Impacts of EPA Power Plant Emissions Regulations on the US Electricity Sector

TL;DR

This study models the impacts of EPA power plant emissions regulations on the US electricity sector, showing significant emission reductions and highlighting strategies for cost-effective decarbonization.

Contribution

It introduces detailed operational constraints into a power system model to assess EPA regulations' impacts on capacity, operations, and emissions.

Findings

Regulations could cut 2040 power sector emissions by 51% from 2022 levels.

Coal-fired power plant regulations lead to the largest emission reductions.

Retiring inefficient fossil fuel generators and strict regulations on all gas plants are key for cost-effective decarbonization.

Abstract

Taking aim at one of the largest greenhouse gas emitting sectors, the US Environmental Protection Agency (EPA) finalized new regulations on power plant greenhouse gas emissions in May 2024. These rules take the form of different emissions performance standards for different classes of power plant technologies, creating a complex set of regulations that make it difficult to understand their consequential impacts on power system capacity, operations, and emissions without dedicated and sophisticated modeling. Here, we enhance a state-of-the-art power system capacity expansion model by incorporating new detailed operational constraints tailored to different technologies to represent the EPA's rules. Our results show that adopting these new regulations could reduce US power sector emissions in 2040 to 51% below the 2022 level (vs 26% without the rules). Regulations on coal-fired power plants drive the largest share of reductions. Regulations on new gas turbines incrementally reduce emissions but lower overall efficiency of the gas fleet, increasing the average cost of carbon mitigation. Therefore, we explore several alternative emission mitigation strategies. By comparing these alternatives with regulations finalized by EPA, we highlight the importance of accelerating the retirement of inefficient fossil fuel-fired generators and applying consistent and strict emissions regulations to all gas generators, regardless of their vintage, to cost-effectively achieve deep decarbonization and avoid biasing investment decisions towards less efficient generators.