Modeling the Electricity Sector: A Summary of Recent Analyses of New EPA Regulations

Several different economic models have been applied to try to understand how new regulations by the U.S. Environmental Protection Agency (EPA) could impact coal-fired generation in the United States as well as the electricity system as a whole. This paper provides an overview of many of the key studies and the models used to analyze the potential impacts of EPA’s rules. The regulations surveyed include the Cross-State Air Pollution Rule (CSAPR), the Mercury and Air Toxics Standards (MATS), the proposed Clean Water Act (CWA) Section 316(b) rule, and the proposed Coal Combustion Residuals (CCR) rule. The models generally agree that these regulations will result in coal plant retirements, though there is far less agreement on how much generation may retire. Assumptions about the price of natural gas and the expected stringency of regulations play a key role in determining modeling results. The models provide useful guidance for policymakers when considering the potential impact of EPA regulation.