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Establishing a Price for Carbon Emissions in the U.S. Would Spur Immediate Reductions in Energy Consumption and More Efficient Use of Power Generators, Study by Carnegie Mellon Researchers Shows
Date:5/28/2008

Simulation of Short-Term Effects of $35 Cost Per Metric Ton of CO2

Indicates Up To Ten Percent Cut in Emissions Possible

PITTSBURGH, May 28 /PRNewswire/ -- As recent judicial, political and industry developments appear to continue to move the United States toward a mandatory price for carbon dioxide (CO2) emissions, new analysis by Carnegie Mellon University researchers provides the clearest picture yet of the possible short-term effects of establishing such a cost. The research, published recently by Environmental Science & Technology, suggests that even a modest price would, almost immediately, result in up to 10 percent reductions in emission levels by prompting changes in both power company investments and consumer behavior.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070425/CARNEGIELOGO )

Simulating the impact of a price on CO2 emissions from the existing fleet of U.S. power plants in three regions using marginal costs for generators and hourly electricity load data from 2006, the researchers considered the short- term effects on electricity price and demand even before any new, more efficient generation facilities could be built. They identified that a price as low as $35 per metric ton of CO2 would likely cause a reduction of consumer electricity use, as well as a change by grid operators in the order in which generators are economically dispatched, depending on their emissions levels and marginal fuel prices.

In fact, the researchers predict that as much as ten percent reduction in emissions would be the result, although the level of reduction is heavily dependent upon the availability of alternative and less carbon-intensive power generation technologies in a particular region. For example, facilities in the Northeast and Midwest would see a higher drop in emissions resulting from the price, while emissions in Texas - with
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SOURCE Tepper School of Business
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