It is the best of times and the worst of times for the climate in 2017.
On one hand, the chances for international climate action appear slimmer than ever. The world’s largest economy will soon be helmed by someone who rejects mainstream climate science and has promised to end domestic climate policies and exit international agreements. For a planet already behind the pace to limit global warming to 2°C this century, losing the initiative of a nation central to crafting the Paris climate accord would seem to be catastrophic.
But Donald Trump’s skepticism of renewable energy and promise of a coal resurgence belie the conditions on the ground. In fact, American renewable energy enters 2017 in its best market position ever — competitive with natural gas and cheaper than coal across swaths of the country. The persistently low price of natural gas, enabled by the fracking boom, has helped the U.S. reduce carbon pollution in recent years and decouple greenhouse gas emissions from economic growth.
Those auspicious market trends have led to a number of optimistic takes on energy in the Trump era, particularly when it comes to renewables. “Donald Trump can’t stop the energy revolution,” wrote Chris Bryant at Bloomberg Gadfly the day after the election. "The train to a global clean-energy future has already left the station," outgoing EPA Administrator Gina McCarthy said in late November. “The energy transition is real, and Mr. Trump is not going to stop it,” Justin Gillis wrote in the New York Times this week.
But while every indication is that renewables will continue growing throughout the Trump presidency, climate and energy researchers say the current economic trends are not enough to avert the most serious consequences of climate change. Serious policy and market reforms are still needed to enable the U.S. power sector to decarbonize at rates envisioned under the Paris accord, experts told Utility Dive, and progress on the federal level is unlikely during a Trump presidency.
Still, a number of proactive states are already devising innovative policies that could protect and expand zero-carbon resources throughout the Trump presidency — just in time for a big, unnoticed decarbonization opportunity in the next decade and beyond.
A tale of two nations?
At the dawn of the Trump presidency, it’s easy to think of the United States as a tale of two nations, both in politics and energy. Election maps depict a country with liberal coasts and a conservative heartland, and public opinions of climate change and fossil fuels largely track ideological labels, though renewables do enjoy broad support.
Recent research on U.S. carbon emissions and economic growth reflects a similar scenario — many states have begun to decoupled emissions from economic growth, while some of the most reliant on fossil fuels have not. A recent report from The Brookings Institution outlined state progress on decarbonization over the last decade and a half, revealing what appears to be a stark divide.
While state decarbonization rates also depend on economic factors, like the carbon intensity of industry, roughly two-thirds of decarbonization from 2005 to 2015 was related to fuel switching from coal to gas, according to the Brookings report.
Northeast states, the quickest to switch to gas, have cut emissions the most since 2000, said Devashree Saha, a Brookings senior analyst and report co-author. In addition to fuel switching, Southern states have also seen decoupling progress from sourcing electricity from nuclear energy.
“Places like Georgia and Tennessee have been able to support double-digit economic growth and emission reduction in large part by sourcing electricity from nuclear as well as natural gas,” Saha told Utility Dive.
But despite friendly power market economics, “in absolute terms, there is this very sharp divide between high carbon and low carbon America,” noted Mark Muro, a senior fellow and report co-author.
“There's a worry that it's an ineluctable state of affairs, that either for production or consumption reasons, we have two different Americas,” he said. “I think our work is trying to point out that if you look at it in terms of 20-year decoupling trends, those two Americas aren’t ineluctable.”
Even in the most carbon-intensive heartland states, Saha and Muro said that renewable energy is starting to catch on — particularly wind. And for good reason. According to recent numbers from Lazard, the average levelized cost of energy for wind in the U.S. is now competitive with natural gas combined cycle plants — and solar is not far behind.
The tenth annual version of the Lazard report, released last month, was the first time solar and wind were shown to be competitive with gas independent of subsidies — a crucial feature, given that gas plants typically set the prices in wholesale electricity markets. And while the numbers are averages, other research shows why many of the most conservative states are embracing renewables.
Another report dropped last month by the University of Texas-Austin analyzed the LCOE for different energy resources in every county of the U.S. While natural gas still wins out over large portions of the South and Midwest, wind is cheapest throughout the heartland, and solar is the most competitive in parts of the desert Southwest.
The upshot of all the numbers is that utilities and developers in large swaths of the nation need little ideological or policy incentive to build or contract for renewable energy resources — they’ll simply do it for the cost and ability to hedge against natural gas prices.
"Whether it is a power purchase agreement or a utility-owned wind project, [renewables] will have a much more stable and predictable cost of energy than fuels like natural gas that have been more volatile in price,” David Eaves, president of Xcel Colorado, told Utility Dive last year.
'Don't have time to [mess] around'
Taking all the trends together, it’s easy to see why many clean energy supporters are not in total despair at the dawn of the Trump era. While the federal landscape remains deeply uncertain, fuel switching and renewable energy cost declines are “underway regardless of the federal policies and won’t be easily reversed," Muro said.
