The policy pathways to cut US carbon emissions in half by 2030

The world is reacting to President Joe Biden’s pledge to cut economywide carbon emissions in the U.S. in half by 2030 — and arguing over whether the commitment is too big or too small. Now climate and energy policy analysts and modelers will get busy charting how the country might actually reach that halfway mark by decade’s end.

That’s a useful exercise, since it helps flesh out the gaps between high-level pronouncements, such as the ​“nationally determined contribution” to the international Paris climate accord that Biden announced Thursday, and the specific policies needed to get there.

Modeling can also find the most economical pathways to cutting carbon from electric power generation, transport, building heating, industrial operations, materials production and agriculture. That’s roughly the order that U.S. decarbonization will need to follow, according to analysts, since a clean electric grid is needed to electrify so many other processes that now rely on fossil fuels — including many that await new technology breakthroughs to replace them.

That’s the conclusion of a new report from Energy Innovation, the think tank whose co-founder Sonia Aggarwal is now part of the White House climate team. In fact, its modeling shows that the economic, employment and health benefits of making the transition would far outweigh the costs.

“We know broadly what types of policies can get us there,” said Robbie Orvis, Energy Innovation’s director of energy policy design and co-author of the report. ​“And there are huge economic gains to be had.”

That’s because the boom in jobs and investment, as well as the reduction in consumer costs and health impacts, to come with this massive overhaul will more than compensate for the job losses in affected industries such as fossil fuels, the report found.

By 2030, the model shows a net gain of 3.2 million job-years — a measure of full-time work over one year’s time — and a $570-billion-per-year, or 2.4 percent, boost in gross domestic product, as well as 45,000 fewer premature deaths from pollution reduction, as compared to a business-as-usual scenario.

A complex policy mix to halve carbon emissions

These findings are in line with a number of studies highlighting the potential for major carbon reductions with technologies that are already cost-effective today. Those include increasingly cheap renewable energy and energy storage, electric vehicles with lower total cost of ownership than fossil-fueled vehicles, and electric heating options that are more cost-efficient than natural gas and heating oil.

But deploying these technologies at the scale and speed needed to hit 2030 targets will rely on an interlocking set of policies at the federal, state and local levels. Other technologies, such as carbon capture and storage and ​“green” hydrogen produced with carbon-free energy to replace hard-to-electrify sectors like steel and cement production, or shipping and aviation, remain further in the future.

And along with ​“carrots” like incentives for switching to cleaner technologies, Energy Innovation’s policy menu contains plenty of ​“sticks” to force heavy-emitting technologies to shrink or disappear.

“Our modeling finds that to get the types of reductions we’re talking about, you need more than incentives,” Orvis said.

Those include policies to force the closure of all coal plants by 2030 and bar the construction of new natural-gas plants (absent as-yet-unavailable carbon capture technologies), end the sale of gasoline-fueled cars by 2035 and diesel-fueled trucks by 2045, and ensure that all new building appliances on the market by 2030 are electric.

The graph below lays out the link between specific policies and their carbon-reduction potential.

While all of these policies are important, some will need to be prioritized over others. Most notably, ​“the clean electricity standard in our scenario is the linchpin to decarbonizing the rest of the economy,” Orvis said.

That’s not just because clean electricity is needed to power vehicles, buildings and industry, he said. It’s also because it’s difficult to expedite the uptake of cars and trucks, boilers and heaters, and massive industrial processes much beyond their natural ​“replacement rate” without imposing unduly high costs on consumers and businesses.

“That’s why going after the power sector first in the next decade is key to hitting that emissions goal,” Orvis said. ​“You’re working against the natural capital stock replacement rate,” which will leave plenty of gasoline- and diesel-fueled vehicles and natural-gas- and oil-fired heaters and boilers in place for decades to come.

Which policies are on deck, and which are missing so far

The Biden administration’s American Jobs Plan proposes an Energy Efficiency and Clean Electricity standard aimed at reducing emissions from power generation to 80 percent below 2005 levels by 2030 and by 100 percent by 2035. It also proposes extending the existing Investment Tax Credit structure for solar power to multiple clean energy technologies through the rest of the decade, as does a newly introduced clean energy bill from U.S. Sen. Ron Wyden (D-Oregon).

Frameworks exist to achieve these policies in ways that align with the budget reconciliation process that could allow a bare majority of Democrats to pass it in the U.S. Senate. But nearly as great a share of power-sector emissions cuts are bound up in closing coal plants by 2030 and halting the buildout of new natural-gas plants, processes that are largely determined by state utility commissions — although federal emissions regulations could be applied to that effect.

The federal policies to drive down transport emissions are not clearly defined at the moment. The Biden administration’s jobs plan does earmark $174 billion for boosting electric vehicle manufacturing and charging infrastructure, as well as EV incentives. U.S. Sen. Charles Schumer (D-New York) has proposed even bigger incentives for customers who trade in gasoline-fueled cars for EVs.

But Energy Innovation’s models show that the lion’s share of transport decarbonization will need to come from federal fuel-economy or tailpipe-emissions standards that eventually end the sale of carbon-emitting cars by 2035 and heavy-duty vehicles a decade later. So far, only California has set goals along those lines, although the Biden administration or Congress could direct the Environmental Protection Agency and the Department of Transportation to issue similar rules, he said.

Building electrification is another area where incentives may be insufficient to achieve the targets set out in the model, Orvis said. It’s possible that federal efficiency or environmental standards could be applied to reduce or end the sale of fossil-fueled heaters, boilers and other appliances. But state building codes, such as California’s Title 24, will also be important levers to incentivize electric over carbon-emitting appliances.

As for the hard-to-decarbonize industrial sector, policies to reduce or eliminate methane leakage from natural gas infrastructure, and hydrofluorocarbon leakage from cooling and refrigeration equipment, are the most important early steps, since both are far more potent greenhouse gases than carbon dioxide, he said.

As for the other major pathway for industrial decarbonization — switching to carbon-free fuels — ​“we’ve delayed that transition a little, because there aren’t really hydrogen boilers and furnaces for heavy industry,” he said.

While the Biden administration’s jobs plan does contain billions of dollars for carbon capture and storage and green hydrogen demonstration projects, the pathway to cost-effective mass deployment remains uncertain. The policy levers to bring technologies to bear are also ill-defined at the moment, although clean energy standards or carbon prices could help, Orvis said.

Energy models are, of course, subject to various uncertainties, although Energy Innovation has made its U.S. Energy Policy Simulator tool available for those interested in testing it out.

While the nonprofit research group didn’t work with the Biden administration on the new report, ​“we’ve been in touch with folks at the White House and on the Hill,” he said. ​“It’s all going into the sausage-making machine as we speak.”

(Article image courtesy of Jorge Alcala)