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

CAMBRIDGE, Mass., June 2, 2014 /PRNewswire/ -- 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 Jurgen 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 Jurgen 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 Jurgen 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 [email protected].

The Brattle Group analyzes complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world.  We are distinguished by the clarity of our insights and the credibility of our experts, which include leading international academics and industry specialists.  For more information, please visit www.brattle.com.

SOURCE The Brattle Group