2

Modeling Results to Meet Climate Goals

The first session of the workshop focused on the use of integrated assessment climate models to scope out the scale and pace of decarbonization needed to meet long-term climate goals, such as limiting global warming to 2°C above the pre-industrial era. All of the session’s speakers highlighted the assumptions that underlie climate models, as well as the massive scale and complexity of the necessary transitions that will be implemented across various sectors of the economy.

Kelly Sims Gallagher (Tufts University, moderator) introduced the three speakers: Leon Clarke (University of Maryland), Jim Williams (University of San Francisco), and Varun Rai (University of Texas). Gallagher mentioned that climate models represent our best efforts at understanding and representing the complex climate and energy system, and are thereby useful for charting our trajectory to meet climate goals. She suggested that understanding the assumptions and limitations of these models is important.

THE OUTLINES OF DEEP DECARBONIZATION

Leon Clarke, University of Maryland, School of Public Policy, Center for Global Sustainability

Leon Clarke provided context for the overall workshop, offering a broad outline about how to think about decarbonization. He noted that the reason for undertaking decarbonization is that society needs to limit the effects of climate change by limiting global temperature change. The

latest Intergovernmental Panel on Climate Change (IPCC) assessment¹ looked at climate modeling results to develop various trajectories toward reaching a carbon neutral global economy. IPCC found that net zero emissions of carbon dioxide should be achieved by 2050 to have a reasonable chance of limiting global warming to 1.5°C above the pre-industrial era, or by 2070 to limit global warming to 2.0°C.

Clarke noted that much of the existing academic and nonprofit research focuses on pathways toward reaching 80 percent emissions reductions by 2050 (the “80-by-50” scenarios) as a benchmark, roughly consistent with the 2°C pathway. Technologically, there is a wide range of potential pathways to pursue to decarbonize the energy system, such as the scenarios shown in Figure 2.1, though there is no clear best option. Technologies that play major roles in the modeling of various 80-by-50 pathways include carbon capture and storage (CCS) for power and industry, nuclear energy, and renewable electricity sources (e.g., solar, wind). Clarke pointed also to the need for negative technologies, such as bioenergy with carbon capture and storage (BEECS), direct air capture and storage (DACS), and other carbon dioxide removal (CDR) technologies, along with natural carbon sink capacity of U.S. lands. Clarke cautioned that while most of the climate modeling work has been undertaken to articulate the technological pathways to decarbonizing the electricity system, societal pathways are important and must be considered as well. Societal pathways to decarbonization could include the following:

1. U.S. federal response to international pressure and global low-carbon economic trends,
2. State and local government implementations of climate policies that spread throughout the country, and
3. Individual consumers demanding low-carbon products and services.

Clarke suggested that achieving 80 percent reductions in greenhouse gas emissions (in carbon dioxide equivalents, CO2e) will probably require at least 80 percent reductions in the energy sector carbon dioxide emissions. As society increases the use of electricity to supply more and more end-uses, and decreases the use of primary fuels, the decarbonization of

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¹ Intergovernmental Panel on Climate Change, IPCC 2018: Global Warming of 1.5°C. An IPCC Special Report on the Impacts of Global Warming of 1.5°C Above Pre-Industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty (V. Masson-Delmotte, P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield, eds.), in press.

electricity production will be a driving feature of decarbonization of the economy. Clarke summarized that all decarbonization pathways contain three key elements: energy efficiency, decarbonizing electricity, and electrification of end uses. The 2016 U.S. mid-century strategy (MCS)² pathways highlight a few of the major energy sector transitions, predicting zero use of coal for electricity generation by 2050, with only 8 percent of electricity coming from freely-emitting fossil energy, and with renewable energy sources (e.g., geothermal, solar, and wind) representing around 50 percent of the generation portfolio.

