Implications of a US electricity standard for final energy demand

Abstract

This paper analyzes the emissions impact of an emissions intensity standard (metric tons of CO2 per MWh of electricity) for the US power sector on US final energy demand — i.e. the manufacturing, residential, commercial, and transportation sectors. An emissions intensity standard, although geared towards the power sector, will have implications for these other sectors of the economy through its effect on economy-wide energy prices. Using a hybrid energy-economy simulation model (CIMS), we find the effect on aggregate emissions from final demand to mostly be small. However, after disaggregating final demand, we find significant changes in CO2e emissions for several of sub-sectors. Given that emissions reductions in final energy demand are needed alongside power sector reductions for the US to achieve deep emissions cuts, our findings provide needed insight as to whether these eventual reductions will be helped or hindered by a US electricity standard.