About half of the electricity in the U.S. is made by burning coal, but a limit on carbon emissions from utilities would lead to a shift toward nuclear, natural gas, and renewable energy, according to a report.
Research and consulting company ICF International released one of its periodic Energy Outlook reports last week, projecting a change in the fuel used for generating electricity in the U.S. if Congress passes an energy and climate bill.
After months of political wrangling, Senate Democrats in recent weeks have decided to pursue a scaled-down energy and climate bill that would put a national cap on carbon emissions from utilities, rather than all industries. Utilities account for about one-third of emissions. Other measures expected in the bill are incentives for energy efficiency, a renewable-energy mandate for utilities, and a response to the oil leak in the Gulf of Mexico.
This limited approach, different from an economy-wide cap on emissions, still faces many challenges before it can pass in the Senate and eventually become law.
If it does become law, there will be a "significant shift" to coal alternatives, namely natural gas, nuclear, and renewable sources such as wind and solar, according to ICF International. Also, air pollution regulations, which utilities are seeking to loosen in negotiations over the bill, will lead to the retirement of coal plants, said ICF.
Growing interest in natural gas as a fuel, which emits about half the carbon as burning coal, is expected to drive up the price in the future. Wind is the most cost-effective renewable energy source, although it is still subsidized and is more expensive than coal.
There are already regional carbon regulations on utilities, including those in 10 Northeast and mid-Atlantic states which buy and sell carbon dioxide permits to stay under emission limits.