Alternative Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions

The document argues that mass-based emission standards are superior to rate-based standards for regulating existing power plants because they avoid production incentives that can lead to emissions 'rebound' and conflicts with existing regional trading systems. Through economic modeling, the author compares a 'fossil budget' approach (covering all fossil units) and a 'coal budget/gas rate' approach. Both core cases are projected to reduce fossil sector carbon emissions by 26% to 27% relative to 2005 levels by 2020, primarily by displacing high-emission coal generation with existing natural gas combined cycle (NGCC) units. While the fossil budget approach provides stronger long-term price signals for zero-carbon investment, the coal budget/gas rate approach results in lower near-term emission credit prices ($20/tonne vs $34/tonne), lower wholesale price increases (6.9% vs 27.9%), and lower retail rate impacts (2.3% vs 4.1%).

• Rate-based emission standards create production incentives for units with emission rates below the standard to increase output to earn more financial credits, which can lead to 'seams' conflicts at the borders of mass-based systems like RGGI and California.
• Rate-based standards for coal units may cause an emissions 'rebound' where heat rate improvements make coal units more competitive than natural gas units, potentially increasing net system emissions or extending the life of coal plants that would otherwise retire.
• Two core mass-based policy designs—a fossil budget and a coal budget/gas rate approach—could reduce U.S. electric sector carbon emissions by 26% to 27% relative to 2005 levels by 2020.
• The primary mechanism for achieving these reductions is the displacement of high-emission coal generation with existing natural gas combined cycle (NGCC) units, accounting for approximately 70% of total compliance.
• The 'coal budget/gas rate' approach is more cost-effective in the short term than the 'fossil budget' approach, resulting in an emission credit price of $20/metric tonne, a 6.9% increase in wholesale prices, and a 2.3% increase in retail rates.
• The 'fossil budget' approach leads to higher near-term costs, with an emission credit price of $34/metric tonne, a 27.9% increase in wholesale prices, and a 4.1% increase in retail rates, because the carbon price applies to both coal and gas generation.
• Despite higher short-term costs, a mass-based fossil approach is more effective for long-term deep decarbonization as it provides stronger price signals for investments in renewables, nuclear, carbon capture utilization and sequestration (CCUS), and energy efficiency.
• Implementing these mass-based policies would increase national natural gas demand by 2.6 to 3.0 TCF, raising Henry Hub gas prices by approximately 9.8% to 11.4% in nominal 2020 dollars.
• Total program costs for the mass-based alternatives are estimated between $8.6 billion (fossil case) and $9.4 billion (coal case) in 2013 dollars, with average abatement costs of $30 to $32 per metric tonne.

APA

Phillips, B. (2014). Alternative Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions. Clean Air Task Force. https://cdn.catf.us/wp-content/uploads/2014/02/21094114/CATF_Pub_RegulatingGreenhouseGasEmissions.pdf

Chicago

Phillips, Bruce. Alternative Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions. Clean Air Task Force, 2014. https://cdn.catf.us/wp-content/uploads/2014/02/21094114/CATF_Pub_RegulatingGreenhouseGasEmissions.pdf.

Wikipedia

{{cite report |last1=Phillips |first1=Bruce |title=Alternative Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions |publisher=Clean Air Task Force |date=27 February 2014 |url=https://cdn.catf.us/wp-content/uploads/2014/02/21094114/CATF_Pub_RegulatingGreenhouseGasEmissions.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{phillips2014alternative, author = {Phillips, Bruce}, title = {{Alternative Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions}}, institution = {Clean Air Task Force}, year = {2014}, month = feb, url = {https://cdn.catf.us/wp-content/uploads/2014/02/21094114/CATF_Pub_RegulatingGreenhouseGasEmissions.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }