This fact sheet examines how Michigan can use its existing policies and infrastructure to meet its emission standards under the Clean Power Plan while minimizing compliance costs, ensuring reliability, and harnessing economic opportunities. Read about additional analyses in WRI's fact sheet series, How States Can Meet Their Clean Power Plan Targets.
Michigan is well-positioned to meet its CPP standards—it can get 98 percent of the reductions required under its mass-based emission target with its existing clean energy policies. Michigan can make up the small remaining gap, and even exceed its targets, by making better use of existing infrastructure:
Energy efficiency resource standard: Requires annual electricity savings of 1 percent of the previous year’s sales from 2012 forward.
Renewable energy standard: Requires 10 percent of sales to come from renewable sources by 2015, and the same amount of credits to be maintained going forward.
Increasing the use of existing natural gas plants. Combined cycle plants generated less than one-fourth of the electricity they were capable of producing in 2012. Running existing plants at 75 percent could cut emissions further.
Increasing coal plant efficiency. Low- and no-cost operational improvements and best practices at existing coal plants could cut emissions further.
Michigan has the opportunity to go even further by expanding its successful clean energy policies. Michigan could nearly double its required reductions by increasing the renewable standard to 20 percent of sales by 2022 and the efficiency standard to 2 percent of sales beginning in 2019, as well as implementing the infrastructure opportunities above.
Michigan can develop an implementation plan that maximizes the economic benefits to the state and achieves emission reductions cost-effectively by:
Adopting a market-based carbon pricing program, which encourages cost-effective emission cuts and generates revenue that can be used for public investments or reducing taxes. The CPP encourages states to trade credits without formally joining a trading program. Assuming a $10 per short ton price of interstate emissions allowances, Michigan could generate an average of over $160 million per year in revenue between 2022 and 2030 from out-of-state sources if it surpasses its CPP target by expanding its clean energy policies and using infrastructure opportunities as described above.
Investing in energy efficiency. Efficiency is one of the most cost-effective tools for Michigan to cut its emissions while saving money for residents. Every dollar invested in the state’s current efficiency programs returns an estimated $4 to $5 in savings to electricity customers.
Michigan is in a strong position to comply with the Clean Power Plan while taking advantage of economic opportunities and maintaining grid reliability. Michigan’s clean energy policies are already cutting CO2 emissions and other harmful air pollution while saving money for the state’s residents. Michigan can meet its mass-based standard by continuing to implement these policies and making better use of existing infrastructure. Repealing or weakening these policies, as has recently been proposed, could make meeting the standards more difficult and expensive. But by expanding these policies, Michigan can scale up their benefits and achieve deeper reductions more cost-effectively.
On August 3, 2015, EPA finalized standards for existing power plants that will help drive additional CO2 emission reductions by 2030. EPA developed these state-specific standards by taking into account each state’s existing fossil fleet along with an estimate of the potential to increase the existing coal fleet’s efficiency, ramping down coal generation by increasing the utilization of the existing natural gas combined cycle fleet, and developing more renewable energy resources. The Clean Power Plan enables states to use a wide range of options to meet their standards, such as existing clean energy policies and electricity infrastructure (the focus of this analysis), other tools to cut electricity use and increase the use of renewables, and broader initiatives such as participation in a cap-and-trade program or use of a carbon tax.