10 - Electricity, Emissions, and Pricing Carbon

Summary

The Electricity Sector

Worldwide, the two largest sources of greenhouse gas emissions are electricity generation and transportation. Electricity generation is the topic of this chapter while transportation is part of the next.

Coal, even today, makes up by far the largest fraction of fuel used to produce electricity. The United States and China are the Saudi Arabias of coal, and coal with all its emissions problems is the fastest expanding fuel for electricity production worldwide, though not in the United States because of its shale-gas revolution. Outside the United States, coal is the lowest in cost because of its abundance and ease of extraction, and because power plants can be built relatively quickly. Unless fracking spreads through the rest of the world leading to low-cost shale gas, without some sort of emissions charge or other limitation mechanism coal will remain the lowest-cost fuel for a long time to come. Finding a substitute for coal or a way to reduce emissions from coal is critical to the world effort to reduce greenhouse gas production.

In the United States, coal and natural gas are used to generate 70% of electricity, and, according to the EIA, in 2007 were responsible for producing nearly 40% of US greenhouse gas emissions. The percentages were not very different from those of other industrialized countries, with the exception of France. France gets most of its electricity from greenhouse-gas-free nuclear power and has much lower emissions per unit GDP and very much lower emissions from the electricity sector. I will come back to this in the chapter on nuclear power.