The US is likely to achieve two-thirds decarbonisation of its power sector by 2035, an important advance but outside the “extremely challenging” target of net zero set by President Joe Biden, according to research released today by research group Wood Mackenzie.
“Based on our understanding of technologies, market policies, the challenges of quickly building transmission lines, and the electrification of energy, we believe that 66% clean generation by 2035 is more than feasible,” wrote the authors of One Giant Leap: President Biden’s Vision for Repowering America.
To reach Biden’s net zero goal, wind and solar power – which currently account for about 10% of grid power supply – would have to become the largest generation sources by 2035, alongside massive expansion in carbon capture and zero-carbon hydrogen, according to the analysts, which note total US energy demand would also have to peak at the end of 2021 to balance this equation.
The whitepaper, a collaborative work between WoodMac seniors David Brown, Ram Chandrasekaran, Brian McIntosh, Ed Crooks, and Chris Seiple, noted that the US has one of the most ambitious power decarbonisation targets of any country and one of the most difficult to implement.
On one hand, policies proposed by Biden’s administration will accelerate zero-carbon supply through federal tax credits and funding to utilities that add clean generation faster than set rates. These incentives – if funded long-term by Congress – combined with the cost competitiveness of renewable technologies. This will make adding wind and solar relatively inexpensive.
“On the other hand, solutions that maintain reliability and resilience are both expensive and full of unknowns,” wrote the paper’s authors.
As renewables advance and with coal in retreat, a multi-day solution – some experts believe a multi-month – is needed in a net zero world, but major technology innovation will be required to provide it, according to WoodMac.
“The remaining natural gas-fired power plants will need to be fitted with carbon capture and storage, but the technology’s ability to deal with large-scale carbon emissions in the power sector needs to be proven,” the authors wrote.
Net zero will also require deployment of more high-voltage transmission lines along with more progress on advanced transmission technologies.
The report noted that proposals for climate -related spending in the US today fall far short of the $10trn WoodMac believes is necessary between 2021 and 2050 to achieve the administration’s objectives for cutting emissions.
There is a much larger amount of private capital looking to invest in decarbonisation, it added. By comparison, the US gross domestic product is roughly $22trn dollars.
The wide scope of investment opportunities means there are options available for investors with the full range of risk tolerance. On the lower end there is transmission for pension funds, while higher risk, higher return technologies such as energy storage and carbon removal can be financed by venture capital and private equity.
Making the changes required to put the economy on a path to net-zero is particularly challenging in the US because of the system of government, according to the paper.
“The separation of power and federalism put constraints on executive authority, and President Biden’s ability to make progress towards his climate objectives will be more limited than for his counterparts in many other countries,” wrote the authors.