Written by Econintersect Guest
— this post authored by Nader Sobhani, Niskanem Center
During his campaign, President-elect Biden proposed to transform the energy sector and eliminate GHG emissions from the power sector by 2035. Doing so would excise 27 percent of U.S. GHG emissions and help decarbonize other sectors, like transportation, as they electrify. Such a rapid transition, however, raises concerns about the power sector of today.
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Even if coal is on a steady decline, natural gas is still a major energy source for the power sector – and it’s still growing. The political and economic challenges of that transition will be higher if it requires shutting down working gas plants. So with such an ambitious target, what is the future role of gas in the power sector?
A recent study by Georgia Tech’s Emily Grubert in Science Magazine asks just that question by surveying the existing fleet of natural gas power plants and estimating their useful lifetime. Unlike coal plants, which can be modified or upgraded to keep running well past the anticipated lifetime, gas generators have a relatively fixed lifespan. They are easier to replace than renew. As they are retired, they will either be replaced by new gas units or low-carbon alternatives. So under a rapid decarbonization of the power sector, what will ambitious emissions targets mean for the existing gas fleet?
Assuming that the typical lifespan is 50 years for steam-turbine based generators, and about 30 years for other generators the Grubert study finds that roughly 73 percent of fossil fuel generation capacity will have already reached its typical lifespan by 2035. That means only about 27 percent of current electricity generation capacity would have to be taken off-line early or retrofitted with carbon capture technology to meet the 2035 deadline. This strands about 15 percent (1,700 GW-years) fossil-fuel-fired capacity life, along with 20 percent (380,000 job-years) of direct power plant and fuel extraction jobs that existed in 2018.
Despite the U.S. being well-placed to reduce power sector emissions rapidly, the impact of stranded assets is certainly not benign. The figure below maps the location of fossil-fuel power plants that will become stranded assets under a 2035 decarbonization deadline, as well as the associated jobs.
Closing these assets before their useful lifespan can be extremely disruptive for communities that rely on these facilities for their livelihoods. Additionally, many of the power-plants that would be stranded by a 2035 deadline are in regulated electricity-markets, meaning that ratepayers would be responsible for these power plants’ unrecovered debts.Getting ahead of the game and understanding when and where these concerns may arise is a critical step to building a productive and competitive low-carbon economy.
A critical insight of this work is that the U.S. should not prioritize building any more natural gas facilities because they will almost certainly become stranded assets, and increase the low-carbon energy transition’s overall costs. A new study from UC Berkeley underpins this conclusion, demonstrating that it is feasible to reach 90 percent clean electricity by 2035 without building any new gas plants. We already have enough natural gas capacity to make up for reduced coal capacity in a decarbonized grid, and renewables can be significantly ramped up before running into reliability concerns. Meeting ambitious climate targets requires recognizing that we are more than half-way across the natural gas without CCS bridge, and ramping up our carbon-free electricity sources should be the main priority over the next decade.
This article appeared on NiskanenCenter.org 10 December 2020 and is reproduced here under a Creative Commons Attribution 4.0 International License.
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