Wednesday, September 12, 2012

PJM Case Proves It Is Possible Both To Slash Carbon Emissions & Power Prices

Often those opposed to reducing carbon pollution insist that doing so is too expensive and raises prices. Those economic objections must be taken seriously and examined on a case-by-case basis.  Yet, powerful examples also now exist that it is possible to both slash carbon emissions and prices.

The PJM power pool and its gas and wind booms are a leading example of why low-carbon can be low-price.  As PJM's gas generation has more than doubled and wind generation has quadrupled since 2008, power prices have dropped 35%.  The savings are $400 per year for a residential customer.

While PJM power prices have plummeted 35%, its carbon emissions have dropped approximately 12%, during the same period, although exact comparisons are made difficult by more areas of the country and generation joining PJM in recent years.  Why are prices and carbon emissions down?

The reductions in price and carbon emissions are primarily because gas displaced substantial amounts of coal generation.  Coal's PJM market share declined from 55% to 40%, as gas rocketed up from 7% to 19% of the market.  Gas powered generation emits about 50% less carbon than coal.  And coal power plants accounted in 2008 for about 90% of the carbon emissions coming from PJM generation.

Gas, however, did not alone produce all the decline in prices and carbon. The wind boom that saw its PJM market share jump from 0.5% to 2% played a contributing role in lowering market prices and cutting carbon emissions.  More zero-bid, zero-carbon power supply will both lower market clearing prices and carbon pollution!

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