Electric Power in a Carbon Constrained World

Abstract

Coal-fired power plants produce nearly 60% of the U.S. electricity and release about one ton of CO2 for each megawatt hour of electricity generated. If the nation is to continue using electric power and expanding capacity to service a growing population hard choices must be made concerning the use of coal. This article explores the technology for producing electricity from coal and the legal constraints being imposed on coal-fired power plants. It discusses greenhouse gas reporting requirements and the regulatory regimen imposed by the Clean Air Act including the move to requiring geologic carbon sequestration and the associated legal problems. It discusses renewable energy with emphasis on the government programs to encourage the use of wind-powered electric generation and the efforts to expand the use of nuclear power. The article then discusses the efforts to limit carbon emissions by increasing the costs of electricity through the use of taxes or a cap-and-trade program. It discusses the bill approved by the House of Representatives (H.R. 2454) and pending legislation in the Senate including S.1733. The article concludes with the observation that using existing laws is a poor way to develop an energy policy, and Congress should create a comprehensive energy policy that will reduce our dependence on carbon-based fuels in a manner that does not harm the economy, but the pending cap-and-trade bills will not accomplish this goal.

Keywords: climate change, global warming, air pollution, energy, carbon dioxide, electric power, nuclear power, renewable energy, cap-and-trade

JEL Classification: K32, L50, L94, Q25, Q40, Q42, Q48