The North Carolina power sector is poised for transition. Economics have driven big changes on the grid, making cleaner options for electricity generation cost competitive with traditional resources such as fossil fuels. State clean energy policies have further enabled the shift into renewable resources. Building on this momentum, Duke Energy Corporation and the state’s rural electric cooperatives have set ambitious climate goals.
With the electricity system appearing to be at a “tipping point,” even modest, well-designed policies can accelerate pollution reduction, make change more affordable for state residents and businesses, and stimulate job growth. For this reason, Recommendation A1 in the North Carolina Clean Energy Plan (CEP)—developed pursuant to Governor Cooper’s Executive Order 80—called for a year-long study of carbon-reduction policies to achieve the CEP’s emissions targets for the power sector: a 70 percent reduction in 2005 emissions levels by 2030, and carbon neutrality by 2050.
Duke University’s Nicholas Institute for Environmental Policy Solutions and the University of North Carolina’s Center for Climate, Energy, Environment, and Economics (CE3) jointly conducted the study. Released in March 2021, the report reflects extensive modeling, policy and economic analysis, and engagement with a wide range of stakeholders—environmental and justice advocates, industrial customers, low-income advocates, renewable energy developers, state agencies, universities, and utilities.
The report does not make specific recommendations. Rather, it offers options for action and a number of ways to compare policies and policy combinations, to inform the design of effective, affordable, and equitable emissions reduction policies for this sector.
Key Findings
- The electricity system appears to be at a “tipping point” where small changes in gas prices or renewables costs can sway the balance between new capacity (i.e., gas turbines, renewables, and battery installations).
- CO2 emissions from North Carolina’s electric power sector will continue to decline as coal plants retire. However, new policies are necessary to achieve the CEP 2030 and mid-century emissions targets. If carefully designed, these policies can make emissions reductions more cost-effective and affordable, and drive positive economic development across the state.
- Coal retirement, carbon market, and carbon adder policies achieve reductions by lowering or “pushing out” in-state fossil generation, while clean energy standard (CES) policies increase in-state renewable generation, thus “pulling in” new resources to the grid. Combination policies can accomplish both outcomes more efficiently.
- Offshore wind requirements are projected to increase the cost of a CES, but could drive economic development in supply chains and maritime trades.
- Some policies can achieve relatively deep reductions in local air pollutants, including coal retirements or CES combined with the Regional Greenhouse Gas Initiative (RGGI) and other “push” policies. This can improve health outcomes in fenceline communities and is important when considering equity in policy design.
Presentation: North Carolina Power Sector Carbon Policies
Fact Sheet: Cleaner Power for North Carolina
Report
Power Sector Carbon Reduction: An Evaluation of Policies for North Carolina
Well-designed clean energy policies can accelerate pollution reduction, make change more affordable for state residents and business, and stimulate job growth. For this reason, the North Carolina Clean Energy Plan—developed pursuant to Governor Cooper’s Executive Order No. 80—recommended the year-long study of carbon reduction policies for the power sector (Recommendation A1). The Duke University Nicholas Institute for Environmental Policy Solutions and the University of North Carolina’s Center for Climate, Energy, Environment, and Economics jointly conducted the study. This report reflects extensive modeling, policy and economic analysis, and stakeholder engagement. It does not make specific recommendations but evaluates different policies and offers options for decarbonizing the grid.
