Betting on Climate Solutions

Betting on Climate Solutions

Why We Should Spread Our Chips
Karl Hausker
May 2, 2019
Today’s definition of “clean energy" is often quite narrow. But when it comes to deep decarbonization, a diverse portfolio is a better bet.

EXECUTIVE SUMMARY

The evidence that climate change is underway grows stronger every year, along with the evidence that it is largely attributable to human activities. To avoid the worst effects of climate change, the United States and the world as a whole must dramatically reduce greenhouse gas emissions over the next 30 years. In the latter half of this century, nations collectively must aim for net negative emissions and begin removing carbon dioxide from the air. In the energy sector, CO2 emissions must be virtually eliminated by mid-century. This will require the “deep decarbonization” of the world’s economies, and the transition to a “clean energy economy.” An energy transition of this scope will be challenging in many ways, but it is technologically and economically feasible, as are reductions in other greenhouses, including: methane, nitrous oxide and fluorinated gases (IPCC, 2018).   

There is widespread agreement among modelers and analysts that a clean energy economy will require three entwined strategies:[1]

  1. Aggressive improvements in energy efficiency across all sectors.
  2. Electrification of end-uses across all sectors, wherever feasible, and a switch to zero- or low-carbon fuels in other end-uses.
  3. Clean generation of electricity from zero- or low-carbon sources.

Despite agreement on these three broad strategies, uncertainties and disagreements remain on details, e.g., over the potential pace of efficiency gains, over which end-uses can be electrified or fuel-switched, and over specific country strategies linked to that country’s stage of economic development. One major area of controversy (beyond the scope of this paper) is the role of bioenergy in a future clean energy economy. Bioenergy has the potential to play a major role in electricity generation and/or provision of liquid and gaseous fuels. However, a sharp debate continues over the extent to which a major expansion of bioenergy production would impact food supplies and alter land use in damaging ways.

This paper focuses on the third strategy and the ongoing debate over how to decarbonize the electricity sector. At the most basic level, the debate is over the definition of “clean” generation. Should “clean” mean renewable electricity only (wind, solar, hydro, geothermal, etc.)? Or does “clean” include all zero- and low-carbon sources of electricity: renewables, nuclear power, and fossil fuel generation with carbon capture and sequestration (CCS)?

These three categories of electricity generation are all potentially pieces of the solution to the threat of climate change. All face challenges in scaling up to meet the threat. This paper argues that we should use a broad definition of “clean” generation given the challenges and uncertainties that renewables, nuclear power, and CCS still face as they continue to evolve. To use a financial metaphor, a broad definition is analogous to a diversified investment portfolio, which carries less risk than a narrow portfolio of just a few stocks and bonds.

 To use a gambling metaphor, limiting ourselves only to renewables would constitute “betting all our chips” on a narrow portfolio of climate solutions. Given the magnitude of the threat posed by climate change, spreading our chips over a broad portfolio of technologies is the more prudent, lower risk approach given the uncertainties over their future performance and cost.[2]  Ultimately, carbon is the problem and should be our focus, not the market share of renewable energy, or RE.

That conclusion is at odds with some in the climate advocacy community who support phasing out use of fossil fuels as quickly as possible, and/or who oppose nuclear power and the use of CCS. Typically, these advocates equate “clean” with “renewable,” and have used the call for “100% clean, renewable energy” as a powerful rallying cry and organizing tool.

Ideally, all those committed to preventing dangerous climate change should work toward bridging their differences over how to define clean energy. The stakes are high, and in the U.S., in particular, powerful political forces are currently a roadblock to strong federal action on climate change. More common ground and understanding can help move solutions forward in all policy arenas: at the federal, state, and local government levels; at the regional level via Regional Transmission Organizations and multi-state collaboratives; and in corporate purchasing of “green” electricity. This paper aims to build better understanding of the challenges of 100% renewable scenarios for a clean energy economy, and it offers some observations on the implications for policymaking.[3]

The paper is organized as follows. Section 2 provides a window on the literature on deep decarbonization, using a 2017 synthesis of that literature as a jumping-off point and highlighting recent studies that build on it or contradict it. This section also compares and contrasts models that use a broad versus narrow portfolio of clean generating technologies. 

Section 3 focuses on improving understanding of a key challenge in 100% renewable scenarios: the riddle of “low-cost” solar and wind generation but “high-cost” 100% renewable scenarios. It provides a layman’s guide to understanding why total electricity system costs increase nonlinearly as the percentage of renewable generation crosses thresholds.     

Section 4 describes how various policymakers and policy influencers are staking out positions on strategies for decarbonizing the electricity sector (with regard to supporting 100% renewables versus all zero- and low-carbon options), while some actors in this arena appear to avoid clear positions as a deliberate tactic for coalition-building. The section concludes with some normative recommendations.

The views expressed in this paper are those of Karl Hausker and do not reflect those of his employer. 

[1] For some developing nations, these strategies can take the form of Low Emission Development Strategies (LEDS). See: LEDS Global Partnership 2019.

[2] MIT researchers use a similar gambling metaphor to convey the uncertainties in climate change predictions. See: MIT Joint Program on the Science and Policy of Global Change n.d.

[3] There are challenges, of course, in deploying CCS, maintaining existing nuclear reactors, and/or building new nuclear reactors. Those challenges are beyond the scope of this paper but merit equal attention.

 

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