Report: PJM carbon price would slash emissions 30%

Source: By Arianna Skibell, E&E News reporter • Posted: Thursday, October 29, 2020

The nation’s largest grid operator, PJM Interconnection, could reduce greenhouse gas emissions nearly 30% and save consumers $2.8 billion by 2030 by setting a modest carbon price.

That’s according to a study released yesterday by the consulting firm Energy + Environmental Economics (E3) and commissioned by the Electric Power Supply Association (EPSA), a national trade group representing competitive power suppliers.

“E3’s findings confirm that by allowing competition to flourish we can deliver a more affordable, reliable and cleaner energy future,” EPSA President and CEO Todd Snitchler said in a statement.

The report found that pricing carbon at $10 per ton could reduce 80 million metric tons of greenhouse gas emissions in PJM, whose footprint includes 65 million customers in 13 Midwestern and Mid-Atlantic states and the District of Columbia.

The report also found that 50 to 90 megawatts of natural gas generation is needed through 2045 to provide reliable electricity service and that meeting net-zero targets will require the use of “yet-to-be-developed” technologies.

Current state policies that mandate low-carbon goals are “costly and ineffective” at reducing emissions, increasing system costs by over $3 billion per year by 2030 while only achieving 40 million metric tons of emissions reductions, the report found.

“The key takeaway is clear: putting a price on carbon and allowing competition to work is cheaper, faster and more productive than a centralized planning approach based on out-of-market subsidies,” said Tom Rumsey, senior vice president of external and regulatory affairs for Competitive Power Ventures, an electricity generation company that runs several natural gas-fired power plants.

Proponents of state mandates and renewable energy targets argue that a carbon price alone cannot achieve the deep decarbonization goals necessary to combat climate change, but it could still help (Energywire, May 19).

The study comes on the heels of a “landmark” policy proposal from the Federal Energy Regulatory Commission welcoming regional grid operators to submit plans to price carbon into their markets (Greenwire, Oct. 15).

PJM formed a carbon pricing task force last year to, among other efforts, weigh the merits of adjusting market rules to account for some member states moving to reduce carbon emissions (Energywire, Feb. 25).