Estimating the impact of fuel‐switching between liquid fuels and electricity under electricity‐sector carbon‐pricing schemes

Switching from liquid fuels to electricity in the transportation and heating sectors can result in greenhouse gas emissions reductions. These reductions are maximized when electricity‐sector carbon emissions are constrained through policy measures. We use a linear optimization, generation expansion/dispatch model to evaluate the impact of increased electricity demand for plug‐in electric vehicle charging on the generating portfolio, overall generating fuel mix, and the costs of electricity generation. We apply this model to the PJM Interconnect and ISO‐New England Regional Transmission Organization service areas assuming a CO2 pricing scheme that is applied to the electricity sector but does not directly regulate emissions from other sectors. We find that a shift from coal toward natural gas and wind generation is sufficient to achieve a 50% reduction in electricity‐sector CO2 emissions while supporting vehicle charging for 25% of the vehicle fleet. The price impacts of these shifts are sensitive to demand side price responsiveness and the capital costs of new wind construction.