We have analyzed how command‐and‐control regulations and market‐based environmental policy approaches could change the mix of fuels used for electricity generation, the amount of CO2 emissions, and the cost of electricity in different parts of the U.S. In particular, we explore how some proposed features of different policies designs affect those outcomes and identify underlying causes of uncertainty about such outcomes. The analyzed policies lead to 6–25% reduction in total CO2 emissions by 2035. The policies also result in modest increases on electricity costs nationally, but this masks a wide variety of effects across regions. The relationship between the policy's effects on costs depends on the design of the policy, regional resource endowments, and the existing generation mix of the region. Generally, the regions with existing high electricity marginal costs would tend to see only minor costs increases and the regions with low electricity marginal costs would see substantial costs increases. Modeling results illustrate that different regions have different preferences in environmental regulations policies and design. The concern of the environmental impacts of electricity generation from fossil fuels and the desire for the country to be less dependent on fossil fuels have resulted in the U.S. Government offering various incentives to promote electricity from renewable sources. The U.S. electricity generation sector faces uncertainties that include future demand, the costs of supply, and the effects of regulation policies. National policies that aim to promote ‘clean’ energy sources may have different impacts for different areas of the country, so it is important to understand the regional effects in addition to the larger national picture. The primary purpose of this paper is to shed some light on the uncertainties associated with the outcomes of possible regulations. The study does not intend to make predictions of the probability or direction of environmental policy in the U.S. Rather, we examine a number of different scenarios and explore their possible impacts on the future of energy system. We focus on future projections for electricity generation mix, electricity costs, emissions and emissions abatement costs under different scenarios. We have examined the key regulations through analyzing various assumptions using the MARKet ALlocation (MARKAL) model and the Environmental Protection Agency's Nine Region MARKAL Database (EPAUS9r).
