latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/gao-urges-action-to-address-far-reaching-effects-of-climate-change-on-us-grid-63081807 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

GAO urges action to address 'far-reaching effects' of climate change on US grid

Blog

Highlighting the Top Regional Aftermarket Research Brokers by Sector Coverage

Video

COVID-19 Impact & Recovery: Energy Outlook for H2 2021

Blog

Corporate renewables market flourished in 2020 despite pandemic

Blog

Corporate Credit Risk Trends in Developing Markets: A Loss Given Default (LGD) Perspective


GAO urges action to address 'far-reaching effects' of climate change on US grid

A new government report anticipates "far-reaching" and costly impacts to the U.S. electric grid from climate change and called on federal regulators to step up their resilience efforts.

The report came on the heels of widespread power outages in Texas due to extreme cold that some have blamed on climate change and as Congress looks to craft an infrastructure package that could address bulk power system reliability.

"Climate change is expected to have far-reaching effects on the electricity grid that could cost billions and could affect every aspect of the grid from generation, transmission, and distribution to demand for electricity," the U.S. Government Accountability Office said a study released March 10, which drew on several other GAO and government reports.

The type and extent of climate effects will vary by geography and other factors, according to the analysis. For example, more frequent droughts could hurt hydroelectric generation in Alaska, the Pacific Northwest and Southwest, while increasing wildfires in states such as California could reduce transmission capacity or damage distribution lines.

Such damage could cost utilities and customers "billions," the GAO said. It referenced one report that estimated total annual outage costs to utility customers will jump from about $55 billion from 2006 through 2019 to more than roughly $480 billion in 2080-2099, "absent aggressive grid resilience mitigation measures."

"This report makes it clear — failing to meet the demands of a changing climate in our power sector will mean increased power outages and higher costs for the American people," said U.S. Sen. Tom Carper, D-Del., chairman of the Senate Environment and Public Works Committee. "We can look to the recent events in Texas as an example of what happens when an electric grid isn't prepared for extreme weather."

Carper, who requested the GAO study along with Senate Energy and Natural Resources Committee Chairman Joe Manchin, D-W.Va., said the economic damage from the Texas power crisis could reach an estimated $90 billion, with consumers "largely stuck footing the bill."

"Extreme weather events like this are being fueled by climate change — meaning they are becoming more frequent and severe," Carper said. "Leaving millions of people vulnerable to extreme weather can't be our new normal."

The GAO made two recommendations for how the federal government could address the power sector's climate vulnerabilities.

The U.S. Department of Energy could develop a department-wide strategy to enhance grid resilience to climate change, which could include sharing tools and information such as the cost of long-term power outages, to help utilities with investment decisions. The DOE could also provide financial assistance, including grants and prizes for energy resilience initiatives, the report added.

Secondly, the GAO called on the Federal Energy Regulatory Commission to identify and assess climate change risks to the grid. The commission could require the North American Electric Reliability Corp. to address climate change in its reliability standards and examine whether and how FERC should consider climate change when reviewing and authorizing hydropower facilities and other projects.

In addition, the report said Congress could require FERC, NERC or grid operators to form a plan to mitigate adverse climate impacts. Lawmakers could also modify the Federal Power Act "to expressly define FERC's role in incentivizing grid resilience."

Congress watching the issue

The GAO report came out on the same day the Senate Environment and Public Works Committee held a hearing on addressing climate change in the electricity sector.

Despite the recent devastation in Texas, "a future of more suffering from climate change is not written in stone," Carper said. "We can invest in a cleaner, more resilient electric sector."

Frank Rusco, the GAO's director of natural resources and environment, noted during the hearing that FERC recently launched a new proceeding to examine the threat that climate change and extreme weather pose to grid resilience. The commission did so after terminating a long-running grid resilience proceeding launched during the Trump administration without first coming to any conclusions.

"They really do need to understand that this system is going to be stressed going forward, and they're going to have to figure out how to regulate to improve that," Rusco said.

Along with causing infrastructure damage and challenges, climate change is spurring the U.S. power sector to rapidly transition to less carbon-intensive generation. U.S. President Joe Biden has set a goal to decarbonize the nation's power sector by 2035, a plan that many utilities, Republicans, and some Democrats see as too aggressive.

"Unless we can get these things permitted in a much shorter timeframe in terms of transmission and pipelines and other things, I don't know how we get to this aspirational goal of zero emissions in the power sector by 2035," said Sen. Shelley Moore Capito, R-W.Va., ranking member of the Environment and Public Works Committee.

Several witnesses, including Xcel Energy Inc. Chairman and CEO Ben Fowke, said additional technologies also must be developed to achieve Biden's goal, with the U.S. power sector still heavily dependent on gas and getting most of its carbon-free generation from nuclear plants.

"For the next two decades at least, natural gas and nuclear do not stand in the way of the [clean energy] transformation. I believe they enable it," Fowke said.

Fowke said Congress could promote that transition through a national clean energy standard and changes to existing clean energy tax incentives, such as providing a direct pay option and addressing tax normalization.