Clarke concluded that while there are some broad areas of agreement about deep decarbonization pathways, many open questions remain: What will be the electricity mix? Will we choose to incorporate bioenergy and alternative fuels like hydrogen into the fuel mix? To what extent will we deploy carbon capture, utilization, and storage (CCUS) and CDR technologies? How can we lower emissions in hard-to-decarbonize sectors (e.g., air transport, cement, steel, and chemicals manufacturing)? How can we lower emissions and raise efficiency in the industrial sector? How will global energy supply and demand evolve? What will be society’s approach to mitigation (e.g., prescriptive policies options, consumer preferences)? Scenarios that stabilize global temperature or go beyond that to achieve offsetting global cooling will require decarbonization efforts beyond 2050, and we should ensure that we are setting up the technologies and pathways to get beyond the 80-by-50 targets, he concluded.

DECARBONIZING THE UNITED STATES: CHALLENGES OF SCALE, SCOPE, AND RATE

Jim Williams, University of San Francisco, and Director, Deep Decarbonization Pathways Project

Jim Williams agreed with Leon Clarke that the three pillars of decarbonization are energy efficiency, low carbon electricity, and fuel switching, including in the transportation sector. Williams presented two Sankey diagrams, representing the energy system in 2014 and a low carbon scenario for 2050 with high renewable energy generation, as shown in Figure 2.2. Williams noted that historical energy use in 2014 is dominated by three fossil fuels (natural gas, coal, and petroleum), while in the 2050 scenario, which reaches an 80 percent emissions reduction below 1990 levels, fossil fuel use has decreased dramatically and electricity has grown to be the dominant energy carrier for most end uses. This transition

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² The White House, United States Mid-Century Strategy for Deep Decarbonization, Washington, DC, 2016.

away from fossil fuels as the primary energy source in the United States to low- and zero-carbon electricity playing that role entails systemic changes to the energy system starting with doubling electricity generation while reducing carbon dioxide per kilowatt hour thirty-fold. Additional sectoral benchmarks for 2050 include increasing average light duty vehicle (LDV) fuel economy to over 100 miles per gallon, electrifying over 90 percent of all building energy uses, and in industry, doubling energy efficiency and electrifying at least 40 percent of end uses.

Williams pointed out that energy supply and end use equipment and infrastructure typically have long lifetimes. For LDVs, reaching the emissions goal by 2050 requires that carbon dioxide emitting vehicles be phased out of the market within 15 years to be replaced by electric and/or hydrogen fuel cell vehicles, representing an increase in zero emissions vehicle sales on the order of ~1 million vehicles per year for the next 15 years. Williams noted that, in this case, the largest expected efficiency improvements are those inherent to electrified powertrains over internal combustion engines, and so electrification of the LDV fleet features convolved improvements to both efficiency and power source decarbonization. He also said that emissions reductions in some sectors, such as electricity and LDVs, will need to outpace economy-wide targets, as there are some sectors that will be more challenging to decarbonize, such as industry and freight shipping. To meet deeper emission reduction targets such as net-zero carbon dioxide by mid-century, some form of CCUS will be required, whether through capture of concentrated emissions sources such as biorefineries or cement plants, through land use practices that increase the natural capacity of the terrestrial carbon dioxide sink, or through applications of direct air capture (DAC).

Williams stated that in a low-carbon economy, the incremental capital costs of low carbon generation and fuels, along with those of end use equipment like electric vehicles or more efficient boilers, end up approximately offsetting the variable costs associated with fossil fuel purchases. There is a relatively small net cost in the system in an 80 percent emissions reductions scenario in 2050, estimated at ~1 percent of GDP with an uncertainty range of ~1 percent, not including any of the collateral benefits of avoiding climate change and pollution. The net energy system costs of decarbonization through 2050 are shown in Figure 2.3.