But the Brookings analysts and others stressed that these auspicious trends are not nearly enough to uphold U.S. climate commitments under the Paris protocol.
“Our last chart suggests that while we're in the midst of major, relatively easy decarbonization, we're not making the kind of benchmarks we need to as a nation,” Muro said.
While most of that “easy decarbonization” comes from the natural gas boom, researchers caution that building too much gas infrastructure today could put the goals under the Paris Climate Accord out of reach. The agreement roughly translates to an 80% economy-wide decarbonization by 2050 for developed nations, and while the power sector is only part of that equation, cleaning up electricity generation is expected to be crucial to cutting emissions from transportation and industry.
The issue is that companies deploying fossil fuel infrastructure today expect it to be around for decades — well into the timeframe when scientists say deep decarbonization is most necessary. Writing in the journal Applied Energy last year, Oxford researchers said the U.S. has likely already depleted its “2°C capital stock” for electricity generation.
“[F]or a 50% probability of limiting warming to 2°C, assuming other sectors play their part, no new investment in fossil electricity infrastructure (without carbon capture) is feasible from 2017 at the latest, unless energy policy leads to early stranding of polluting assets or large scale carbon capture deployment,” they wrote.
And even if the world’s economies stopped deploying fossil fuel assets today, some still see cause for concern. David Archer, a climate scientist at University of Chicago, noted that CO2 in the atmosphere is rising faster than the planet can keep up — a concept known as “committed warming.”
“This energy imbalance means even if CO2 stayed where it is today … the temperature would continue to rise for a long time because it takes a long time to warm the deep ocean especially,” he said. “So we're already over the danger line and we don't have time to [mess] around.”
These deep decarbonization issues would still exist had Democrat Hillary Clinton won the White House. Her climate plans, while ambitious, were likely not enough to align the U.S. with Paris goals. But even with federal action very likely off the table for Trump's administration, some researchers see an opportunity for deep decarbonization just over the horizon.
The natural gas switchover
When most in the power sector think of the natural gas boom, they think of the production increase enabled by the advancement of fracking and horizontal drilling technologies.
But Alex Gilbert, an energy analyst and co-founder of SparkLibrary, points to an earlier boom in gas generation. From 2000 to 2005, he said, the U.S. added over 155 GW of natural gas combined cycle capacity and about 77 GW of gas combustion turbines.
That expansion of the natural gas fleet has helped drive coal-to-gas shifting in the power sector today, Gilbert said, “because a lot of those facilities just had open capacity.” But in the future, as those plants start to retire, it could open a massive new opportunity for renewables deployment and decarbonization.
Unlike traditional coal plants, whose heavy capital investments require 20-30 years of operation to pay off, Gilbert noted that modern natural gas turbines are cheaper, allowing a shorter depreciation timeframe.
“The stranded asset idea — that's not really an issue with natural gas power infrastructure because the plants are so cheap to build,” he said.
Beginning in the mid-2020s, Gilbert expects many of these plants will find themselves uneconomic in regional wholesale markets, just as aging coal and nuclear plants do today.
“Because we have such a massive amount of natural gas combined cycle that was built 2000-2005, that almost guarantees a very high level of retirements over a very rapid period,” he said.
That generation of natural gas plants could fall victim to the growing efficiency of the fleet, Gilbert said. Utilities are expected to continue adding new natural gas plants through 2020, and these new gas plants are significantly more efficient than ones built a decade ago.
“What will happen is that most of the plants that were built between 2000 and 2005 are going to be around maybe 50% efficiency and the newer ones are around 60%,” Gilbert said. “So when they’re in the markets, as long as there isn't other stuff going on, these least efficient units will be the least economic compared to the rest of the gas fleet.”
Depending on the natural gas price and how many coal plants persist in regional markets, Gilbert expects that the older gas plants may become some of the least economic units in the country by the late 2020s. And because natural gas plants are relatively cheap, “it's easier to just retire them” and find replacement capacity, rather than modify existing plants.
That coming natural gas switchover would seem to create a huge opportunity for zero-carbon resources to not just supplement the existing generation fleet, but actively replace significant fossil fuel capacity.
The problem is that gas and renewables are more compliments than competitors in the power system today. Fast-acting gas generators help supplement renewables that only provide power intermittently. To be a viable replacement, renewables would need to be paired with energy storage or new zero-carbon generation would need to be developed.
Whether that happens will depend as much on policy as current technological trends, researchers said, but some states and regional markets are leading the way.
States, wholesale markets at the forefront
Like Gilbert, MIT energy analyst Jesse Jenkins sees reason to be optimistic about decarbonization progress, even at the dawn of the Trump presidency.
