In addition to reducing electricity costs, competitive power markets helped drive 150 million metric tons in carbon reductions in 2018-2019, new EIA data show.
Competitive power suppliers provide more than 150,000 MW of power generation capacity in the United States – enough to power 112 million homes. Thus, competitive markets are a key driver in reducing the nation’s carbon dioxide emissions – while also reducing consumer costs.
According to newly-released data from the U.S. Energy Information Association (EIA), reductions in electricity generation emissions were the primary reason for reduced energy-related carbon dioxide emissions in the U.S. in 2019. The report found that “nearly all” of the 3 percent decline in energy-related emissions between 2018 and 2019 was due to changes in the fuel mix used to generate electricity.
Between 2018 and 2019, natural gas-fired generation rose from 35 percent to 38 percent of electricity generation, while coal-fired generation fell from 27 percent to 23 percent. Along with increased alternative energy installations, this switch has helped reduce CO2 emissions by about 150 million metric tons.
“EIA attributes nearly all (96%) of this decline to the changing mix of fuels used to generate electricity.”U.S. Energy Information Adminstration, Nov. 10, 2020
Much of this has occurred because lower-emitting domestic natural gas drove down prices and became the best option for power generators to keep costs low. When power is bought and sold in a competitive market, prices are determined by supply and demand, creating a market-driven incentive to keep costs as low as possible to meet reliability needs.
While transportation is now the biggest contributor to U.S. carbon emission, electric power generation accounts for about one third of all U.S. CO2 emissions, which means this decline has real impact. It is also another example of how competitive markets are helping electricity generators provide affordable, reliable service while also reducing emissions.
Power producers in competitive power markets are leading the energy transition to low-carbon and zero-emitting generation resources. According to the EIA, emissions from the electric power sector have fallen by 33 percent since 2007 “because less electricity has been generated from coal and more electricity has been generated from natural gas…and non-carbon sources.”
The EIA analysis focuses on emissions, but it is important to note the impact competition has had on consumer prices. The same power markets that are driving down carbon dioxide emissions are also lowering electricity bills across the country.
Thanks to competitive power markets, the 65 million Americans living in the PJM region enjoyed savings of $3.2 to 4 billion in 2019 while consumers in the New York Independent System Operator region have seen fuel costs reduce by $7.8 billion due to improved grid efficiencies.
When power is bought and sold in a competitive market, companies are encouraged to retire higher cost plants and invest in new, highly efficient technologies and fuels that lower their costs to produce power, passing the savings on to consumers and reducing emissions in the process.
It’s just more evidence that competitive power markets are key to promoting clean, reliable, and affordable power.