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There’s a Lot Ridin’ on Biden

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.

Source: EIA

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).

This graph shows GHG emissions from the US power sector (in black and green), ignoring any electrification-induced demand increases. The right axis measures the increase in wholesale electricity costs/MWh (USD 2018) due to the acceleration in renewable energy investments. These cost estimates include costs of fossil assets retired before full capital cost recovery.

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/

14 thoughts on “There’s a Lot Ridin’ on Biden Leave a comment

  1. Richard
    Climate has been changing for millions of years. Even the worst projected climate change being attributed to ‘carbon’ is a blip in time that by all perspectives is definitely NOT the ‘most existential threat that we face globally.” You’ve confused your politics with science. Challenge me by starting with the first and most obvious question that I’ve yet to see any study or paper address: What is the most optimal temperature for planet earth? If you don’t know or can’t answer that question, then the carbon issue is irrelevant.

  2. From Carl Wurtz above “Though costs of wind and solar are low, battery storage remains hopelessly impractical given the scale involved.”

    If we switch to electric cars with 75-150 kwh batteries, and can connect them to the grid at work or home they may well have this sort of capacity. Electric cars can then charge at times of low demand and cost, then feed back in the grid at times of high cost electricity and stabilize the electrical grid. See:
    https://en.wikipedia.org/wiki/Vehicle-to-grid.
    Power will still have to come from a non-CO2 producing source. While I support cost effective renewables, carbon sequestration may well be necessary, see:
    https://en.wikipedia.org/wiki/Carbon_capture_and_storage
    If biomass is burned for energy and the carbon captured this will actually remove CO2 from the atmosphere while supply power for electric cars. We just need to see where the technology goes if the incentives are priced appropriately. Pricing carbon is best done with carbon fee and dividend I describe earlier.
    If this scale of electric cars seems improbable consider this: in 1900 most would not have believed that by 1920 horse drawn travel would be obsolete, cars would be mass produced and gasoline available everywhere.

    • Paul, though Vehicle-To-Grid (V2G) storage has seen limited implementation in other countries, its efficiency has been rated anywhere from 40-60% – meaning 40-60% of energy is wasted. There are many reasons why that’s unacceptable, not the least that its output is effectively 40-60% dirtier after it’s been stored.

      Also, few consumers are willing to sacrifice the security of knowing their car will be charged when they need to drive it. Would you?

      Carbon Capture and Storage, or CCS, has not proven to be remotely practical anywhere in the world, for many reasons. See:
      http://www.geoengineeringmonitor.org/2015/05/false-promise-of-carbon-capture-exposed/

      “Biomass” has become the chosen pseudo-green label for clear-cutting old-growth forests, grinding the logs to wood chips, then shipping them to Europe where renewables advocates in Germany and other countries can claim burning wood is “renewable”. Michael Moore’s film “Planet of the Humans” puts it in context: “If all of the trees in the U.S. were cut and used for biomass, they could power the country’s electrical grids for one year. Then what?”.
      https://planetofthehumans.com/

      “If this scale of electric cars seems improbable consider this: in 1900 most would not have believed that by 1920 horse drawn travel would be obsolete, cars would be mass produced and gasoline available everywhere.”

      I agree that electric cars will replace internal-combustion ones, and the sooner the better.

      In 1900 most people didn’t believe horse-drawn travel would be obsolete by 1920. Henry Ford, however, did.

      • “Also, few consumers are willing to sacrifice the security of knowing their car will be charged when they need to drive it. Would you?”

        The V2G technology is intended to assure that. When you have tens of millions of cars available as “virtual” power plants, we only need a small percentage of each car’s storage to meet the aggregated total demand. This will also extend the life of vehicle batteries.

    • This argument ignores the inherent enviormental and economic cost of electrifying vehicles at any significant scale. It also ignores the environmental and economic cost of even producing this volume of vehicles. Second, there is an implicit assumption that vehicles will charge at low cost times and be available to support the grid at other times – consider this past summer when those assumed time periods coincided and the weather / smoke substantially reduced solar and wind capacity. Third, focusing energy policy on singular resources (weather dependent wind and solar) and vehicles to backup the grid, jeopardizes the entire transportation system. The solutions to all of these arguments requires a diversified mix of energy resources, a comprehensive perspective on the environment, and a rational approach to economics that considers the full lifecycle costs of every approach.

  3. “But given the low costs of wind, solar, and battery storage, accelerated investment in renewables looks increasingly cost-effective at low/moderate carbon prices.”

    Meredith, to my knowledge there is not a single community in the world, much less an entire country, powered by wind, solar, and battery storage. Though costs of wind and solar are low, battery storage remains hopelessly impractical given the scale involved. To power California for a single cloudless, calm day with Li-ion batteries would require an investment of over $1 trillion – roughly ~4x our state budget – and the batteries would have to be replaced every 7-10 years.

    To place all of our bets on this baseless, hypothetical scenario seems the height of irresponsibility. What am I missing?

    • “What am I missing?”

      A lot as you’ve been told many times. You’re claim that it would cost $1 trillion implies that batteries cost more $15,000/kW–a rather ridiculous assertion that is at least 10 times too high.

      • Wrong. Again you’ve demonstrated your tenuous grip on energy basics – the difference between power and energy, the difference between battery storage capacity and battery output capacity.

        When you understand these differences we have a discussion. I would be wasting my time, but you’re portraying yourself as an expert and it would be irresponsible not to correct your comments for the benefit of other readers.

        • Show us your calculation of how you got to $1 trillion. I took $1 trillion and divided by 65,000 MW of installed capacity (an rough approximation) to get to my answer for your implied capacity cost. I have no idea of how you got to your value otherwise. Explain to me your understanding of “power” vs “capacity.” If I can’t duplicate your equation then we can’t have a conversation.

  4. The most cost effective and socially acceptable method of reducing carbon emissions is probably the carbon dividend plan endorsed by economists, see: https://clcouncil.org/economists-statement/
    https://en.wikipedia.org/wiki/Energy_Innovation_and_Carbon_Dividend_Act_of_2019#:~:text=The%20Energy%20Innovation%20and%20Carbon,to%20reduce%20greenhouse%20gas%20emissions. (Google search terms “carbon dividend plan”). Rather than try to pick the winning carbon reduction strategy this will increase fees on carbon production with the lowest cost of administration. As the cost of carbon intensive products increases lower cost and therefore lower carbon technology will be developed. Most lower income people will be better off with this policy as the dividend will be more than their increased costs for products. This should create a voting pool supportive of the measure. It will also prevent politicians spending carbon fees on pork barrel projects that are not cost effective for reducing carbon emissions.

    • Paul, James Hansen has been promoting the same idea, called alternatively “fee-and-dividend”, or a “revenue neutral carbon tax”, since 2005. Several bills have been introduced; all have been shelved.

      It’s a great idea – too great, in fact. While the U.S. fossil fuel lobby is pulling the strings in Congress it will go nowhere.

  5. When economics becomes political it tends to lose perspective and objectivity. Your very political and singular focus on carbon emissions fails to address the more expansive and consequential environmental, international political, and related economic impacts. Maybe your model needs to include a few more variables?

    • At the moment, climate change is by far the most existential threat that we face globally. You don’t try to decide if you need a new refrigerator while you’re fighting a house fire (or at least facing an onrushing wildfire.) Lomberg is incorrect in his views which is why we haven’t heard from him many years.

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