SPSC Low Carbon Tool: Interim Status Report

CREPC/SPSC meetingSan Diego, CA

October 5, 2012

Arne Olson

Energy and Environmental Economics, Inc.

E3 has operated at the nexus of energy, environment, and economics since it was founded in 1989

E3 advises utilities, regulators, government agencies, power producers, energy technology companies, and investors on a wide range of critical issues in the electricity and natural gas industries

Offices in San Francisco, CA and Vancouver, B.C.

30 professional staff in economics, engineering & policy

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The 2010 & 2011 SPSC Carbon Reduction Scenarios

SPSC Study Case carbon reduction targets based on economy-wide Waxman/Markey bill

• 17% below 2005 levels by 2020

• 42% below 2005 levels by 2030

Low Carbon Case in the WECC 10-year plan

• Tool evaluates congestion given transmission and generation assumptions, carbon pricing changes dispatch but not new build

Low Carbon Case in the WECC 20-year plan

• Evaluates new transmission and generation; carbon pricing can change new generation and transmission build choices

• LBNL funded E3 to develop the “Low Carbon Scenarios Tool” to support SPSC development of inputs to the WECC’s 20-year tool & track combined impacts of DSM & electrification on WECC loads

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Proposed Interface of Low Carbon Tool & WECC LTPT

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WECC Long-term Transmission Planning

ToolElectricity sector only: 2032

Low Carbon ToolEconomy-wide “baseline”

emissions forecast

Emission reduction measures

Economy-wide carbon reduction scenario

Electricity-sector carbon target

New electricity demand due to electrification

Input to WECC

Carbon reduction policies in electricity sector

Optional input to WECC

Optional input to WECC

Low Carbon Tool Screen Shot

Excel-based, users can define and save new scenarios

Option for State & Province-specific GHG reduction inputs & outputs or WECC-wide inputs & outputs

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Low Carbon Tool: WECC Baseline CO2 Forecasts

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40%

12%

0

100

200

300

400

500

600

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Elec

tric

Sec

tor E

mis

sion

s (M

MTC

O2e

)

RPS Targets

Coal Displacement

Low GHG Case

Reference Case

58%24%

0

500

1,000

1,500

2,000

2,500

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Econ

omy

Wid

e Em

issi

ons

(MM

TCO

2e)

Fuel Efficiency

Biofuels

Electrification

Natural Gas

Industrial Extraction

Electric Sector Savings

Offsets

Low CO2 Case

Reference Case

40%

12%

0

100

200

300

400

500

600

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Elec

tric

Sec

tor E

mis

sion

s (M

MTC

O2e

)

RPS Targets

Coal Displacement

Low GHG Case

Reference Case

Economy-wide baseline (CO2 from fuel combustion only)

Electricity Sector Baseline(CO2 from fuel combustion only)

Example Scenario: Economy-Wide CO2 Reduction Options

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1. Fuel Efficiency & Conservation

2. Fuel Switching Zero-Carbon Biofuels

3. Electrification (res., comm., industrial & transportation vehicles)

6. Decarbonization of Electricity Sector (DSM, RPS, coal displacement & CCS)

7. Offsets/Residual (non-WECC or non-fossil fuel based CO2 reductions)

5. Reduction in Mining & Refining Energy Use Due to Reduced Demand

4. Fuel Switching Natural Gas Vehicles

-80%-42%

0

500

1,000

1,500

2,000

2,500

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Econ

omy

Wid

e Em

issi

ons

(MM

TCO

2e)

Fuel Efficiency

Biofuels

Electrification

Natural Gas

Industrial Extraction

Electric Sector Savings

Offsets

Low CO2 Case

Reference Case

Example Scenario: Impacts in Electricity Sector

Electrification increases carbon in electricity sector even while reducing carbon in overall economy

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impact of electrification

0

100

200

300

400

500

600

700

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Elec

tric

Sec

tor E

mis

sion

s (M

MTC

O2e

)

Electric Efficiency

RPS Targets

Coal Displacement

CCS Retrofits

Generic Decarbonization

Electrification

Non-Electrification Result

Reference Case

Active Case

Zero-carbon resources

Example Scenario: WECC Electrification Impacts

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Net impact of electrification and energy efficiency results in higher load growth than reference case

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Net

Ele

ctric

Dem

and

(TW

h)

Reference

+ Energy Efficiency

+ Electrification

Next Steps

Work with SPSC & LBNL staff to develop draft inputs to the “Low Carbon Case”

Webinar with SPSC to show draft inputs, solicit feedback

To be scheduled in Oct – Nov. timeframe

Revise inputs based on SPSC & LBNL feedback

Work with WECC staff to integrate results of Low Carbon Case into Long-Term Planning Tools

SPSC members may also be interested in developing state & provincial specific scenarios

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Thank You

Contact:

Arne Olson, Partnerarne@ethree.com

Energy and Environmental Economics, Inc.101 Montgomery Street, San Francisco, CA 94104(415) 391 – 5100

Low Carbon Tool Approach

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Base Case Non-ElectricFuel Demand

Fuel-Specific Emissions Factors

Low Carbon Case Non-Electric Emissions

Policy-Driven Changes•Fuel Efficiency•Biofuels Switching•Natural Gas Switching•Electrification

Low Carbon Case Fuel Demand

Policy-Driven Modifiers•Electric Efficiency•Electrification

Low Carbon Case Electric Demand

Clean Energy Goals•RPS Targets•Coal Displacement•Sector Carbon Cap

Low Carbon Case Electricity Mix

Offsets

Base Case Electricity Demand

Base Case Electricity MixLow Carbon Case Electric Emissions

Inputs for Low Carbon Case

Low Carbon Tool inputs can be calibrated to long-term carbon reduction targets in 2050

• Potential to calibrate to existing studies, i.e. Science (2012) Williams et al., on California GHG reduction pathways

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0%

5%

10%

15%

20%

25%

30%

35%

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

2047

2050

2053

2056

2059

Adop

tion

%

S-Curve vs Linear Adoption

S-Curve

Linear

2032 impacts to electric sector evaluated based on long-term carbon goals and assumptions about adoption rates of GHG reduction measures, specified in the tool as “s-curve”