1 Potential Short Run Reductions in CO2 Emissions Attainable through the Redeployment of Existing Natural Gas Electricity Generating Capacity: An Empirical Analysis

As the leading contributor of greenhouse gas emissions, the electricity sector stands to be notably impacted by climate policy. The use of fossil fuels for electricity generation accounts for more than 40 percent of US carbon dioxide emissions. Coal is the dominant fuel in the electricity sector, and it accounts for about half of all US electricity generation and two-thirds of electricity generated from fossil fuels. However, natural gas can be burned more efficiently than coal and produces substantially less carbon dioxide per unit of energy. Given adequate natural gas generating capacity, shifting the fuel mix from coal toward natural gas would sharply reduce emissions. This paper assesses the potential emissions reductions that are immediately achievable using existing natural gas generating capacity. It takes into consideration the gas capacity that utilities must hold in reserve to follow daily fluctuations in the demand for electricity and provides an estimate of the remaining capacity available to replace coal. Using this estimate, the paper provides an approximation of the reductions in emissions achievable through a range of generator utilization rates consistent with historical behavior in the industry. In addition, it provides estimates of the effect of natural gas prices on gas-fired generation. The paper finds that roughly 178 gigawatts of gas generating capacity is available to displace coal, and that overall US emissions can be reduced between 10 and 16 percent in the very short term