This report summarizes implications of alternative pathways for implementing the U.S. Environmental Protection Agency’s Clean Power Plan (CPP) in Michigan. Conducted at the request of a utility consortium, the analysis was performed by the Electric Power Research Institute (EPRI) to investigate Michigan’s options in preparing a state plan required by the CPP. EPRI’s U.S. Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model is used to assess the relative costs of choosing mass- and rate-based CPP compliance targets across a range of scenarios representing potential developments of emission trading markets.
The analysis suggests that the state mass target applied to existing units, implemented as per the proposed Federal Plan, is likely an attractive CPP compliance pathway for Michigan. This pathway is lower cost for the state than the performance-rate pathway where covered units face subcategory specific adjusted emission rate targets. It also allows Michigan to comply without relying on the development of trading markets. These conclusions are robust to key uncertainties, including the natural gas price path, the lifetime of Michigan’s remaining coal units, and the development of trading markets.
The results indicate that Michigan’s primary compliance strategy is to shift from coal generation to gas and renewable generation. Thus in all but one of the 27 compliance scenarios examined, Michigan coal generation in 2030 fell approximately 30% versus 2015 levels, whether due to pre-planned coal unit retirement decisions, or incentivized by the CPP directly.