June 02, 2014

Brattle Economists Revisit Findings on Potential Effects of Carbon Emissions Rulemakings Ahead of EPA's Clean Air Act

In anticipation of the Environmental Protection Agency’s (EPA) proposed guidelines under Section 111(d) of the Clean Air Act, set to be released today, The Brattle Group has released a compendium of prior studies examining the effects of a potential carbon emissions rulemaking. These studies cover a range of possible rulemaking options pertaining to carbon emissions in a wide variety of power markets across the United States. Many features reportedly in the proposed rule have been studied in prior work, including cap-and-trade programs, renewable energy programs, and carbon control measures.

“We are releasing this compendium to lend objective perspective to the debate,” said Frank Graves, head of Brattle’s Utility Practice. “Brattle’s experts have spent years assessing the effects of carbon emissions rulemakings and, as a result, are well equipped to examine the regulations put forth by the EPA and to model any unique provisions contained within.”

The following is a sample of prior studies conducted by Brattle economists that simulate and assess the impacts of various carbon rules in a wide range of scenarios:

  • Judy Chang and Jürgen Weiss recently assisted Great River Energy with the development of a compliance option for Section 111(d) involving an ISO-administered carbon price with carbon revenue refunding to load serving entities. The approach leverages the ability of ISOs and RTOs to minimize cost while maintaining reliable electric supply. The approach has the potential to achieve required emissions reductions at lower total cost, while taking into account the need to maintain reliable electric supply. The complete study can be viewed here.
  • Peter Fox-Penner, Mark Sarro, and Jürgen Weiss, have worked on several projects assessing the impact of California’s climate law, AB32, which, among other things, includes a cap and trade program to lower greenhouse gases from power plants. Brattle’s analysis found the economic impacts of AB32 including the cap-and-trade programs to be relatively modest for small businesses, one of the groups studied. The report can be downloaded here.
  • For the Texas Clean Energy Coalition, Peter Fox-Penner, Ira Shavel, and Jürgen Weiss simulated the entire future Texas power market under two alternative carbon rules designed to be simplified examples of EPA’s rule. The study, available at
    www.texascleanenergy.org, found that the Texas grid could adjust to a simplified carbon rule by building more wind, solar, and efficient gas-fired capacity with a small effect on retail electric prices.
  • Metin Celebi and Frank Graves have been studying the economics of retirement decisions for each coal plant operating in the United States under the proposed and emerging EPA air quality and water regulations, taking into account the predicted profitability and cost of replacement power for both regulated and unregulated plants. The study included estimates for the increase in coal plant retirements as a result of potential GHG prices in the future. The study can be viewed here.
  • Metin Celebi, Marc Chupka, and Frank Graves have examined the CO2 emission impacts of possible nuclear retirements that occur as a result of low wholesale electricity prices in many regions. They found that premature economic retirement of vulnerable nuclear plants would substantially increase CO2 emissions as fossil fuel generation would increase, but also that the cost of retaining such plants through various policy mechanisms would be quite modest. A presentation summarizing Brattle’s research can be viewed here.

If you wish to further discuss how the EPA’s proposed guidelines may impact state regulations, utilities, and the industry as a whole, please contact Frank Graves at 617-864-7900 or Frank.Graves@brattle.com.

Associated Experts
Metin 087
Principal
+1.617.864.7900
Dr. Celebi provides expertise in electricity markets and the analysis of environmental and climate policy. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Chang for web
Principal
+1.617.864.7900
Judy Chang is an energy economist and policy expert with a background in electrical engineering. She has 20 years of experience in advising clients in transmission, resource, and strategic planning. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Chupka 090
Principal
+1.202.955.5050
Mr. Chupka has more than 25 years of public and private sector experience analyzing energy markets and regulation and assisting energy clients and counsel in a broad span of commercial analysis, regulatory proceedings, and litigation support. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Graves 060
Principal
+1.617.864.7900
Mr. Graves specializes in regulatory and financial economics, especially for electric and gas utilities, and in litigation matters related to securities litigation and risk management. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Sarro 061
Principal
+1.617.864.7900
Dr. Sarro is principal and director of The Brattle Group, and a leader of its practice in cases involving “big data” and document analytics. He is a financial and empirical economist who is the lead consulting expert to investigative and trial teams in complex investigations and high-stakes litigation. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Shavel 087
Principal
+1.202.955.5050
Dr. Shavel is an energy economist specializing in the economics and operations of the U.S. electric power system, generation and transmission investment, and environmental strategy. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Jurgen weiss0492
Principal
+1.617.864.7900
Dr. Weiss specializes in issues broadly motivated by climate change concerns, such as renewable energy, energy efficiency, energy storage, the interaction between electricity, gas and transportation, and carbon pricing. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Fox penner 131
Academic Advisor
+1.202.955.5050
Dr. Fox-Penner specializes in economic, regulatory, and strategic issues in network industries. His practice centers on energy and environmental policies and electric regulation, planning, and competition issues. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4