Deep Decarbonization in the U.S. Implications for CPP & Near-term Decisions

Jack Moore, Director of Transmission AnalysisEnergy & Environmental Economics (E3)

CTAEE/EIAustin, TexasApril 8, 2015

Energy and Environmental Economics, Inc. (E3)

Electricity sector specialists, founded 1989

Rigorous analysis on a wide range of energy issues

Advise utilities, regulators, gov’t agencies, power producers, technology companies, and investors

Offices in San Francisco and Vancouver, international practice includes China and India

Key advisor to California state government on climate policy, electricity planning, energy efficiency

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Deep Decarbonization Pathways Project

• National strategies to keep global warming below 2°C

15 countries, >70% of current global GHG emissions

• OECD + China, India, Brazil, South Africa, Mexico, Indonesia

July 2014 report to UN Secretary General Ban Ki-moon

Nov 2014 US Report by E3, LBNL, PNNL team

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US Report focus: What would it take for US to achieve 80% GHG reduction below 1990 level by 2050?

Report available at http://unsdsn.org

DDPP Aggregate CO2 Trajectories

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DDPP modeling crates potential for comparisons & benchmarking similar metrics for low-carbon action across countries (rather than exclusively annual CO2)

USA

Analysis explores implications of 80% reductions as long term target

CO2 from energy in 2010 was 5405 MMT (17 tons/person)DDPP US 2050 target is 750 MMT (1.7 tons/person)

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US GHG emissions by economic sector

Pathway A

Pathway B

2050 analysis is important for avoiding intermediate solutions that fall short of long term goals

750 MMT

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PATHWAYS model

E3’s climate policy modeling platform built in Analytica(US & CA versions)

Multi-sector model (80 demand; 20 supply) with sophisticated infrastructure stock representation to 2050

Hourly electricity dispatch model; sensitivity & uncertainty analysis

Conservative assumptions about economy, lifestyles (EIA Reference Case for population & economic growth)

PATHWAYS Model: Sectoral and Geographic Granularity

9 US Census regions separately modeled

Allows for a better understanding of impacts and differences in regional options for future energy systems

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Electricity sector solutions

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Electricity sector is of paramount importance and

requires hourly representation

Hourly electricity supply and demand is balanced for three regions, approximates U.S. interconnections (excludes Canada) • Western, Eastern, Texas

PATHWAYS Model: Physical Infrastructure Representation

80 demand sectors, 20 supply sectors

Annual time steps with equipment lifetimes

Aligns with the structure of policymaker goals

Illustrates inertia of the physical energy system

Makes decarbonization pathways “real”

02468

101214161820

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ion

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Reference Gasoline LDV PHEV Gasoline EV

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Reference Gasoline LDV PHEV Gasoline EV

y gNew Vehicles by Vintage yTotal Stock by Year

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KEY RESULTS: Decarbonizing U.S. economy depends on 4 energy transitions

1. Efficiency and Conservation

3. Decarbonize electricity

2. FuelSwitching

4. Decarbonize fuels (liquid & gas)

Reduce energy use per capita (MMBtu/person)

Increase share of electricity & H2 in total

final energy (%)

Reduce emissions intensity (tCO2e/MWh)

Reduce emissions intensity (tCO2/EJ)

• High efficiency residential & commercial buildings

• Industrial efficiency

• Transportation efficiency & smart growth

• Electric heat pumps for HVAC, water heat in buildings

• Electric and/or fuel cell vehicles in transportation

• Increase in renewable generation, increase in nuclear and/or CCS electricity generation varies by scenario

• Liquid biofuels in vehicles or biogas & synthetic decarbonized gas in pipeline for buildings & industry

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U.S. DDPP results consistent with U.S. 2025 climate pledge with China

Source: NY Times November 12th, 2014 + Deep Decarbonization Pathways in the United States, 2014

E3 DDPP Results Overlay

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Multiple Pathways to Deeply Reduce U.S. Energy Emissions

tonn

esC

O2e

0

10

20

2010 2030 2050

Per capita emissions

5,153 5,639

746 740 747 741 -

1,000

2,000

3,000

4,000

5,000

6,000

2014 2050Reference

2050 Mixed 2050 HighRenewables

2050 HighNuclear

2050 HighCCS

MM

T C

O2

Cost ~ 1% GDP

(-0.2% − +1.8%)

