Carbon Neutrality By (Fill in the Blank) Through (Fill in the Blank)

Energy news is abuzz regarding carbon neutrality at the local, state, and national levels, in announcements by large energy consumers, announcements by lending organizations, and announcements by utilities for their future power needs. In addition to the news releases, there are research reports from higher education on what may actually be possible; when we need to deploy certain technologies, what may or may not get us to official carbon neutrality, and where budding technologies will be needed to getting us all the way there.

Here are a few recent releases: Vice-President Biden’s election plan to get to 100 percent clean energy by 2035 (which is a centerpiece of his $2 trillion plan to address climate change); a recent report from the University of California at Berkley that shows we can reach 90 percent clean electricity by 2035; the Commonwealth of Virginia’s Clean Economy Act which requires electricity to come from 100 percent renewable sources such as solar or wind; here in North Carolina the 27 city and counties with 100 percent renewable energy resolutions; and finally large energy consumers such as Facebook, Walmart, and Amazon, which need clean energy for their companies’ corporate commitments. In states such as Virginia and North Carolina, data centers require a 100 percent renewable energy source for each project as opposed to purchasing renewable energy credits through a power purchase agreement.

It is incredibly exciting on one hand, but so many questions come to mind. Covering the first two questions and answers here will help prepare us for the remaining questions which will be covered in another blog later this month:

(1) How do you define “carbon neutrality” and what technologies contribute toward this goal?

(2) What deadline are we talking about – 2035 or 2050 or something else?

(2a) More generally, does the goal matter even if we don’t know exactly the path to get there?

(3) What is the baseline year that is referenced?

(4) What is the role of the federal government vs. states and how do you implement something that is not a patchwork of different regulatory systems?

(4a) If we don’t have a climate action plan at the national level, or a price on carbon, are states the learning laboratories?

(5) How do we treat uneconomic assets (i.e., legacy coal plants) in the mix as we transition?

(5a) Is securitization needed and what is the impact on rates for consumers and others?

(6) How much does transportation electrification and building electrification matter in reaching the goal?

(7) What is in the utility’s area of responsibility especially when utilities are really good at building and maintaining infrastructure?

Let’s start with where we are right now. Today, 40 percent of America’s electricity comes from carbon-free sources. Vice-President Biden has pledged getting to 100 percent carbon-free sources by 2035 through solar and wind, backed by energy storage technologies and keeping the hydro/nuclear plants. It is unclear how Biden’s $2 trillion price tag will be allocated and whether it is large enough to clean up the grid to meet a 2035 deadline but it is refreshing to see this proposal on a national election platform.

This proposal begs the question about what carbon neutrality even means. Carbon neutrality, at its simplest level, means having zero carbon dioxide either by offsetting carbon emissions by reducing them somewhere else or through investment in renewable energy, energy efficiency, or another low carbon technology. What technologies are “acceptable” to stakeholders for the purposes of carbon neutrality though?

There are two main schools of thought. On one hand, environmental groups want carbon free power to come from renewable energy (and that excludes nuclear, hydro, and biogas/renewable natural gas). It means no new nuclear such as the Vogtle plant in Georgia. As the only commercial nuclear facility, it is already over budget by $1 billion even if it is constructed on time. Environmental groups ask what could have been done with that same investment in renewable energy.

The second school of thought is that we might get to 50 percent, maybe 80 percent renewables, but after that, it will start getting very expensive without utilizing more traditional energy resources. Many believe that almost all existing nuclear facilities need extending beyond their useful life of 60 years if they are going to get us to carbon neutrality.

A recent report from the University of California at Berkeley shows that the U.S. can deliver 90 percent of clean, carbon free electricity without new fossil plants (but keeping the existing plants). The report - 2035 Report: Plummeting Solar, Wind, and Battery Costs Can Accelerate Our Clean Energy Future - shows how recent cost declines for solar, wind, and battery storage allow the U.S. to reduce generation and carbon emissions by retiring from coal and reducing gas generation by 70 percent. The build out of new renewable energy would add $1.7 trillion of investment into the economy and increase energy sector jobs to 530,000 per year, through 2035, across all regions of the U.S. without raising consumer bills. The 2035-time frame for near-complete decarbonization of the power sector is significant because it is 15 years faster than many proposals, and matches the Biden plan.

What do we need to make from all of this? We can get to a 2035 carbon neutrality goal, but the investment will be massive and the last 10 percent is going to take a pathway that may not be clear today. Coal plants are already being retired, but gas has been proposed as a bridge fuel to the transition out of coal since renewables are intermittent. A New York Times article highlights the push and pull between gas and renewables but the Berkeley study shows we can reduce gas by 70 percent and still meet a carbon neutral goal by 2035. So natural gas may not be front and center as clean technologies are what people are banking on now.

In conclusion: no one technology will meet all of our energy needs now. Retiring coal plants mean uneconomic assets must be paid for (a question of how to do this), natural gas that replaced coal has faced challenges of large gas pipeline infrastructure abandonment (think Atlantic Coast, Dakota, Keystone), so renewable energy becomes the bridge to the future. It’s low cost, clean, and healthier for our communities. But to effectively transition, there requires answers to lots of "how" details.


© 2020 by Diane Cherry Consulting.