Accelerating Decarbonization in the United States Technology, Policy, and Societal Dimensions (2024) / Chapter Skim
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6 The Essential Role of Clean Electricity
6 The Essential Role of Clean Electricity
Pages 307-349
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From page 307... ...
These latter challenges for actors in federal agencies, state and local governments, the private sector, and civil society include • Public engagement and decision-making support for siting the new transmis sion facilities and other electric projects and for the expansion of regional wholesale markets necessary to support an electric system that depends increasingly on renewable energy and other carbon-free resources; • Regulatory support for investment in distribution-system infrastructure and communications, controls, interconnection policies, and other technologies necessary for supporting much-more expanded distributed energy resources at the grid edge; • Regulatory support for innovative pricing of electricity, utility business model changes, and the provision of related retail services to enable dynamic interactions between customer-sited technologies and equipment and grid operations; 307 A00026 -- Accelerating Decarbonization in the United States_CH06.indd 307 3/27/24 6:54 AM
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From page 308... ...
1 It is common for discussions of methods to reduce emissions from the power sector to focus on the role of avoiding emissions through such things as energy efficiency and other demand-side measures. Such actions are essential to a decarbonized economy and are discussed in the chapters on end uses of energy (i.e., Chapter 7 on the Built Environment, Chapter 9 on Transport, and Chapter 10 on Industrial Decarboniza tion)
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From page 309... ...
° Conducting research, development, and demonstration for long-duration energy storage technologies and on advanced electric generation tech nologies capable of providing around-the-clock power supply with no carbon emissions. ° Reinforcing local electricity distribution networks to accommodate increasing peak demand from electric vehicles, heat pumps, and other new loads.
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. • Congress enact the following: º establish that it is the "National Transmission Policy to rely on the high-voltage transmission system to support the nation's" goals to achieve net-zero carbon emissions in the power sector (p.
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From page 311... ...
. Coal-fired electricity generation has declined and now accounts for one-fifth of the nation's electricity, after decades during which it accounted for half of the country's power supply.4 Power sector CO2 emissions dropped by over one-third from 2005 through the end of 2022, with emissions slightly increasing from 2020 through 2022 (EIA 2023)
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From page 312... ...
Conference of the Parties (COP26) in Glasgow, Scotland, in late 2021, the President announced the climate components of his proposed "Build Back Better" framework, including tax credits, grants, loans, and other incentives for clean energy investment (including in the power sector)
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From page 313... ...
. This was important for the power sector in light of the large number of electric companies that had made commitments to reduce GHG emissions, and the role that transpar ency and reporting plays in maintaining corporate commitment to decarbonization.
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: $28 billion ° Carbon capture and storage for industrial and power-sector purposes: $10 billion ° Battery supply chains used in energy storage and electric vehicle (EV) applications: $7 billion FIGURE 6-1 Funding for Clean Energy in the Infrastructure Investment and Jobs Act.
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From page 315... ...
. Power-Sector Provisions of the IRA Although President Biden and many congressional leaders had hoped to see greater financial incentives for clean power in 2021, it was not until August 2022 that such incentives were put into law through the IRA.
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As described by analysts from the Rhodium Group in their analysis of IRA impacts, the new law includes a suite of long-term, full-value, flexible clean energy tax credits and other programs in the IRA focus on the "4 Rs" of electric generation decarbonization: • Reinvigorate new clean capacity additions: production and investment tax credits (PTC and ITC) ; • Retain existing clean capacity: zero-emitting nuclear PTC; • Retire fossil capacity: U.S.
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, 68 percent of the population, and 51 percent of GHG emissions had pledged to reduce GHG emis sions (see Figure 6-3)
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Notably, electric utilities serving 84 percent of the nation's electricity customer ac counts have made commitments to have either 100 percent renewable/clean power or net-zero emissions by no later than 2050 (Figure 6-4)
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; and corporate efforts (e.g., the 300-member Clean Energy Buyers Alliance8) to accelerate the achievement of carbon-free electricity through procurements of clean energy (CEBA 2023)
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GDP, 68 percent of the population, and 51 percent of GHG emissions have pledged to reduce GHG emissions. Electric utilities representing 84 percent of the nation's electricity customer accounts have made commit ments to have either 100 percent renewable/clean power or net-zero emissions by no later than 2050.
