Wind Energy FAQs: GHG Emissions and Power Prices

Greenhouse Gas emissions and Power Prices (2005-2017)

One of the objections frequently raised, in opposition to efforts to reduce greenhouse gas (GHG) emissions from the power sector, is that this will place a significant burden on electricity users in the form of increased prices. In this post we demonstrate otherwise by reference to actual power sector emissions vs. the Clean Power Plan targets.

The Clean Power Plan (CPP) was a policy of the previous administration which aimed to reduce carbon dioxide emissions from electrical power generation by 32% by 2030, relative to 2005 levels. The final version of the plan was unveiled by President Obama in August 2015. However in March 2017, President Trump signed an executive order mandating a review of the plan and EPA is currently weighing a repeal and replace option. One of the major criticisms leveled at the CPP, by its detractors, is the supposed cost associated with its implementation.

We weigh the merits of this argument by first looking at the actual carbon emissions of the power generation sector from 2005 to the present and then at electricity prices over the same period.

Carbon emissions. The Energy Information Administration publishes monthly data on carbon emissions from the power generation sector and we show them in the following graph, for the period from 2000 to the present day. Also included is  the CPP’s 2005 starting point in addition to its 2030 GHG target.

The chart shows that annual power sector GHGs fell from 2,415 million tonnes in 2005 to an all-time record low of 1,759 million tonnes in the 12 months to October 2017: a 27.2% decrease. Another way of saying it; we are only halfway between 2005 and 2030, but in that time the power sector has achieved 85% of the GHG reductions that would be needed to reach the 2030 CPP goal of 1,642 million tonnes.

So what happened to electricity prices over the same period?

Power prices.   The Energy Information Administration also publishes monthly data on national electricity prices. To ensure comparability, we inflation-adjusted all prices to November 2017 using CPI information from the Bureau of Labor Statistics, and include the chart as follows;

It demonstrates that over the period since 2005, inflation-adjusted electricity prices have been remarkably stable fluctuating from a low of 9.57 c/KWh in January 2005 to a high of 12.03 c/KWh in July 2008 and thereafter remaining largely unchanged from 2012 to the present day.

And from this data, we conclude that reducing power-system GHGs (and increasing the use of wind and solar) has not resulted in any significant change in electricity prices.