US natural gas prices fell in 2009 on account of weak demand and increased supply from shale gas production. The fall in prices led to a reduction in coal- fired electricity generation and a concomitant increase in natural gas-fired electricity generation. Low natural gas prices conjoined with static coal prices and underutilized natural gas power plant capacity to create an environment primed for switching from natural gas to coal. Due to differences in chemical make-ups and plant efficiencies between the two fuels, this switching led to a significant reduction in carbon dioxide emissions. This thesis models how the fuel switching effect occurred and how it translated to an emissions reduction. It also analyzes several hypothetical policies aimed at augmenting the effect to achieve further reductions in emissions. Throughout the analysis, it considers the other impacts— environmental, human health, and economic—of a large-scale shift from a fuel
system based on coal to one based on natural gas.
In its role of maintaining reliability and resource adequacy, PJM has been following the finalized Cross State Air Pollution Rule (CSAPR)1 and proposed National Emissions Standards for Hazardous Air Pollutants (NESHAP),2 issued by the United States Environmental Protection Agency (EPA), affecting electric generating units, and coal-fired units in particular. PJM has been in the process of estimating the impacts of these rules on the amount of coal-fired generating capacity that may retire, rather than install pollution control retrofits by examining the retrofit status of coal capacity by the age and size of coal-fired units.