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Achieving the Clean Power Plan 2030 CO2 Target with the New Normal in Natural Gas Prices


  • Jeffrey C. Peters
  • Thomas W. Hertel


The U.S. Clean Power Plan (CPP) seeks to reduce CO2 emissions from electric power by 32% from 2005 levels, in part, by adjusting the generation mix. Generating technologies can substitute via two distinct, but interdependent mechanisms: i) utilization - i.e. adjustment of operations of existing capacity and ii) expansion - i.e. decommissioning and construction of capacity. We develop a framework for analyzing these interdependent mechanisms, then construct and validate an empirical model of the U.S. electricity sector using recent data. Assuming current low gas prices persist, increasing utilization of gas (at the expense of higher-emitting coal) will drive higher returns to gas capacity. As a result, under our business-as-usual scenario for 2030 (no CPP) we project approximately 26% less CO2 emissions than 2005 levels, indicating that the CPP target could be met with only limited policy intervention.

Suggested Citation

  • Jeffrey C. Peters & Thomas W. Hertel, 2017. "Achieving the Clean Power Plan 2030 CO2 Target with the New Normal in Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
  • Handle: RePEc:aen:journl:ej38-5-peters

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    Cited by:

    1. Simshauser, Paul, 2021. "Vulnerable households and fuel poverty: Measuring the efficiency of policy targeting in Queensland," Energy Economics, Elsevier, vol. 101(C).
    2. Jeffrey C Peters, 2016. "GTAP-E-Power: An Electricity-detailed Economy-wide Model," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(2), pages 156-187, December.
    3. Simshauser, P., 2021. "Vulnerable households and fuel poverty: policy targeting efficiency in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2129, Faculty of Economics, University of Cambridge.
    4. Simshauser, Paul, 2018. "Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment," Energy Policy, Elsevier, vol. 120(C), pages 697-713.
    5. Brown, Marilyn A. & Kim, Gyungwon & Smith, Alexander M. & Southworth, Katie, 2017. "Exploring the impact of energy efficiency as a carbon mitigation strategy in the U.S," Energy Policy, Elsevier, vol. 109(C), pages 249-259.

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