Competition and clean air: The operating economics of electricity generation

Journal Article · Sat Jan 01 04:00:00 EST 1977 · Electricity Journal

OSTI ID:443478

Biewald, B ^[1]

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1. Synapse Energy Economics, Cambridge, MA (United States)

Competition alone cannot be counted on to produce environmental improvement in the electricity industry. Given the different duty factors of baseload, intermediate and peaking plants, specific environmental policies such as air emissions caps will be needed to continue improvement as the industry restructures. The environmental impacts of electric industry restructuring depend critically upon the operating economics of existing power plants. If new, clean generating capacity can be built economically to displace a large portion of the relatively dirty portion of the existing fleet, restructuring that provides for this competition could bring about environmental improvement. On the other hand, if the existing plants are economically competitive, the electric industry restructuring may further entrench these older generators possibly with them running at even higher capacity factors and producing even more pollution. The authors view, having examined operating cost data for existing plants, is that in this debate the pessimists are correct: Operating costs of the vast majority of existing generators are sufficiently low that they will be highly competitive relative to new capacity and will remain so for some time. In short, competition will not, on its own, result in cleaner air. The hoped-for `win-win` result is not likely to happen if left to chance. What this analysis points to is a need to include air emission constraints in restructuring plans, so that any economic benefits from competition are not realized at the expense of further environmental degradation. Specifically, regional or national cap and trade systems should be implemented for nitrogen oxides, fine particulates, carbon dioxide, and some toxic air emissions. Alternatively, revenue-neutral pollution taxes (reducing taxes on `goods` such as income and increasing taxes on `bads` such as air emissions) could be applied toward the same end.

• OSTI ID: 443478
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 1 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
AIR POLLUTION ABATEMENT
BUSINESS
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY
ENVIRONMENTAL IMPACTS