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BCSE In The News

Yes We Can Get There From Here
By: Dan Lashof
Published: February 8, 2015

Last July I published an issue brief called Closer than You Think, pointing out that U.S. carbon dioxide emissions in 2011 were lower than many people realized—about 9 percent below their 2005/2007 peak—putting President Obama’s 17-percent-below -2005-levels reduction target within reach. Since then recognition that U.S. emissions have been falling has become more widespread. In October, Dallas Burtraw and Matthew Woerman at Resources for the Future argued that the U.S. is “on course” to achieving a 16.3 percent reduction by 2020. Last week the Business Council for Sustainable Energy (BCSE) and Bloomberg New Energy Finance (BNEF) released a report documenting the rapid growth in energy efficiency, renewable energy, and natural gas generation over the last few years and estimating that U.S. 2012 carbon dioxide emissions were almost 13 percent below 2005 levels. This week the World Resources Institute released an analysis asking “Can The U.S. Get There From Here?” and senior associate Nicholas Bianco said “The U.S. is not yet on track to hit its 17 percent target.”

So are we there yet or what? The apparent dispute between WRI and RFF is largely semantic, of the glass-is-half-full v. half-empty kind. The RFF report actually showed that the U.S. is only “on course” if the EPA does its job of setting global warming pollution standards for power plants and several other categories of stationary sources which it had examined in an Advanced Notice of Proposed Rulemaking back in July 2008. EPA has set standards for mobile sources and proposed a standard for new power plants, but stationary source standards that will have a big impact on emissions, particularly standards for existing power plants, remain a work in progress. WRI, for its part, noted that the 2020 target is achievable using existing tools if the federal government takes an ambitious “go getter” approach. WRI finds that 90 percent of the reductions needed by 2020 can come from four measures: carbon pollution standards for existing power plants; phasing out hydrofluorocarbons (HFCs); reducing methane emissions from oil and gas production and distribution; and increasing energy efficiency standards for appliances and other energy-using equipment. Even if federal standards end up being “middle of the road,” WRI finds that the 2020 target could still be attained if states adopt more aggressive “go getter” policies.

How realistic is it to think we can achieve the emission reductions in WRI’s “go-getter” scenario? Here is where the BCSE/BNEF report helps, with more than one-hundred figures that paint a picture of the major changes underway in America’s energy system that have already achieved about three-quarters of the targeted reductions in carbon dioxide emissions. (Note that the WRI and RFF reports look at reducing total global warming pollution by 17 percent, which is a somewhat more challenging task, given projected growth in the non-CO2 gases which account for about 20 percent of the total). The BCSE/BNEF report highlights the recent dramatic growth in three major technologies: energy efficiency, renewables, and natural gas. (The report misleadingly labels these collectively as “sustainable” energy, when natural gas, while cleaner-burning than other fossil fuels, is by definition not sustainable). Let’s take a look at each of these technologies in turn.

Energy efficiency. The data presented in the BCSE/BNEF report show clearly that energy efficiency has been the energy policy success story of the last 30 years. Since 1970 total natural gas used in our homes has remained essentially flat while the number of households has increased by over 70% (Figure 22). In commercial buildings overall energy use per square foot has declined substantially since 1980, while electricity use per square foot has increased slightly, although not nearly as much as you would expect given the huge increase in the number of computers, printers, and servers we now stuff into our offices (Figure 91). There is still plenty of room for improvement. Most large office buildings are now Energy Star certified, but that is not the case with smaller office buildings and other types of commercial buildings, such as stores, schools, and hospitals.

Renewable energy. The promise of renewable energy sources, such as wind and solar power, has been much discussed for decades, but that promise has only become a large scale reality in the last few years. The U.S. added 17 gigawatts (GW) of renewable energy capacity last year—a new record. Overall, non-hydro renewable electricity capacity has doubled in the last five years to almost 86 GW, which is approaching the hydro capacity of about 100 GW (Figure 8, 9). Wind remains the largest share of this capacity, but the growth in solar has been the most dramatic. Last year alone more than 3 GW of solar capacity was installed, bringing the total solar capacity up to 8 GW—a four-fold increase compared with just four years ago.

This explosive growth has been driven by key federal and state policies, but also by an equally dramatic drop in cost. The price of photovoltaic (PV) modules has dropped by more than 75% in the last 5 years to well below $1/Watt (Figure 35). Progress has also been made in reducing balance-of-system costs, bringing total installed costs to under $2/Watt in some cases. This means that the unsubsidized levelized cost of solar electricity can be below 10 cents/kWh under favorable circumstances, and averages around 15 cents/kWh, which is less than retail electricity prices in many parts of the country.

Natural gas. The drop in natural gas prices since their peak in 2008 has been every bit as dramatic as the drop in the price of PV modules (Figure 26). Unlike with renewables (and contrary to the terminology used in the BCSE/BNEF report) this is not sustainable. The drop in gas prices was driven by a simultaneous increase in supply due to application of innovative drilling techniques, particularly hydraulic fracturing (or “fracking”), and a reduction in demand due to the Great Recession. Both of these factors have shifted recently as very low gas prices have reduced drilling activity and increased demand, particularly when the cost of generating electricity with natural gas at existing power plants drops below that of coal (Figure 27). As a result, after bottoming out in April 2012, natural gas prices have begun to rebound and are projected to return to more “normal” levels of $4-5 per million Btu over the next year or two.

Low natural gas prices certainly contributed to the drop in carbon dioxide emissions in 2012 as gas-fired generation replaced coal. In the absence of power plant carbon pollution standards, however, some of these reductions will be reversed as natural gas prices rebound. Meanwhile, drilling for natural gas creates a host of problems for affected communities, for public health, and for the environment. In particular, increased methane leaks from natural gas production and distribution could offset much of the climate benefits from reducing dependence on coal. Moreover, as we think beyond the 17-percent-by-2020 target to the much deeper reductions we need to make in subsequent years it becomes clear that we will need to phase out carbon dioxide emissions from all fossil fuels, including natural gas, as quickly as possible.

What all this means is that while we are not there yet, seismic shifts in our energy system due to growth in energy efficiency, renewables, and natural gas make the 2020 global warming pollution reduction target far easier to achieve than had been anticipated just a few years ago. Beyond 2020 the challenge is certainly greater, and more comprehensive policies will be needed, but recent progress, particularly in scaling up wind and solar, makes me optimistic that if we can muster the will, we can find the way to solve the climate crisis.