Climate change, economic recovery, and the 2020 election.
If you are climate-concerned, the past four years have been tough sledding. The Trump administration has been busy holding up federal policies limiting greenhouse gas (GHG) emissions, mucking up international climate agreements, and propping up the domestic coal industry.
This political agenda has caused my blood pressure to rise. But GHG emissions in the United States have continued to fall. As Catherine explains in her recent blog, this decline has been largely driven by the power sector. Low natural gas prices, state-level policies, and the rise of renewables have been slowly pushing carbon-intensive coal out of U.S. electricity markets.
Looking at these GHG emissions trends, you might think that another four years of a Trump administration would not be so bad for the climate. After all, domestic GHG emissions will almost certainly continue to decline if Trump wins a second term.
But here’s the deal. When we think about what’s at stake in this election, the benchmark we should have in mind is not where we’ve been, but where we need to go from here. The next four years could mark a historic turning point — or a missed opportunity. This is true for many high-stakes social and economic issues. This short blog will focus narrowly on climate.
The view from 2020
In normal economic times, GHG emissions trajectories are hard to bend because they are determined by long-lived investments and slow-moving systems. But these are not normal economic times. When we manage to put COVID-19 behind us, there will be much celebration in close proximity to complete strangers. And then whoever is in the White House will be tasked with building the economy back up after a crippling recession. How we build back will help shape, among other things, our GHG emissions trajectory for years to come.
Both candidates have talked about big plans to get the economy going again. Trump has been light on specifics. But he has floated the idea of tax cuts and investing in highways, pipelines, and other infrastructure. The Biden recovery plan puts clean energy and climate change front and center. It includes incentives to accelerate the deployment of renewable energy and electric vehicles, support for clean energy research, and investments in modernizing infrastructure.
Focusing on the energy sector, there are a growing number of studies (see, for example, here, here, here, and here) that consider something resembling a choice between “business-as-usual” and a scenario that accelerates investments in decarbonization. Cost and benefit projections vary because different assumptions are made and different scenarios are considered. But there are some common themes across the reports I’ve seen:
1. The electricity sector is a linchpin: If we want to decarbonize the economy, this will likely be achieved with an electrify-almost-everything strategy. The effectiveness of this strategy hinges on reducing the carbon intensity of the electricity sector.
2. Least-cost strategies for meeting long-run electricity decarbonization goals require investments in the short-run. Power system assets are long-lived. The generation capacity and associated infrastructure that we build over the coming years will stick around for decades.
3. Decarbonization benefits can justify the costs: Granted, it’s really hard to anticipate and capture all the costs of deploying and integrating renewable energy resources. But given the low costs of wind, solar, and battery storage, accelerated investment in renewables looks increasingly cost-effective at low/moderate carbon prices.
The figure below summarizes projections from one recent study. This Berkeley team used models of power system operations and new capacity investments to compare an unconstrained “no new policy” scenario against an alternative path that aims for 90% decarbonization by 2035 (detailed assumptions can be found here).
The difference between these two GHG emissions trajectories (green versus black lines) is large. But the difference in wholesale electricity costs (measured as levelized cost/MWh) is not. By 2035, projected wholesale costs are 11% higher under the 90% Cleaner case.
(4) Max’s Yoga Theorem still applies: More flexibility is better. Looking across all these reports, the optimal portfolio of technology investments is still far from clear. Flexibility in responding to changing demand, technology costs, and innovations will be critical to keeping costs down.
Bringing it back to the nail-biter election before us, the economic recovery strategy we choose will have an enduring influence. If recovery proceeds under a banner of climate denial, we miss the opportunity to lock in GHG reductions now. And the U.S. will drag on, versus reinforce, other countries’ efforts to act aggressively on climate.
One step at a time
A big win for Biden does not guarantee a big win for the climate. Building a coalition of Americans who can rally around the general idea that the Trump administration is leading the country in the wrong direction is one thing. Holding this coalition together to get real work done on climate change (and a host of other high-stakes issues) is another. My hope is that, should Biden win this election, the sense of urgency will be enough to force climate compromise even if such a deal falls short of anyone’s ideal.
But 2020 has given us enough to worry about. For now, we need to do everything we can to open the door to federal action on climate. Eight days and counting….
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas
Suggested citation: Fowlie, Meredith. “There’s a Lot Ridin’ on Biden” Energy Institute Blog, UC Berkeley, October 26, 2020, https://energyathaas.wordpress.com/2020/10/26/theres-a-lot-ridin-on-biden/