A newly published report by the Regulatory Assistance Project, New U.S. Policy to Reduce Carbon Emissions from the Power Sector, highlights several design features of the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan that are worth consideration by China’s policymakers. The authors identify the idea of treating energy efficiency as a resource, increased transparency in power sector planning, and improvements to power plant dispatch to reduce emissions as particularly valuable concepts in China.

“The twin concepts of integrated resource planning and energy efficiency as a resource can be useful as China designs cost-effective power sector plans that simultaneously address carbon emissions and air quality goals,” said Christopher James, RAP principal and coauthor of the paper. “China already has experience with these concepts in the form of efficiency power plants, although these have yet to be well-integrated into power sector planning.”

The EPA’s proposal also includes comprehensive, detailed, and transparent cost-benefit analysis, including climate mitigation impacts and the benefits associated with air quality effects on public health. The authors of RAP’s analysis believe that greater transparency and data availability in China will strengthen economic, regulatory, and policy analysis for controlling greenhouse gas emissions and advancing distributed generation resources, demand response programs, and grid integration of renewables.

The philosophy underlying the EPA proposal is that generators should be dispatched according to their variable costs, ideally including environmental costs, so that the system operator calls upon generators with the lowest operating cost (including the cost of emissions) first.

“China has a very different approach to dispatch,” coauthor Max Dupuy added. “The government assigns the system operator a roughly equal number of operating hours for each coal-fired generator. As a result, the overall performance of the Chinese power system suffers significantly in terms of cost, environmental performance, carbon emissions, and distorted investment decisions.”

While the Clean Power Plan offers several examples for China’s policymakers, RAP’s analysis cautions that it is not a perfect proposal. The authors believe the EPA would be justified in increasing the carbon emissions reduction targets for each U.S. state. Higher targets for energy efficiency programs, stricter building codes, accounting for the contribution of demand response programs, and measures to reduce line losses could, they suggest, also contribute to meeting a stronger carbon emissions standard.