A new econometric model developed by researchers from the Harvard School of Engineering and Applied Sciences (SEAS) have revealed that the major reason for decrease in carbon dioxide (CO2) emissions from the power sector in 2009 is the availability of abundant cheaper natural gas.
This means that a decrease in the natural gas price has minimized the industry's dependency on coal. The power industry is accountable for 40% of the total emissions. In 2009, carbon emissions from power sector decreased by 8.76%.
There is a wide variation in the energy generation, application and pricing across the U.S. In certain regions of the Midwest, nearly half of the existing power facilities have been established to process coal. However, New England and the Pacific states rarely depend on coal and hence, price variation does not create any impact in these regions.
Michael B. McElroy, Professor of Environmental Studies at SEAS, along with his colleagues, has developed a new model that analyzes the connection between the price of energy generation from gas and coal and the part of electricity produced from coal. The model considers nine regions individually. The econometric model describes that the emission can be further reduced by launching a carbon tax, which will create smaller impact on the electricity cost.
In addition, the model forecasts that a tax imposed on carbon emissions resulting from power generation will contribute to the shift to natural gas from coal. McElroy stated that a reasonable carbon tax, approximately $5 per ton of carbon emission, can save 31 million tons of carbon dioxide in the U.S.
Source: http://seas.harvard.edu/