Last week, as Chairman of the Senate Energy and Natural Resources Committee Jeff Bingaman (D-N.M.) announced he would propose a federal Clean Energy Standard (CES) bill early next year, the Energy Information Administration (EIA) released an impact analysis that examines how such a policy would affect the nation’s power profile and carbon emissions.
Bingaman is reportedly planning to retire at the end of 2012, and he has acknowledged that the proposal is unlikely to be passed by both congressional houses. “I think it would be very difficult to get it through both houses,” he told reporters in October. “But that doesn’t mean we shouldn’t introduce it and talk about it and let people respond to it.”
According to the EIA’s analysis—which was requested by Sen. Bingaman—a CES is a “policy that requires covered electricity retailers to supply a specified share of their electricity sales from qualifying clean energy resources. Under a CES, electric generators would be granted clean energy credits for every megawatthour of electricity they produce using qualifying clean energy sources. Utilities that serve retail customers would use some combination of credits granted to their own generation or credits acquired in trade from other generators to meet their CES obligations. Generators without retail customers or utilities that generated more clean energy credits than needed to meet their own obligations could sell CES credits to other companies.”
The analysis examined a hypothetical CES that would require renewables—including solar, wind, biomass, and hydropower—as well as nuclear power to constitute 45% of all electric utility sales starting in 2015 and gradually increase to 95% by 2050. The analysis also includes national gas and coal-fired generation if outfitted with carbon capture and storage (CCS) technology. Under the CES, all electricity providers would be covered by the requirement, regardless of ownership type or size. The CES would also operate independently of any state-level policies.
Predictably, the Bingaman CES (BCES) policy would change the nation’s generation mix, reducing the role of coal technologies and increasing reliance on natural gas, non-hydro renewable, and nuclear technologies, the EIA finds. Coal power would decrease by 41% in 2035 (compared to an increase of 23% in the EIA’s Annual Energy Outlook [AEO 2011]), while natural gas generation would grow 53% by 2035. Under the BCES policy, non-hydro renewable technologies grow at the fastest rate, increasing from 146 billion kWh in 2009 to 601 billion kWh in 2025 and 737 billion kWh in 2035. These totals are 60% and 75% greater than the 2025 and 2035 reference case projections put forth in the AEO2011.
Wind would increase more than five times under the BCES, while biomass would also grow, on the back of cofired generation. Under the BCES, projected annual electricity sector carbon dioxide emissions would fall 22% below the reference case level in 2025 and 43% lower in 2035.
A more interesting finding was that the BCES had a “negligible impact” on electricity prices through 2022, but prices rose 21% by 2035, the EIA says. “In the early years of the projection period, there is negligible impact on average end-use electricity prices, as the requirement to hold BCES credits is modest,” it suggests. “The share of total sales that must be covered by credits does not exceed 45 percent until after 2030. This is important because, while coal-fired plants do not receive BCES credits, efficient combined cycle plants receive 0.48 credits for each megawatthour they generate, more than retailers purchasing their output are required to hold until after 2030. This effectively reduces the cost of most natural gas-fired generation until the later years of the projections.”
Some regions would see exponential increases. The regions with the highest price increases in 2035 are the SERC Central Region (SRCE) (69.2%) and the WECC Northwest Region ( (61.5%). The two regions with the highest increases in terms of cents per kilowatthour in 2035 are NPCC Long Island (NYLI), where prices increase by 5.2 cents/kWh and SERC Central (SRCE), where prices increase by 4.2 cents/kWh.
The EIA in November published a similar study of a CES with stipulations set by Rep. Ralph Hall (R-Texas), chair of the House Committee on Science, Space, and Technology. It found that a CES could increase power generation costs by almost 30% nationwide by 2035.
Sources: POWERnews, Sen. Jeff Bingaman, EIA