12Pathways to Deep Decarbonization in the United States

Scenario High Renewables High Nuclear High CCS Mixed

Electric generation

~ 70% wind, solar, geo by 2050

~40% nuclear by 2050

~55% CCS by 2050

Mix of nuclear,CCS, renewable

Fuelstrategy

Decarbonizepipeline gas to replace liquid fuel

Hydrogen from electricity to replace liquid fuel

Limited fuel switching, some biofuels

Decarbonizepipeline gas to replace liquid fuel

Maintransport fuel

Electricity, pipelinegas, fossil diesel

Hydrogen, biofuel, fossil diesel

Electricity, biodiesel

Mix of hydrogen, electricity, fossil, pipeline gas

Light dutyvehicle

EV, PHEV FCV EV, PHEV Mix of EV, PHEV, FCV

Pipeline gas

~60% biomass, 15% fossil NG, 15% synthetic NG

~60% fossil NG, 35% biomass

~80% fossil NG

~80% biomass, 7% hydrogen, 7% synthetic NG

Different Pathways to 80% Reduction

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Current U.S. energy system in 2014

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Decarbonized energy system in 2050

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Electricity plays much larger role in low-carbon economy

Electricity Increasingly Dominated by Non-Dispatchable Generation

FossilCCS

SolarSolar

0

5

10

15

20

25

30

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2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

Exajou

les(EJ)

Fossil

NuclearHydro

Wind

Solar

CCS

Pathways to Deep Decarbonization in the United States, Mixed case results

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Mixed Case: Electricity Demand by Fuel Type

Electricity Supply: Regional Generation Mix by Decade (Mixed Case)

Coal

Nuclear

Gas

Wind

Solar

Gas w/CCS

Technology Generation Share Texas – High Renewables Case

Coal

Gas

Nuclear

Solar

Wind

Generation Dispatch & Balancing(Texas – High Renewables Case)

Electric Supply Electric Demand

Supp

ly (M

W)

In High Renewables, High Nuclear and Mixed scenarios: flexible loads (esp production of hydrogen or methane) deployed to help balance intermittent renewable generation

In High CCS scenario: natural gas with CCS is dispatchable, solving grid integration challenges

Wind

NuclearSolar

Gas

Curtailment

Conventional Loads

H2P2G

Electricity used to produce hydrogen and synthetic methane balance variable generation (wind, solar) & provide lower carbon fuel

Natural gas pipeline is partly decarbonized using gasified biomass and electricity-produced fuels with low lifecycle emissions

Decarbonized pipeline gas is used to replace liquid fossil fuels in industry, heavy duty transport

Biomass not used for ethanol because it is scarce and has better uses, such as biogas and biodiesel, while alternatives exist for LDV fuels

Deep Decarbonization Across Sectors: Some Complementary Options

U.S. Cost Components

Stock Costs

Diesel Savings

Gasoline Savings

Electric Costs

Gas Costs

Cost mostly fixed costs, savings mostly fuel savings

Lower net cost if technology costs lower, fossil fuels higher

21Pathways to Deep Decarbonization in the United States, High renewables case

Median 2050 net energy system cost ~1% of GDP ($40T)Uncertainty range -0.2% to + 1.8%

U.S. Net Energy System Cost by Sector

‐$100

$0

$100

$200

$300

$400

$500

$600

$700

$800

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

Billion

s

Residential Commercial Transportation Industrial Total

Pathways to Deep Decarbonization in the United States, Mixed case results 22

Incremental Average Household Spending in 2050 ($/Month)

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Implications for near term planning

Multiple pathways exist that are feasible to reach 80% reductions emphasizing different technologies

Planning must take infrastructure inertia into account

Important if plan to meet 111d can also set state up for ability to make further reductions

• There are dead-ends that provide short-term GHG reductions but don’t lead to 80% by 2050

• Other options set up the US (or ERCOT) to more easily make further emissions reductions post 2030.

Coordination across sectors can help

• Certain low-carbon options in other sectors – including hydrogen and synthetic methane production - could also help address electric sector balancing issues but must begin to consider carbon reduction plans across sectors (beyond electricity); Accounting for emissions reductions outside of electric sector needs to be clear.

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Investments choices today will determine capacity to reduce emissions over the next 35 years.

A car purchased today, is likely to replaced at most 2 times before 2050. A residential building constructed today, is likely to still be standing in 2050.

