Full Title: A Review of the Impacts of an ALL CLEAN Clean Energy Standard for Selected Regions & States
Author(s): Mark A. Foster
Publisher(s): National Energy Policy Institute
Publication Date: February 1, 2013
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The ALL CLEAN Clean Energy Standard provides that all electric generation from existing and new sources earn clean energy credits in proportion to how much CO2 they save compared to a coal fired electric power plant. The ALL CLEAN policy requires electric generators to increase their proportion of clean energy to 80% by 2035 and make up for any shortfall less than the 80% by purchasing clean energy credits.
The Energy Information Administration’s National Energy Modeling System analysis of the ALL CLEAN Clean Energy Standard policy indicates it would reduce CO2 emissions in the electric sector by 60%, resulting in a cumulative reduction in CO2 emissions of 16 billion tonnes by 2035.
At the national level, the ALL CLEAN policy would increase renewables by 74%, wind by 123%, solar by 210%, nuclear by 28% and natural gas by 42%. Coal’s market share of electric generation would fall from slightly under 50% today toward 15% in 2035.
The ALL CLEAN policy would also increase household electrical prices on the order of a third on average – roughly comparable to other clean energy standard policies. However, it is important to note that clean energy standard policies would increase household electricity prices from 10‐40% depending upon the availability of local competitively priced clean energy resources. In clean energy rich areas, clean energy credits may be sold to other regions, generating revenue and potentially even reducing the price of electricity compared to the status quo. In clean energy poor areas, electrical generators will be balancing buying credits from clean energy e rich regions and finding innovative ways to develop limited locally available clean energy resources.
Thus, given the potential for electric price increases and the persistence of state or regional price inequities under a clean energy policy, one of the key challenges facing any clean energy policy will be the local assessment of the prospect of electric price increases that may be seen as providing benefits to producers of clean electricity and traders of clean energy credits in other states and regions.
In this regard, the ALL CLEAN policy has an advantage over other Clean Energy Standard prescriptions because it is inclusive, providing clean energy credits for all existing and new electrical generating resources in proportion to their CO2 reduction potential. This feature of the ALL CLEAN policy enables a larger liquid market for clean energy credits to form based on a larger pool of clean energy generating resources. Combined with incentives for the development of new clean energy technology, an increasingly competitive electric market, and policies and practices to reduce barriers to the construction of electric transmission infrastructure, the ALL CLEAN policy should limit electric and natural gas prices increases and improve the prospects for its consideration as a leading clean energy policy prescription.