Williams stated that the net-zero carbon by mid-century pathway is technologically feasible, and that the largest challenges are institutional, including: cross-sector coordination in planning and investment, providing certainty for investors, encouraging consumer adoption of low carbon technologies (e.g., heat pumps and zero emissions vehicles), adapting to an energy system primarily powered by renewables and dominated by fixed costs, developing new electricity market rules, retirement of the

natural gas distribution system, and addressing land use practices. He asked: How should we coordinate across sectors when the institutions to facilitate communication and cooperation do not currently exist? How can we drive investment flows into low carbon equipment and infrastructure? How can we drive rapid consumer adoption? What changes are required for electricity balancing in high renewables systems?

THE SCALE AND SCOPE OF DEEP DECARBONIZATION

Varun Rai, University of Texas, Austin, and Director, UT Energy Institute

Varun Rai considered decarbonization through the historical lens of technology diffusion into the market place. Rai suggested that the scale, scope, and rapidity of the decarbonization transition are unprecedented, all-encompassing, and truly daunting, and will require coordinated efforts across geographies, governments, and cultures. Rai defined three types of energy transitions:

1. An individual or community-wide shift in fuel sources (e.g., electrifying the heating system in an apartment complex),
2. A transition in fuel dependence of an economic system (e.g., transitions to natural gas energy in the Netherlands), and
3. Long-term, disruptive shifts in energy use patterns across society (e.g., the electrification of the LDVs).

Rai suggested that energy transitions consist of both temporal and spatial processes. Spatially, most technologies begin in an innovator market or country before the results are subsequently replicated in other geographies. Temporally, deployment occurs in three phases: an innovation phase, a risk mitigation or growth phase, and a maturity phase. Rai pointed out an additional, oft-ignored earlier period called the formative phase which lasts from the earliest attempt to commercialize a technology up to around 1-2 percent adoption. This formative phase lasts on average about 20 years, and precedes meaningful scale-up of the technology. Full diffusion of the technology through the core market (for which it was conceived) and secondary markets (which can repurpose the technology) takes additional decades, anywhere from 20-60 years.

Rai listed the duration of formative phases and diffusion phase for various technologies (shown in Figure 2.4), but noted that these examples pale in comparison to the scope of the transition required to deploy low carbon technologies. The larger the scope of the change, the longer the diffusion period will be for that technology, with systems of systems

(refineries, steam engines, and passenger cars) that are made of complex systems of technologies taking the longest by far to diffuse through the market. In these cases, when there are many stakeholders, many competing ideas, and the need for integration with larger parts of the system, the platform (including the interaction mechanism, resources, financing, institutions, regulations, and incremental innovation and sector learning) that supports diffusion needs to be established before the system can operate effectively and efficiently.

Rai showed the observed rate of technology adoption for three energy technology (U.S. nuclear, U.S. Flue Gas Desulfurization (FGD) and Japan liquefied natural gas (LNG); Figure 2.5), and suggested that growth in the early phases is typically overestimated, while growth in the later phases is underestimated when compared to the standard S-curve of technology adoption. During the formative phase, the benefits of deploying the technology are not yet clear, leading to prolonged duration of the formative phase. During the growth phase, many of the benefits become clear, there are more potential adopters, and lower risk attracts investors to the technology. Eventually, regulation and policy follows as the industry matures.

Rai gave two examples of technologies that will need to be deployed widely in deep decarbonization pathways: CCS and solar energy generation. In Rai’s own integrated modeling, he found that regardless of the details of a particular decarbonization pathway, CCS technology needs to commence its formative phase soon, or the technology will not be sufficiently mature to enter the growth phase when the rest of the energy system is ready to deploy. Recent cancellations of CCS projects in Europe suggest that this long formative phase and the subsequent learning curves are not being sufficiently undertaken to support a rapid deployment and diffusion. Rai suggested also that for large unit-cost technologies such as a nuclear plant, cost reductions may not automatically hold for capital intensive technologies as quickly as many predict. In contrast, the formative phase of solar began in the 1980s and 1990s, and the growth phase started in the mid-2000s. Cost projections of solar were typically overestimated, and as the cost of solar dropped, the deployment of solar proceeded much faster than even the most aggressive modeled scenarios predicted.

