A central part of President Obama’s Climate Action Plan (CAP) is to cut CO2 emissions from the electricity sector, which accounts for about a third of US emissions of CO2. This article summarizes the broad objectives of the plan and then focuses on the challenges and the prospects of delivering emission reductions, especially from coal-based generation.
The CAP is evidence of the President’s inability to pass comprehensive federal climate change legislation, without which it will be difficult for the US to lead global climate change negotiations. Nevertheless, it gives momentum to initiatives that were already underway, in particular the introduction of CO2 emission standards for power stations. Taken together with other environmental regulations, CO2 standards will encourage early closures of existing coal plant and discourage building new coal-based generation; the result could be an important reduction of CO2 emissions. However, coal’s future is directly related to the price of natural gas in the US; to the extent those prices rise, coal will regain electricity market share and US emissions of CO2 will rise. Furthermore, there is uncertainty about the details of the emission standards and their implementation, and it is too early to assess the extent to which these standards will affect coal-based generation and related emissions.
US policies and energy market developments will influence international energy markets and climate change negotiations. However, economic developments and policy decisions in the largest emerging countries, in particular China and India, are now more critical than ever. Current forecasts of coal-based generation in these countries imply that global concentration of greenhouse gases (GHG) will soon exceed levels that the world’s scientific community considers to be “safe” from the perspective of climate change. The real challenge – for all – is to develop economically attractive low carbon energy alternatives that can be adopted at scale in the largest emerging countries.
David Robinson, Senior Research Fellow, Oxford Institute for Energy Studies