A new report casts doubt on whether the electricity sector globally can meet the decarbonization goals of the Paris Agreement on climate change by 2060 and outlines the factors that could aide or set back those efforts.
"Even under the most optimistic scenario, in which all new capacity is met with renewables and fossil fuel plant retirements continue at recent rates, the industry will barely meet the 2060 target," said the report by the University of Virginia Darden School of Business.
Some scientists have projected that achieving the Paris accord's goal of limiting global warming to 2 degrees C from pre-industrial levels would require cutting another 800 gigatons of carbon dioxide emissions by 2060, which would effectively require decarbonizing nearly all global economic activity, the report said. The document also cited findings by the Intergovernmental Panel on Climate Change that the share of zero-carbon emissions generation would also need to increase from the current level of 30% to more than 80% by 2050.
Publicly traded electric companies are coming under increasing pressure from investors to ensure they are maneuvering to remain competitive as cultural expectations for the companies evolve and markets transition to a lower-carbon economy. Many of the utilities that have issued climate reports say they are moving to reduce emissions and add renewables but that they also plan to continue to use natural-gas fired and nuclear generation to maintain grid reliability. Some energy companies more broadly in their climate reports often cite the difficulties in trying to predict the direction of governmental policies or technological breakthroughs.
President Donald Trump has pledged to pull the U.S. from the Paris agreement and his administration has made moves to roll back environmental regulations and promote more fossil fuel development.
Michael Lenox, co-author of the report, agreed that predicting what could happen 40 years out is impossible, but the report attempts to measure the ability of some technologies, such as renewable power, to continue to be a disruptive force.
The transition to zero emissions "could be influenced by a lot of things," Lenox said in a May 30 interview. "It's hard to see us making the 2060 zero emission goal with the current trajectories, but the possibility still remains."
According to the report, one of the major hurdles to decarbonizing the global power system is upgrading power grids to accommodate new technology and clean energy.
"Wind and solar are growing at a rapid pace but will hit a market penetration ceiling if issues around intermittency and distributed generation are not addressed," the report said. And electricity storage technologies can only go so far in filling in the gaps in transmission capabilities. "Even with cost-effective storage, the grid itself needs to be nimble and flexible to handle distributed distribution on a massive scale," the report said.
Several promising technologies are emerging although the report suggested more progress at a faster pace will be needed. Some of the technologies cited by the report include systems that allow two-way communication, standardized smart grid products to ensure they can work together, and data analytics and artificial intelligence.
The report added that the pace of change will also depend on whether natural gas prices remain low, government interventions and the adoption of emissions trading regimes.
As for renewables growth, the report said the trajectory of solar and wind suggests they could become the dominant low-cost technology in the near future. "Yet with countries like China and India still building coal plants to keep up with rising demand in consumption, and with natural gas generating capacity continuing to grow due to low pricing, decarbonization will take time," the report said.
The report predicted that hydropower and nuclear energy will play supporting roles but face challenges as facilities age. Small-scale generation solutions in hydropower and nuclear energy hold promise, but are still far from widespread commercialization, it said.
Natural gas will continue to be a vital part of the new generation mix but have difficulty competing longer term with renewables given falling capital and installation costs for wind and solar, even under a low-price gas scenario. the report said. It added that without incentives to defray the additional costs of carbon capture and storage technologies, coal will not be able to compete with natural gas or renewables in the new clean energy economy.
To get to the goals of the Paris agreement, owners of coal and natural gas power plants must also be "willing to walk away from these assets even before planned retirement," the report stated.