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For example, CBO has estimated that the IRA (also known as the 2022 Reconciliation Act) alone could lead to significant carbon emission reductions in the power sector over the next decade (as shown in Figure 6-6)
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CC BY 4.0. Figure 6-7 shows the projected annual increases in solar, onshore wind, and offshore wind capacity additions that REPEAT estimates could enter the system after 2022.9 The REPEAT Project examined the sensitivity of different carbon-reduction outcomes in the power sector to changes in assumptions about the pace of build-out of the nation's high-voltage transmission grid.
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, the National Renewable Energy Laboratory (NREL) , Energy Innovation, and ClearPath -- reach similar conclusions about the impact of new federal policy on changes in the power sector.
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NOTES: "Low," "Central," and "High" reflect Rhodium Group's three core emissions scenarios: "A central case that relies on central energy market prices, central clean technology costs, and baseline economic growth. A low emissions case that uses continued rock-bottom prices for clean energy technologies paired with high oil and gas prices and baseline economic condi tions.
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The IRA provides substantial incentives for energy efficiency and electrification that are expected to provide substantial additional savings to con sumers" (Roy et al.
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A recent nine-model intercomparison published in Science shows the IRA resulting in wind and solar growth rates ranging from 10 to 99 GW/year between 2021 to 2035, with particularly wide variation in predicted increases in energy storage, ranging from 1 to 18 GW/year. Despite this variation, generation and emissions outcomes for the power sector are more closely aligned across models by 2035, with key provisions from the law resulting in emissions reductions of 43 percent and 48 percent below 2005 levels by 2035 (Bistline et al.
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From page 327... ...
Examples of non-technological issues are institutional and jurisdictional complexities in the power sector -- barriers that were summarized by an expert workshop hosted by RFF and that include market structures that disfavor renewable energy resources, backed-up interconnection queues, local siting opposition, policy uncertainty, and challenges in arranging for efficient procurement of clean power .
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From page 328... ...
Finding 6-7: Business-as-usual approaches to government decision-making on such things as transmission and distribution system build-out, regional power markets, retail rate design, and distributed energy resource deployment can impede the type and pace of actions needed for decarbonizing the power system consistent with a net-zero transition. Changes in public engagement and govern mental leadership on these issues will be necessary to enable equitable emissions reductions and affordable decarbonization opportunities offered by technological change.
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As recommended in the first report, Congress should adopt a cap on power-sector GHG emissions, or clean electricity standard for the power sector, which would be designed to reach roughly 75 percent clean electricity share by 2030 and a declining emissions intensity reaching net-zero emissions by 2050. Build-Out of the Electric Transmission Grid Given the essential role that the nation's electric transmission system will need to play in enabling decarbonization of the grid in a relatively affordable and timely way, it is im perative that the nation moves forward with planning, siting, building out, and paying for expansion of the high-voltage transmission system.
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greenhouse gas emissions by roughly one billion tons per year in 2030 and reduce cumulative greenhouse gas emissions by 6.3 billion tons of CO2-equivalent over the decade (2023–2032)
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These transmission issues are being addressed by actions at FERC16 and DOE, but -- however well intended and critically important to decarbonization -- each of those agency's processes are time-consuming and their outcomes are uncertain. Many states and other stakeholders do not support expanded federal action to accelerate 16 In December 2022, FERC issued proposed rules to implement its newly expanded backstop siting authority under the IIJA (FERC 2022a)
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presenting the potential to decrease inter-regional transmission build-out (Blanford and Bistline 2021) , and with some modeling suggesting that the power sector can attain 100 percent clean energy by 2035 under a constrained technology and infrastructure scenario limiting transmission build-out (Denholm et al.
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, FERC, the states, transmission companies, grid operators, and public stakeholders should expeditiously implement the new provisions of the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA)
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States, too, have begun examining in earnest the potential implications of new, enhanced, expanded wholesale power markets. In December 2021, the Colorado Public Utilities Commission, for example, found significant consumer, environmental, and eco nomic benefits of a Western RTO, which could reduce electricity costs for consumers by up to 5 percent annually while accelerating the state's clean energy goals (CO PUC 2021)
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should work with Regional Transmission Organizations (RTOs) and regional energy imbalance markets to ensure that wholesale power markets in all parts of the country are designed to accommodate the shift to 100 percent clean power.
