Thought Leadership

Phasing Out the Use of Fossil Fuels for Generating Electricity


By Steve Weissman

March 2, 2017

Preparing to meet long-term GHG reduction goals

Carbon-free electricity is an essential part of efforts to achieve deep reductions in greenhouse gas (GHG) emissions. However, regulators tend not to face head-on the need to phase out the use of fossil fuel power production. In fact, the U.S. Energy Information Administration recently reported that after a downward trend of several years for new natural gas-fired generation, new annual capacity additions are once again on the rise.

The first and most important step to reverse the trajectory is for policymakers to acknowledge that market forces alone will not push these polluting energy sources off of the grid. Therefore, our political leaders have opportunity; some might say an obligation, to ultimately eliminate the use of fossil fuels all together.

There seems to be a quiet hope that greater energy efficiency and the accelerated development of renewable generation will eventually replace coal and natural gas. Yet, throughout our nation’s history, transitions in fuel choices have been additive – not subtractive. Even with the addition of coal, then oil and natural gas, the nation still uses about as much wood for energy production as it did during the Civil War. This should be no surprise, since energy demand continues to grow, while the introduction of new energy resources tends to bring down the market price of competing options. At the same time, investors in natural gas plants and other infrastructure will exert political pressure to ensure that they can realize the maximum return on their investments.

Read the full report, Phasing Out the Use of Fossil Fuels for the Generation of Electricity

Phasing out fossil-fueled generators at a level sufficient to successfully decarbonize the grid will require affirmative steps by governments at the federal, state and local levels. Here are some of the things policymakers can do.

Have a Plan

State regulators make decisions that affect natural gas use for decades, yet do not typically address the long-term implications of doing so. Before saying “yes” to that next gas-fired power plant or long-term contract, it would be instructive to know the context. What does business-as-usual look like, in terms of projected natural gas use through 2040, or 2050? What would a ramp-down of natural gas use look like, in order to meet long-term GHG reduction targets? How does that new project or contract fit into this picture?

Put a Limit on New Coal-Fired Power Plants

Congress or the states could put a limit on GHG emissions related to power generation and, if the allowable level of emissions is consistently reduced over time to a level that reflects scientific consensus of what is needed to stabilize climate change, generators would be forced to move away from the use of coal and natural gas. More states could join the few that have prohibited long-term contracts for facilities with smokestack GHG emissions as great as those experienced with conventional coal-fired plans.

Ban the Use of Fossil Fuel

Title I of the Clean Air Act1 calls for the Environmental Protection Agency to create National Ambient Air Quality Standards to protect public health and welfare. States are required to establish State Implementation Plans designed to enable the state to meet the standards. As part of that process, the EPA must determine that a pollutant will “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.” It has already made such a finding for greenhouse gases. EPA could set and enforce a standard that would require states to move away from the use of fossil fuel.

Place a Limit on Greenhouse Gas Emissions

The Northeast states participating in the Regional Greenhouse Gas Initiative (RGGI) and California have done this, having a clear impact on the construction of new coal-fired plants and, as emission caps are tightened over the years, should discourage new gas-fired plants. In a political environment that is not likely to produce a uniform national approach, more states may be motivated to join in with RGGI or California, or create their own approaches.

Set an Accurate Price for Carbon-based Generation

Federal regulators could impose a carbon adder on wholesale electricity prices, enabling non-greenhouse gas-emitting sources to better compete in wholesale electricity markets. Because they can normally avoid paying for the climate-related externalities associated with their projects, carbon-emitting power sources have an unreasonable competitive advantage in wholesale markets that a carbon adder could help to overcome. This option is being explored in New York and the Northeast.

Divest Ownership in or Close Government-owned Fossil Generators

A significant portion of the power plant fleet in the United States is owned by public entities such as federal agencies or municipal utilities. For instance, the Tennessee Valley Authority (TVA), which is a corporate agency of the federal government, owns and operates eight coal-fired power plants with a total of 35 generating units. TVA has expressed the intention to retire its older coal plants and replace them with cleaner facilities and has already retired several units. TVA could produce a definite, accelerated schedule for the retirement of the 35 remaining coal-fired generating units. A similar opportunity exists for municipal utilities (those utilities owned and operated by city and county governments, or independent board elected by public vote) that own generators that burn fossil fuels.

These and other strategies can fill the gap between the adoption of renewables and phasing out fossil-fueled generation. With a clear understanding of this reality, public officials can better tailor their decisions to support a movement away from coal and natural gas generation.

1Clean Air Act Title I, Part A. Section 101-131 

Steve Weissman

Sr. Principal Advisor

Steven is an energy and environmental attorney and policy expert.

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