What’s driving down industry emissions? The market

By Kristi E. Swartz | 09/14/2016 08:00 AM EDT

ATLANTA — Market forces, not U.S. EPA’s Clean Power Plan, are the chief driver behind lower carbon emissions right now, energy experts said at a conference here on power-sector trends yesterday.

Low natural gas prices, federal tax breaks for renewables, and the falling cost of wind and solar are behind the electric utility industry’s transition away from fossil fuels, which is doing more to cut into greenhouse gas emissions.

Such changes do not render the Obama administration’s signature climate rule unnecessary, officials pointed out. And states are going to have to think beyond 2030 — the rule’s compliance date — if they want to make any meaningful impact against climate change, others said.


"We see the Clean Power Plan as a tremendous organizing framework toward moving toward a decarbonized future," said Julie McNamara, energy analyst with the Union of Concerned Scientists. "This isn’t just about 2030, this is about ‘what does this mean if we’re facing a low-carbon future, what’s the best path to get there?’"

McNamara was one of several speakers at an all-day event here hosted by the Bipartisan Policy Center, Great Plains Institute and Nicholas Institute for Environmental Policy Solutions. All three have been working with states on how to best meet goals of the Clean Power Plan, which broadly called for a one-third reduction in power-sector emissions by 2030.

The Supreme Court stayed the rule in February while massive litigation over it plays out. On Sept. 27, the full U.S. Court of Appeals for the District of Columbia Circuit is scheduled to hear more than 3 ½ hours of arguments over the rule (Greenwire, Aug. 17).

Some states that started working on compliance plans continue to do so or have their own low-carbon policy mandates to meet. Others have halted all work, at least publicly.

The electric companies that are fighting the Clean Power Plan argue they are reducing carbon emissions on their own. The regulation isn’t their only challenge right now, however.

Electricity demand is flat and likely will remain that way for some time. And new technologies are making it easier for customers to control their electricity use.

Both forces are cutting into utility companies’ revenues, and many are grappling with how to change their business models from ones they’ve been used to for decades.

"Technology is driving the changes that we’re seeing," said Ted Thomas, chairman of the Arkansas Public Service Commission. "There’s risk in adopting new technology, and there’s risk in not adopting new technology and being left behind."

The PSC has to manage all of those risks as it develops new policies, he said.

What about nuclear?

A looming question is the role nuclear power will play as states look for carbon-free options beyond renewables. Many speakers said that nuclear must be a part of the electricity mix.

SCE&G Sets VCS Unit 2 Reactor Vessel in Containment
South Carolina Electric & Gas and its partners place the reactor vessel in the containment building of V.C. Summer Unit 2 in this Aug. 30 photo. A looming question is the role nuclear power will play as states look for carbon-free options beyond renewables. | Photo by SCE&G, courtesy of Flickr.

"It’s hard to have an intellectually honest conversation about carbon if you cannot talk about nuclear," said Cathy Woollums, Berkshire Hathaway Energy’s chief environmental counsel. "The United States, from a policy perspective, has not dealt with the nuclear issue."

Woollums said Berkshire Hathaway Energy has considered building nuclear but shelved plans because the company didn’t think there was enough intestinal fortitude in the country to support it.

The nation’s nuclear industry is in flux as low natural gas prices and in some cases wind are forcing many to be shut down because they are uneconomical to run. Meanwhile, Georgia and South Carolina are building multibillion-dollar reactors, but both projects are years behind schedule and billions of dollars over budget.

There are efforts to keep the current fleet operating and a separate measure to commercialize new technology, including small modular reactors. Many electric companies that view nuclear as a way to maintain carbon-free baseload power also acknowledge that it comes with a hefty price tag.

"I don’t know what the future will be, but I don’t know if it’s so much about intestinal fortitude, it’s just so darn expensive," said Michael Dowd, air division director of Virginia’s Department of Environmental Quality. "When you look at the costs, they are very, very high, and I can’t say I see a lot of public support, but that could change."

This story also appears in ClimateWire.