Prices between $50 and $80 a ton will trigger major market responses.
Victor Niemeyer (niemeyer@epri.com) is a technical executive in EPRI’s global climate change research program, and Lew Rubin is a utility industry analyst and founder of consulting firm Portal Solutions in Santa Cruz, Calif.
It is becoming increasingly likely U.S. lawmakers will adopt some type of climate-change policy in the near future. Whatever the details, it almost certainly will include the power-generation sector, which represents fully one-third of U.S. greenhouse gas (GHG) emissions. Such a policy—imposed as a carbon tax or as a cap-and-trade regime—is bound to have a profound effect on power generation, on the power companies that supply electricity into the U.S. market, and on electric customers throughout the land. Carbon dioxide (CO2) price of any magnitude will lead to higher electricity prices for consumers, but also will provide suppliers with incentives over time to invest in lower-emitting and non-emitting generation, such as nuclear power, coal with capture and sequestration, and renewable technologies.
In anticipation of such changes on the horizon, EPRI organized and conducted a broad-based study of climate change policy effects on electricity generators and consumers in the Western Electricity Coordinating Council (WECC) region. A diverse collection of nine Western generation companies funded and participated in this effort, and added immeasurably to the quality of results and insights.