Quantifying the Impact of Proposed Carbon Emission Reductions on the U.S. Energy Infrastructure

The U.S. is actively considering the adoption of ambitious targets for greenhouse gas emissions that would require a reduction in energy-related carbon dioxide releases of 80% or more by the year 2050. Achieving such a goal will entail a rapid transition away from reliance on petroleum for transportation and high carbon fuels for electricity generation towards alternative transportation fuels and low-carbon electrical generating technologies, including solar, wind, geothermal, nuclear, and coal with carbon capture and storage (CCS). Even with adoption rates for these technologies that are all near or even beyond the limits of plausibility, it will be impossible to achieve the desired emission reductions while simultaneously maintaining reasonable economic growth unless, in addition, the energy efficiency of the economy improves at a rate significantly above the historical trend. If that trend were to persist, however, and in addition nuclear and coal with CCS were both removed from the supply mix, the desired emission reductions could be achieved only if per capita economic output were to decline, even with an installed base of solar and wind capacity many times greater than the current level. Lester and Finan, “The Impact of Carbon Emission Reduction Targets” July 2009 2 Introduction This paper examines the implications for the U.S. energy infrastructure of the targets for greenhouse gas emission reductions now being actively considered by the U.S. government. The Waxman-Markey legislation recently passed by the U.S. House of Representatives calls for U.S. carbon emissions to decline 83% from their level in 2005 by 2050. At various times President Obama has similarly called for emission reductions of over 80% by mid-century, and in July the President agreed with the other G8 leaders that the developed countries, including the U.S., should reduce their emissions 80% by 2050. These targets are loosely derived from integrated scientific and economic assessments of the consequences for the earth’s climate of elevated atmospheric concentrations of greenhouse gases. The problem of mitigating greenhouse gas emissions will affect all countries. Here we examine what would be required for the U.S. to achieve reductions in this general range. It is widely recognized that an effective strategy for reducing greenhouse gas emissions must focus on the energy sector, whose releases of carbon dioxide account for 80% of all U.S. anthropogenic greenhouse gas emissions. There are two essential elements of a strategy for reducing energy-related carbon emissions: first, improving the efficiency of energy use (energy productivity) or, equivalently, reducing the ‘energy intensity’ of the economy; and second, ‘decarbonizing’ the nation’s energy supply infrastructure – that is, reducing the carbon intensity of the energy system by moving away from primary reliance on petroleum for transportation and high carbon fuels for electricity generation towards alternative transportation fuels and low or zero-carbon electrical generating technologies. It is evident that these two elements of an overall strategy are interdependent. The more rapid the transition to low carbon energy supplies, the less we will need to rely on energy end-use efficiency gains to achieve a given emission reduction target, and vice versa. There is in fact a fixed relationship between the two if a target for economic output is specified together with the carbon reduction goal. The relationship between these four factors – carbon 1 H.R. 2454: American Clean Energy and Security Act of 2009, Section 702 2 Climate change avoidance strategies must also reduce emissions of potent non-carbon greenhouse gases such as methane and nitrous oxide. Lester and Finan, “The Impact of Carbon Emission Reduction Targets” July 2009 3 emissions, carbon intensity of the energy system, energy intensity of the economy, and economic output – is given by the simple identity