How the Timing of Climate Change Policy Affects Infrastructure Turnover in the Electricity Sector: Engineering, Economic and Policy Considerations

The electricity sector is responsible for producing 35% of US greenhouse gas (GHG) emissions. Estimates suggest that ideally, the electricity sector would be responsible for approximately 85% of emissions abatement associated with climate polices such as America’s Clean Energy and Security Act (ACES). This is equivalent to ~50% cumulative emissions reductions below projected cumulative business-as-usual (BAU) emissions. Achieving these levels of emissions reductions will require dramatic changes in the US electricity generating infrastructure: almost all of the fossil-generation fleet will need to be replaced with low-carbon sources and society is likely to have to maintain a high build rate of new capacity for decades. Unfortunately, the inertia in the electricity sector means that there may be physical constraints to the rate at which new electricity generating capacity can be built. Because the build rate of new electricity generating capacity may be limited, the timing of regulation is critical—the longer the U.S. waits to start reducing GHG emissions, the faster the turnover in the electricity sector must occur in order to meet the same target. There is a real, and thus far unexplored, possibility that the U.S. could delay climate change policy implementation for long enough that it becomes infeasible to attain the necessary rate of turnover in the electricity sector.

This dissertation investigates the relationship between climate policy timing and infrastructure turnover in the electricity sector. The goal of the dissertation is to answer the question: How long can we wait before constraints on infrastructure turnover in the electricity sector make achieving our climate goals impossible?

Using the Infrastructure Flow Assessment Model, which was developed in this work, this dissertation shows that delaying climate change policy increases average retirements rates by 200-400%, increases average construction rates by 25-85% and increases maximum construction rates by 50-300%. It also shows that delaying climate policy has little effect on the age of retired plants or the stranded costs associated with premature retirement. In order for the electricity sector to reduce emissions to a level required by ACES while limiting construction rates to within achievable levels, it is necessary to start immediately. Delaying the process of decarbonization means that more abatement will be necessary from other sectors or geoengineering. By not starting emissions abatement early, therefore, the US forfeits its most accessible abatement potential and increases the challenge of climate change mitigation unnecessarily.