“2016 is maybe the first year where I’ve started to hear conversations outside academia about the long-term decarbonization challenge,” he said. “I've been working on climate policy for a long time … and there’s not been a lot of focus on that long-term goal until recently and you’ve got conversations at the White House and state Houses on how we go the distance for zero carbon.”
While those discussions are likely to dry up at the federal level, Jenkins and others expect that “the states are going to keep driving.” Already, some are making strides on long-term decarbonization goals, as well as protecting existing zero-carbon generation.
Last year, both New York and Illinois approved contentious nuclear support packages aimed at preserving at-risk plants there, and California regulators are reviewing a plan from Pacific Gas & Electric to replace the Diablo Canyon nuclear plant with zero-carbon resources. Ensuring the preservation and/or orderly retirement of aging nuclear plants will be crucial for states to prevent backsliding on emissions during the Trump era, the researchers said.
But moving forward, the need in electricity markets is for “low-carbon and ideally dispatchable resources that can complement our renewable resources,” Jenkins said.
That currently poses a problem for wind and solar. While the Lazard numbers show them to be competitive on their own, the firm’s parallel study of energy storage showed that battery technologies still have a way to go to challenge traditional dispatchable generation.
But that’s nothing the right market structure cannot fix, at least in theory. One state proposal offers hope: A plan from the Arizona consumer advocate filed in the state’s RPS proceeding last month seeks to mandate that a certain amount of renewable energy be delivered to the grid during peak demand hours, which in Arizona come in the evening.
Since wind and solar do not tend to generate during those times, energy storage would likely be needed to shift the zero-carbon generation to peak hours. Compared with the LCOE of a combined cycle plant, the dispatchable renewables would not be economic. But Lon Huber, a consultant who authored the proposal, says they can compete against combustion turbines used to meet peak demand.
“Utility-scale solar PPAs in Arizona have been as low as $0.0375/kWh recently,” Huber told Utility Dive last month. “The [latest models of] natural gas combustion turbines that would be purchased to provide capacity have a levelized cost of energy of $0.194/kWh and run 20% of the year, according to the 2014 Tucson Electric Power IRP.”
A recent PPA for a Kauai Island Utility Cooperative solar-plus-storage project was $0.145/kWh, Huber pointed out. That shows that even in Hawaii, a place notorious for its poor business climate, dispatchable renewables can compete with fossil fuel peakers.
Proposals like the Clean Peak Standard would not allow renewables to displace gas right away, but could build valuable experience for the sector, allowing further price declines and greater utility familiarity with new technologies. And Arizona is far from alone. States like New York and California are making strides on integrating energy storage and distributed resources into utility planning processes, Hawaii is steaming toward a 100% renewable energy mandate, and the Aliso Canyon natural gas shortage outside Los Angeles has helped utilities demonstrate that bulk energy storage can replace peaker plant capacity.
Moving forward, Gilbert expects recent moves from FERC and regional markets to integrate energy storage to be especially important.
“One of the biggest things we could do right now is figure out how to integrate energy storage into wholesale and retail operations across the country,” he said. “There are still a lot of states where you can’t even use storage.”
That could soon change. A recent rulemaking from FERC put ISOs on notice that they will soon need to provide mechanisms for energy storage in wholesale markets, something the California ISO has already done. That could be “the biggest thing for energy storage in years,” according to GTM Research’s Shayle Kann.
But even if storage and renewables mature at rates faster than anticipated, some researchers expect other emerging technologies will be needed as well.
“Whether we can reverse the atmospheric concentration or warming will depend on whether we can develop cost effective negative carbon technologies, carbon capture and storage and biomass, or even geoengineering to directly address warming,” Jenkins said. “Those are long-term research agendas that have been important regardless of what happened this November.”
They also could be the initiatives at greatest risk under Trump. Advanced nuclear and CCS in particular have been big beneficiaries of Department of Energy loans, and how the Trump administration will handle those programs remains unclear. And if Trump or Congressional Republicans move to strike the carbon endangerment finding from the Clean Air Act, it could scuttle one of the final hopes for carbon capture technology.
In the face of that uncertainty, the prospects for decarbonization during the Trump era remain murky at best. To many, the climate scenario that emerges when Trump exits the oval office will depend on how clean energy and utility companies build political power throughout his tenure.
"We need to rebuild the consensus on energy in this country," Gilbert said. "At this point, I would hazard to guess that most people in electricity expect decarbonization to happen and they expect it to happen sooner rather than later, and a lot of the utility people now understand that's part of the public service they provide."
That consensus is "not as reflected as it could be" in policy discussions around the nation, but that could change if disparate groups are willing to come together for the climate, as in the Illinois nuclear bill.
"More than anything," Gilbert said, "the industry just needs political power, and I think that's one of the biggest takeaways from the election in general."