Rai stated that technological improvements are not sufficient for scale-up; the transition requires policy, regulations, business models, and public experience with actual deployment across markets to support growth. While large scale energy transitions are expected to be long affairs, progress can be accelerated with careful design of technology-push and demand-pull, coupled with transformed social norms. Most importantly, growth requires careful design of learning cycles between generations of the technology across jurisdictions.

DISCUSSION

A participant opened the discussion by asking how utility commissioners should deal with the cost of grid expansion to electrify buildings, especially in those cities with many old buildings with fossil fuel heating systems that are not cost-effective to replace? Additionally, they asked how to deal with stranded assets from the built-out gas distribution system? Rai suggested that this issue requires higher level regional or cross-city coordination so that cities and states can learn from the policies and technological experimentation of others. Williams acknowledged that this issue is more easily addressed for new construction through building standards, and more difficult for retrofits. He added that stranded assets and the retirement of gas infrastructure may be inevitable, either due to mandated building electrification, or simply to market mechanisms, as the share of residual customers using gas decreases and prices rise as a result. He also noted that some localities may want to consider taking a close look at low carbon gas fuels that could avoid the need for electrification retrofits.

The panel was asked if the durations of the formative phase and diffusion phase for new technologies have been accelerating over time, and if these phases can be accelerated. Rai suggested that these periods have not been accelerating. There is typically a 15- to 20-year formative phase followed by a 20- to 60-year diffusion phase. He gave three historical cases of technologies with significantly shorter diffusion phases: nuclear energy, jet aircraft, and catalytic converters. Here, the driving force for diffusion was a strong technology push related to World War II, and huge demand due to military spending that was relatively cost insensitive, leading to diffusion phases in the 10- to 20-year timeframe. When the capital intensity to adopt a new technology becomes lower, and the benefit to the user is much more obvious, then you can accelerate the diffusion timeline. Williams pointed also to a few examples of acceleration by social demand pull and social policy push, such as rural electrification during the New Deal era that occurred over two decades. Williams suggested that with the fast diffusion of nuclear energy, federal leadership played a large role in the rapid transition. Gallagher added that you must take a systemic approach to encouraging diffusion of new technologies in the market, including a lot of experimentation to avoid technical issues with scale-up.

A participant described that there are two popular, competing visions for decarbonization in the energy policy community: (1) building firm energy capacity through options like CCS, increasing nuclear capacity, and bringing renewable energy sources onto the grid, or (2) focusing on innovation and long-duration storage. Is this a legitimate debate, or should we focus on reconciling these two visions? She asked the panel: what do you think is the best path forward? Clarke suggested that this

is a hard debate to resolve, and that to do so, we need to build communities of practice that share information, methodology, and experiences in decarbonization across cities and regions. Clarke suggested that the energy policy community will not be able to choose the best pathway simply through top-down debate, but that more information will come from the communities of practice that begin to implement these ideas. However, strategies to build communities of practice were not discussed. Williams suggested that whether we end up with 90 or 100 percent renewable electricity is really an academic consideration, and that the community need not spend time worrying about those details if we make meaningful strides toward decarbonizing electricity. He stated that we will likely always have a need for natural gas generation capacity for times of wind and solar undergeneration, although constrained to very low levels by carbon dioxide limits.

The panel was asked if they believe that the public is ready for the high costs associated with deep decarbonization. In response to that question, Williams posed: Is the public ready for climate change? He said that if we need to address decarbonization to mitigate the effects of climate change, we will. He suggested that the costs of decarbonizing the energy system are around 1 percent of GDP, less than the historical variation in energy costs associated with the fluctuations of oil prices.

A participant wondered if society will reach a decision point where we need to invest in one set of technologies over the others, given the long investment timelines and the associated financial commitments. Can we afford to pursue “all of the above” technologies? Rai answered that he does not think that society is yet ready to choose a pathway. Different geographies may favor different decarbonization technologies, and a lot more experimentation will need to occur to optimize the pathways for different countries.