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rates for low-income customers. Deployment of Distributed Energy Resources on the Electric System For decades, many large electricity customers have been able to take advantage of installing on their own premises various small-scale energy technologies (e.g., cogeneration systems)
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. In many cases, DERs like energy efficiency, rooftop solar, and on-site battery storage can serve needs locally and avoid some generating and delivery capacity additions (although such outcomes are quite location-specific and in some cases the addition of DERs can cause additional investment in local distribution system capacity and capa bilities above and beyond what might otherwise occur on the local grid; see further discussion below)
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. States, localities, and tribal governments should use the technical assistance, funding, and financing opportunities in the Inflation Reduction Act (especially, e.g., Environmental Protection Agency Greenhouse Gas Reduction Fund)
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Recommendation 6-6: Support Planning, Public Participation, and Investment in Modernizing Local Grids. Decision makers on utility service provision (i.e., state utility regulators for jurisdictional investor-owned utilities and boards of cooperatives, municipal electric utilities and other publicly owned utilities)
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to advance net-zero energy transitions depend on critical minerals whose supply chains are subject to numerous domestic challenges and international risks (DOE 2022a; Kelly and Nelson 2023)
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Additionally, Congress should support the Department of Energy's work to secure resilient supply chains that will be critical in harnessing emissions outcomes and cap turing the economic opportunity inherent in the energy-sector transition. Table 6-1 summarizes all the recommendations in this chapter to support decarbon izing the electricity system.
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From page 342... ...
, Transmission states, transmission companies, public stakeholders, and Department of the Interior 6-3: Expand Congress, • Electricity • GHG reductions Siting and Regional FERC, regional • Non-federal • Equity Permitting Power Markets transmission actors • Health Reforms for Consistent with organizations Interstate Decarbonization Transmission Objectives 6-4: Provide Decision makers • Electricity • Equity Ensuring Equity, Rate Options on utility rates • Non-federal Justice, Health, to Encourage (i.e., state utility actors and Fairness of Flexible Demand regulators for Impacts While Ensuring jurisdictional Siting and Affordable investor-owned Permitting Electricity utilities and boards Reforms for of cooperatives, Interstate municipal electric Transmission utilities, and other publicly owned utilities) 342 A00026 -- Accelerating Decarbonization in the United States_CH06.indd 342 3/27/24 6:54 AM
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From page 343... ...
Objective(s) Categories Short-Form Implementing Addressed by Addressed by Addressed by Recommendation Recommendation Recommendation Recommendation Recommendation 6-5: Support States, localities, • Electricity • GHG reductions Ensuring Equity, Equitable and tribal • Non-federal • Equity Justice, Health, Deployment of governments actors • Health and Fairness of Distributed Energy • Public Impacts Resources engagement Siting and Permitting Reforms for Interstate Transmission 6-6: Support Decision makers • Electricity • GHG reductions Ensuring Planning, Public on utility service • Non-federal • Equity Procedural Equity Participation, and provision actors • Health in Planning Investment in (i.e., state utility • Public and Siting New Modernizing Local regulators for engagement Infrastructure and Grids jurisdictional Programs investor-owned Siting and utilities and Permitting boards of Reforms for cooperatives, Interstate municipal electric Transmission utilities, and other publicly owned utilities)
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From page 344... ...
2022a. "America's Strategy to Secure the Supply Chain for a Robust Clean Energy Transition." https://www.energy.
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From page 345... ...
2021. "Transmission Projects Ready to Go: Plugging into America's Untapped Renewable Resources." Americans for a Clean Energy Grid.
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From page 346... ...
2022. "A Turning Point for US Climate Progress: Assessing the Climate and Clean Energy Provisions in the Inflation Reduction Act." Rhodium Group.
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From page 347... ...
2021. "Implementing the Clean Energy Investments in US Bipartisan Infrastructure Law." World Resources Institute.
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From page 348... ...
2023. "Evaluating Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S.
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From page 349... ...
Leadership on Clean Energy Technologies." https://www.whitehouse. gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030-greenhouse-gas pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadership-on-clean energy-technologies.
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