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Feb. 19: Effective Carbon Control Policy Improves Competition, Climate, Cost of Power Generation

Contact:

Geof Becker
412-268-3486
gbecker@andrew.cmu.edu


Carnegie Mellon Professor Says Effective Carbon Control Policy
Improves Competition, Climate, Cost of Power Generation

Paper Warns About Cost of Failure To Enact Carbon Control Targets

PITTSBURGH—Jay Apt, a professor at Carnegie Mellon University's Tepper School of Business and co-author of a forthcoming paper outlining incentives for controlling carbon emissions, warns of the consequences of delay in enacting effective electric sector policy. He outlined his research in a presentation titled "Controlling Carbon in the United States Electric Power Sector," Feb. 18 at the American Association for the Advancement of Science's (AAAS) annual meeting in San Francisco. His presentation was part of a session titled "Energy or Climate Security: Do We Have to Choose?"    

Apt, executive director of Carnegie Mellon's Electricity Industry Center, argues that the cost of sector-wide carbon controls could double if policymakers wait to respond until faced with public panic over adverse environmental effects. During the AAAS session, Apt discussed the research of he and co-authors David W. Keith of the University of Calgary and M. Granger Morgan, co-director of the Electricity Industry Center and head of Carnegie Mellon's Department of Engineering and Public Policy. The Electric Industry Center is jointly housed in the Tepper School and the university's Department of Engineering and Public Policy.    

In the United States, electric power production generates more carbon dioxide than any other sector of the economy, meaning the electricity industry will have to assume the biggest burden for its reduction. If implemented in an orderly way, an 80 percent reduction of carbon dioxide from power plants is likely to cost about half of what the U.S. spent complying with the Clean Air Act a generation ago. Beyond the environmental impact of rising carbon dioxide levels, Apt and co-authors warn of three adverse consequences of delaying effective carbon control incentives:

  • Investment in effective carbon control strategies will be stifled;
  • Taking more draconian measures at mid-century will likely cost twice as much as implementing more moderate measures now;
  • Aging plants will be replaced by new, high carbon-emissions plants, whose future carbon-control retrofits will cost much more than if added during initial design and construction.    

Apt and co-authors urge policymakers to adopt a two-prong approach to creating market-based incentives to reduce carbon emissions. A carbon portfolio standard would provide certainty about future carbon dioxide emissions targets, and federal loan guarantees for capital construction costs would help reduce the barriers to widespread adoption of emissions-control technology.

The authors also warn that delay in enacting effective carbon emissions controls will erode U.S. competitiveness, as foreign companies continue to develop control technology patents.    

"A carbon portfolio standard is the least-cost national solution," the authors conclude.

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