share of in-state generation in 2011 (44 percent), while nuclear and natural gas sources comprised 33 percent and 18 percent, respectively.
Due in large part to retirement of the state’s aging coal plants, Pennsylvania’s power plant CO2 emissions are expected to decrease by around 9 percent compared to 2011 levels by 2020. As of 2012, 26 coal generators (3,845 MW capacity or 23 percent of existing coal capacity) in the state were slated for retirement, while more than 3,552 MW of renewable capacity was in the regional construction queue.
How Pennsylvania Can Meet Future Emissions Standards
As we discussed in a blog post in August, states may have considerable flexibility in how they comply with the 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, and other strategies. Our analysis found that Pennsylvania could use the following tools to reduce its power sector CO2 emissions:
Meeting alternative energy targets. Pennsylvania already has an alternative energy standard in place, requiring 8 percent of the state’s electricity to come from renewables by 2021. By meeting this requirement with new, in-state renewable generation, Pennsylvania can reduce its CO2 emissions by 4 percent below 2011 levels by 2020.
Meeting energy efficiency targets. Pennsylvania’s existing efficiency standard requires utilities to implement programs that help customers save energy at their homes and businesses. Meeting this standard can reduce Pennsylvania’s CO2 emissions by 11 percent below 2011 levels by 2020.
Using more combined heat and power (CHP) at commercial and industrial sites. Businesses like universities, hospitals, industrial manufacturers, and others can save energy by installing combined heat and power (CHP) systems, which generate electricity more efficiently than the average power plant. Pennsylvania is currently using less than one-third of its CHP potential of 10.5 gigawatts. Increasing the use of CHP by only 26 percent could reduce CO2 emissions by 3 percent below 2011 levels by 2020.
Using more gas. Pennsylvania’s most efficient natural gas plants – combined cycle (NGCC) units—generated much less electricity than they were capable of producing in 2011. Running existing NGCC plants at 75 percent capacity can reduce CO2 emissions by 3 percent below 2011 levels by 2020.
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 reduce CO2 emissions 2 percent below 2011 levels by 2020.
Greater Emissions Reductions and Cost Savings Are Possible
While Pennsylvania is in a good position to meet moderately ambitious standards, it has the potential to go even further by expanding its current policies. Doing so will not only allow the state to meet more ambitious power plant standards, should EPA pursue them, but also save customers money.
One great opportunity is coming up in 2017, when the current phase of Pennsylvania’s energy efficiency standard ends. At that point, the Pennsylvania Public Utility Commission (PUC) can decide to increase the electricity savings that utilities must achieve each year. If the PUC decides to ramp up annual electricity savings to 2 percent per year beginning in 2017 and continues to achieve this rate of savings through 2030, it can reduce power sector CO2 emissions by an additional 9 percent below 2011 levels by 2020. A PUC study found that continuing the electric efficiency program will continue to be very cost effective for Pennsylvania ratepayers, with the potential to achieve $5-$10 billion in net benefits over a 10-year period starting in 2013.
Additional CO2 reductions and cost savings could be achieved by expanding the state’s alternative energy standard. If Pennsylvania continues to increase its renewable sales at the same rate after its 2021 target, it can reduce power sector CO2 emissions by an additional 8 percent in 2030 compared to 2011 levels. A report by PJM Interconnection, the independent electric grid operator serving the Mid-Atlantic region, found that adding wind capacity could be especially economically beneficial for customers in Pennsylvania and the surrounding region. The study found that 15,000 megawatts of wind capacity in the region would save about $4 to $4.5 billion in wholesale power costs, saving each Pennsylvania customer about $42 to $48 annually on electric bills. A recent study by the Ohio PUC also found that incorporating renewable generation sources decreased electricity prices in Ohio, which is located in the same regional transmission organization as Pennsylvania.
Pennsylvania Can Build Off Progress Made to Date
Pennsylvania is well-positioned to reduce its power sector emissions in the near term, but it’s important that the state continue to build on the progress it’s already made. Pennsylvania’s experience has shown that emissions reductions are achievable and economically beneficial. This is all the more reason why the state should take additional steps to achieve even greater reductions in both the near and long term. By doing so, Pennsylvania will not only be able to meet EPA’s power plant emissions standards, but can help prevent the worsening impacts of climate change.