0 5 10 15 20 25 30 35

Residential building

Electricity power plant

Industrial boiler

Heavy duty vehicle

Light duty vehicle

Space heater

Hot water heater

Electric lighting

Equipment/Infrastructure Lifetime (Years)

2015 2050

4 replacements

3 replacements

2 replacements

2 replacements

1 replacements

1 replacements

1 replacements

0 replacements

2030

Average lifetimes, actual results will vary 25

Thank You!Jack Moore, Director of Transmission Analysis Energy and Environmental Economics, Inc. (E3)101 Montgomery Street, Suite 1600San Francisco, CA 94104Office: 415-391-5100Email: jack@ethree.com

ADDITIONAL SLIDES

Energy Supply and Demand Transitions – All Scenarios

Mixed Case: High Renewables Case:

High CCS Case: High Nuclear Case:

Energy Demand by Sector

0

10

20

30

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

EJ

Residential

Electricity Pipeline Gas Residual Fuel Oil LPG Kerosene Biomass

0

10

20

30

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

EJ

Commercial

Electricity Pipeline Gas Diesel Fuels LPG Kerosene

0

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30

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

EJ

Transportation

Electricity Diesel Fuels Gasoline

Jet Fuel Hydrogen Gas Fuels (CNG/LNG)

0

10

20

30

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

EJ

Industrial

Asphalt & Road Oil Biomass Coal Coke

Diesel Electricity Gasoline Pipeline Gas

Pipeline Gas Supply and SectoralDemand (Mixed Case)

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0

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2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

Fina

l Ene

rgy in 2050 (EJ)

Natural Gas Hydrogen

Power to Gas Biogas

Natural Gas w/ End‐Use Capture Residential

Commercial Transportation

Industrial

PIPELINE GASDEMANDSECTORS:

Industrial

Transportatio

CommercialResidential

PIPELINE GASSUPPLYSOURCES:

Bio-SNG

Natural GasH2P2G

$0

$10

$20

$30

$40

$50

2010 2020 2030 2040 2050

GDP…

Conservative assumptions about economy, lifestyles

Technology is commercial or near-commercial

Environmental sustainability (limits on biomass, hydro)

Infrastructure inertia

Electricity reliability

U.S. GDP (Trillion $2012)

166% increase

0

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500

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U.S.…

U.S. population (Millions)

40% increase

U.S. National Energy Modeling System and 2013 Annual Energy Outlook reference case

PATHWAYS Design Principles

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Four Low-Carbon Scenarios: Generation Mix by Year (West)

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Comparison of 2030 Western Region Spring-time Generation Profile

Idealized dispatch across WECC with flexible fuel production loads allows renewable integration in both scenarios.

High Renewables Scenario requires reduction in base load generation during some hours to accommodate wind & solar

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0

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40,000

60,000

80,000

100,000

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140,000

1 3 5 7 9 11 13 15 17 19 21 23

MW

Hour

Curtailment

Storage Discharge

Storage Charge

Wind

Solar

Gas

Other Renewable

Hydro

Oil

Nuclear

CCS

Coal

High Renewables Scenario High CCS Scenario

May 2030 (week 20), hours 1-24

Wind SolarGas

Geo, Bio, small hydro

Large hydro NuclearCCS

Coal

Example of Daily Resource Balancing by Season: High Renewable Scenario

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Early Spring

WinterFallSummerSpringHigh wind, less solar

High loads, more reliance on gasLow loads, high

solar, wind & hydro,

reductions in coal output

E3, UC, LBNL, PNNL team

Williams et al. Nov. 2014

What would it take for US to achieve 80% GHG reduction below 1990 level by 2050?

• Is it technically feasible?

• What would it cost?

• What physical changes are required?

• What economic and policy changes are implied?

U.S. Deep Decarbonization Report

36Report available at http://unsdsn.org

PATHWAYS Model Methodology: Bottom-Up Energy Demand

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LED

CFL

Incandescent

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Total Residential Final Energy for Lighting

LEDsCFLs

T12

Infrastructure stock rollover model (keeps track of “stuff” e.g. Number of light bulbs by type)

0.00E+001.00E+122.00E+123.00E+124.00E+125.00E+126.00E+127.00E+128.00E+129.00E+121.00E+13

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ntial D

eman

d (lu

men

s/year)

+

=

Lighting Stock Service Demand

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Residential Building ShellWest South Central Census Division (AR,LA,OK,TX)

0%10%20%30%40%50%60%70%80%90%

100%

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Typ

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Reference

Energy Star

PathIECC 2000

0.00.10.20.30.40.50.60.70.80.91.0

Reference IECC2000

EnergyStar

PATH

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ell E

ffic

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nd

ex

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Cooling

00.050.1

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Air

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AEO Ref Case (for Calibration)

DDPP High Renewables Case

AEO Ref Case (for Calibration)

DDPP High Renewables Case

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