Accelerated retirements of coal-fired power plants would reduce future carbon dioxide emissions, while faster-than-expected shutdowns of nuclear facilities would boost them, the U.S. Energy Information Administration said Monday.
In either case, the EIA attributed much of the accelerated retirements to higher-than-anticipated operations and management costs in the future. In the case of coal retirements, increased transportation costs and declining mining productivity also played a role. Natural gas-fired generation and renewable electricity would replace lost capacity in both scenarios.
Carbon emissions would decline 20 percent by 2040 if coal-powered plants shut down earlier than expected compared with an EIA reference case. That amounted to 110 gigawatts coming offline, a 117 percent increase above the reference case.
Emissions would drop because natural gas-fired generation, which is half as carbon-dense as coal, would rise 19 percent and renewable energy generation would jump 10 percent.
The coal industry has faced steep competition from cheap natural gas as a domestic energy boom has unlocked previously inaccessible hydrocarbons.
New and forthcoming regulations that would require technology upgrades, such as those required by the Mercury and Air Toxics Standards that go into effect in 2016, also would make operating some older, dirtier generators less profitable. Of the power plants subject to that specific regulation, 64 percent are compliant — the others are deciding whether it makes business sense to keep units operating, said EIA's Jeffery Jones and Michael Leff.
"When faced with declining profitability, plant owners may choose to retire their units rather than make additional investments to keep them operating," they said.
But in the case of nuclear energy, which provides 20 percent of the nation's electricity, accelerated retirements would bump emissions upward 4 percent by 2040 compared with the EIA reference case. In all, 42 gigawatts would shut down, though most of that would come in 2029 or later when reactors near the end of their 60-year licensing periods.
Emissions would rise because nuclear power isn't carbon-based, but would be replaced by a 13 percent increase in natural gas generation and 5 percent more electricity from renewables.
The nuclear industry has warned that early shutdown of some of its reactors would jeopardize President Obama's goal to cut emissions 17 percent below 2005 levels by the end of the decade. The industry, like coal, has faced declining profitability in the wake of the natural gas boom. On top of that, Exelon Corp., an electric utility that owns a significant amount of nuclear generation, has argued the 2.3-cent per kilowatt-hour wind energy production tax credit has made it difficult for its reactors to compete in certain markets.
Jones and Leff said that the changes in the U.S. wholesale electricity markets have eaten away at nuclear operators' "quark spread," which is the difference between the price of electricity and fuel costs. Those changes have dimmed the outlook for some reactors, they said.
"Lower wholesale electricity prices have reduced quark spreads for all nuclear power plants, especially those with increasing operations and maintenance [O&M] costs or capital addition costs," they said.
The EIA also considered a case that included both accelerated nuclear and coal retirements. That resulted in a 14-percent decline in emissions relative to the reference case in 2040.