these net new investments could help avoid the even more costly consequences of delayed action and reduce ongoing fuel costs, resulting in a system that could be less expensive to operate in the long term. Spending on the energy transition, coupled with the significant grid investment needed for reliability and resilience under any scenario, could increase the cost of the energy system for households and businesses in the coming decades. If these cost increases aren’t carefully managed and mitigated to the extent possible, they could hamper economic activity and create customer backlash. This, in turn, would delay needed action and result in a less orderly energy transition. Businesses and policy makers will thus need to target capital expenses to mitigate the affordability challenges that customers will face. (For more detailed context, see sidebar “Investments and affordability.”) KEY PRIORITIES To enable a capital-efficient system, business leaders and policy makers need to consider three key priorities now: planning investments for long- term decarbonization, deploying capital more cost- effectively, and empowering and educating customers to manage rising costs.
Modeled scenarios underlying our analyses
For the purpose of this article, a more orderly transition pathway has been modeled as a scenario in which the United States achieves its stated commitments of a 50 to 52 percent reduction (from 2005 levels) in economy-wide greenhouse-gas (GHG) emissions by 2030 and 100 percent carbon-free electricity by 2035. We call this the “Achieved Commitments” scenario. It is modeled to align with a global pathway that limits warming to about 1.7°C, which can still result in severe climate change impacts. Further action will be required to go beyond commitments and hold warming below 1.5°C. We contrast the Achieved Commitments scenario with two other scenarios: 1. The Current Trajectory scenario, in which the current path of technology cost decline continues, though active policies remain insufficient to close the gap required to meet policy objectives. The Current Trajectory scenario is modeled to align with a global pathway that reaches 2.4°C of global warming. 2. A Delayed Trajectory scenario, in which the United States continues on the Current Trajectory until 2030 and then needs to “catch up” to achieve the same cumulative GHG emissions as the Achieved Commitments scenario by 2050. Under the Delayed Trajectory scenario, the United States must both accelerate deployment of clean technologies after 2030 and invest in abatement technologies such as direct air capture to negate earlier emissions.
1. Planning investments for long-term decarbon ization. Energy infrastructure is depreciated over long periods, potentially requiring
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customers to bear costs over many decades. The assets that go into the ground this year will affect costs and the system composition through the 2040s and ’50s. The exact makeup of a decarbonized power system is uncertain, so scenario planning will be helpful in identifying investments that could be valuable under a range of decarbonization scenarios and hence more judicious in the near term. By incorporating new asset types, utilities could identify and plan the right portfolio to deliver the energy transition at a lower cost. These include hydrogen-related assets; carbon capture, utilization, and storage assets; nuclear power; electric-vehicle-charging infrastructure; batteries; and long-duration energy storage.
ACTION AREA 1 Designing and deploying a capital- efficient and affordable system Meeting the US government’s 2030 emissions- reduction goals would require more than $500 billion in additional generation, transmission, and distribution infrastructure investments compared with the current trajectory of the US power system (Exhibit 2). That figure does not include so-called stranded investments: assets such as fossil fuel–intensive thermal plants that are retired early or are no longer used to the extent originally planned. However,
Accelerating the journey to net zero
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