2015 A “Watershed Year” For US Power Sector As Emissions Fall To Two-Decade Low

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2015 could be a “watershed year” for the US power sector according to a new white paper published by Bloomberg New Energy Finance, with records viable in annual renewable build, coal retirements, and gas burn. More importantly, Bloomberg suggest that “electricity-related emissions could fall to their lowest levels since 1994.”

The white paper, published Thursday and which synthesizes previous research published by Bloomberg New Energy Finance (BNEF), highlights three factors that are combining to make 2015 a year “for the record books.”

“More interesting than the single-year drop in emissions are the ‘structural’ impacts that will live on for decades,” says William Nelson, Head of North American Analysis. “Emissions can rise or fall year-to-year based on weather anomalies and volatile fuel prices – but in 2015, we’ll take a giant, permanent step towards de-carbonizing our entire fleet of power plants.”

According to BNEF, the United States is set to install more renewables than ever before in 2015, with 18 GW of new renewable energy projects being brought online. New solar installations alone are set to reach an all-time high of 9.1 GW in 2015, thanks primarily to California, which will install approximately half of that figure. Wind energy will reach 8.9 GW in 2015, with a third being located in Texas.

“Both technologies are in the midst of a temporary build rush, as developers racer to capture important federal tax incentives that are set to step down or expire by 2017,” the authors of the white paper write.

Several factors are behind the second factor BNEF highlight in their white paper, the predicted record year for coal retirements in 2015, with 23 GW worth of coal-fired plants being shut down, representing 7% of the country’s current coal capacity. BNEF highlight three separate catalysts for the record retirement figures, including:

  • Old age: numerous units are today approaching 50+ years of operation.
  • Cheap gas: sub-$4/MMBtu Henry Hub gas will hit coal units twice — first, by reducing wholesale power prices; and second, by bringing combine-cycle gas turbines (CCGTs) into the base-load power mix, encroaching on sales of coal-fired electricity.
  • Environmental regulations: standards laid out by the US Environmental Protection Agency (EPA) will force generators to decide whether to invest in expensive environmental controls.

Finally, the US power sector is set to burn more natural gas in 2015 than ever before, as the industry sets to fill the space left by coal retirement, as well as the fact that “remarkably low gas prices have boosted burn totals by allowing efficient gas turbines to undercut the cost of coal-fired electricity.”

All these factors, therefore, will have a direct impact on America’s CO2 emissions, which are expected to fall to their lowest levels since 1994. Emissions will drop 15.4% below 2005 levels, going a long way to helping the US meet their pledge of cutting CO2 emissions by 28% by 2025. And while this 28% is inclusive of power, transport, agricultural, industrial, and residential sectors, the impact a 15.4% drop in power sector emissions will have on the country as a whole are huge.

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Joshua S Hill

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7 thoughts on “2015 A “Watershed Year” For US Power Sector As Emissions Fall To Two-Decade Low

  • Here’s one issue I have with gas. The US is producing and consuming lots and lots, but only have about 6 percent of the world’s total. Most of the natural gas sits below Russia and Middle East countries. So at roughly 30 trillion cubic feet per year consumption and 330 trillion cubic feet in reserves. That’s 10 years. The other issue I have with natural gas is the environmental problems we’re ignoring. That would be breathing zones and groundwater impact. Gas is cheap now. Bloomberg would love to see more world trading of LNG, whether it’s out of or into the US. The figure below is proved reserves of natural gas with respect to production zones (continents mostly).

    • Valid concerns.

      But I will take 10 years of NG over coal as we ramp wind and solar to higher levels.. Maybe in year 5-8 we will see NG start to decline as we are seeing in coal today?

      • I agree. And considering that even with high retirement rates, it’s only 7% of coal-based capacity in 2015 that is going out — with that rate, would take 14 years to just retire all coal plants. So LNG is indeed needed to fill the gap in between.
        Considering LNG is still significantly lower with CO2 emissions, and less costly and easier to build than Nuclear, it will be the bridge fuel for a decade or two.

        • Coal provided 39% of US electricity last year, so 7% of that is less than 3% of total US electricity consumption. Wind and solar are more than capable of replacing that, so there is no need for increased gas capacity.

      • Storage will eat into, and is eating into, the use of gas. Gas is a lot more dispatchable than coal. Storage can delay and avoid the use of gas to meet short term demand.

        As storage costs continue to drop gas will be pushed further into the background.

        Coal cannot be turned on and off nearly as quick as gas which means storage would have a much smaller impact.

  • This is good news, would be better if fed would wake up and show the market some direction.
    1) Cut all the federal subsidies to FF
    2) Continue the wind PTC until 2020 then ramp to down to zero in 2015.
    3) Convert solar to direct cash payment, so nonprofit (schools) can benefit. Continue until 2022, then 2023(25%), 2024(20%), ..2027(5%), 2028(0%).
    4) Add a real carbon tax(fee), then use 25% to offset costs of 3 and 3; 75% equal payment to each citizen in US. Tax would start at say $50/ton and go up $10 every quarter. Set cap at $300 with National Science Association to study raising cap in 2020 and every 5 years, based on on results and current climate science. They could not lower fee.
    Oh an please raise the gas tax so the highway fund can fix all the bridges before they fall down. It is hiding the FF cost that is keeping the US addicted.

  • When you write an article about a report, please publish the link to the report.

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