Understanding Interactions Between Electric-sector and Economy-wide CO2 Policies

This presentation investigates the interactive effects of economy-wide and electric sector decarbonization policies. Using EPRI’s United States Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model, this research (1) looks into the capacity and generation requirements to meet potential configurations of a net-zero electric sector policy and economy-wide emissions target, including a clean energy standard, carbon tax, and emissions cap; (2) analyzes price and demand effects of a range of policy and technology drivers of electrification; and (3) examines sensitivities to variations in the policy elements of emissions reductions policies. Results show that (1) all decarbonization scenarios show a rapid expansion of renewable wind and solar, robust increases in end-use electrification, and increases to total electricity demand; (2) electricity prices and rates of electrification are sensitive to policy choices made in the electric sector; (3) variations in the design of an electric sector emissions reduction policy impact emissions outcomes, electricity prices, and the optimal capacity and generation mix to meet the standard; and (4) the adoption of some low carbon technologies within the electric sector, including carbon capture and storage, bioenergy, and hydrogen, depend on policy design choices. This research suggests that further analysis of the price and demand effects of electric sector policies on buildings, transport, and industrial electrification is warranted, particularly under a wider range of economy-wide emissions futures and policy designs.

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