Carbon costs will reshape the generation fleet and affect retail rates.
The Intergovernmental Panel on Climate Change has made clear that climate change is a worldwide issue imbued with unparalleled urgency. Naysayers remain, but the weight of evidence today indicates that we need to deal with it—collectively and quickly. At the same time, it’s clear that the need for new power generation capacity in the United States will continue growing. Efficiency and the recession will reduce the rate of growth, but the inexorable forces of economic growth; general electrification of the economy; aging power infrastructure; new technologies (e.g., electric vehicles); and population growth will stimulate the need for additional sources of electricity.1 Even during recessions in the United States in the 1980s, the 1990s and earlier this decade, the demand for electric power dipped only temporarily before recovering strongly to maintain a long-term growth rate of 2 to 2.5 percent.2 While some countries continue to pursue business-as-usual resource options,3 often involving coal generation, it’s clear that for both developed and developing countries, the challenge revolves around the imperative to sharply lower emissions of greenhouse gases (GHGs), while also meeting the growing need for power.