As the US government pledges more than US$360 billion in clean energy incentives under the Cut Inflation Act, energy companies are already waiting for investment. It’s a huge opportunity, and analysts predict it could help reduce US greenhouse gas emissions by about 40% over the decade.
But in conversations with energy industry leaders over the past few months, we’ve heard that financial incentives alone aren’t enough to meet the national goal of achieving net-zero emissions. here 2050.
Achieving net-zero emissions will require more pressure from regulators and investors and acceptance of technologies that are not generally seen as the best solutions to the climate crisis, some energy industry leaders believe.
“Net-zero”, with natural gas
In the spring of 2022, we hosted a series of conversations at Penn State University on energy and climate with executives from several major energy companies – including Shell USA and electric utilities American Electric Power and Xcel Energy – as well only with officials from the Department of Energy and other public sector agencies.
We asked them about the technologies they see the United States relying on to develop a net zero greenhouse gas energy system by 2050.
Their responses provide insight into how energy companies envision a net zero future that will require extraordinary changes in the way the world produces and manages energy.
We’ve heard a lot of agreement among energy leaders that getting to net-zero emissions isn’t about finding a future silver bullet. They point out that many effective technologies are available to reduce emissions and capture emissions that cannot be avoided. What is not an option, according to them, is to leave existing technologies in the rearview mirror.
They expect natural gas in particular to play a significant, if not growing, role in the US energy sector for many years to come.
Behind this view, energy leaders say, is their deep skepticism that renewable energy technologies alone can meet the country’s future energy demands at a reasonable cost.
The costs of wind and solar energy and energy storage have rapidly declined in recent years. But reliance on these technologies has some grid operators worried that they can’t rely on the wind or the sun shining at the right time, especially as more and more electric vehicles and other new users connect to the power grid.
Energy companies are rightly nervous about power grid outages — no one wants a repeat of Texas outages in the winter of 2021. But some energy companies, even those with ambitious climate goals, are also profiting big from the technologies. traditional energy sources and have large investments in fossil fuels. Some have resisted clean energy mandates.
In the view of many of these energy companies, a net zero energy transition is not necessarily a transition to renewable energy.
Instead, they see a net-zero energy transition requiring the massive deployment of other technologies, including advanced nuclear power and carbon capture and sequestration technologies that capture carbon dioxide either before it either released, either into the air and then stored in nature or pumped out. clandestinely. So far, however, attempts to deploy some of these technologies on a large scale have been met with high costs, public opposition and serious questions about their environmental impacts.
Think globally, act regionally
Another key takeaway from our roundtable discussions with energy leaders is that how clean energy is deployed and what net zero looks like will vary by region.
What sells in Appalachia, with its resource-based economy and manufacturing base, may not sell or even be effective in other areas. Heavy industries like steel require tremendous heat and chemical reactions that electricity simply cannot replace. The economic displacement resulting from the shift away from coal and natural gas production in these regions raises questions about who bears the burden and who benefits from the shift in energy sources.
Opportunities also vary by region. Waste from Appalachian mines could boost the national supply of materials essential to a cleaner energy grid. Some coastal regions, on the other hand, could boost decarbonization efforts through offshore wind.
On a regional scale, industry leaders said, it may be easier to identify common goals. A good example is the Midcontinent Independent System Operator, known as MISO, which operates the power grid in the upper Midwest and parts of the South.
When its coverage area was primarily in the upper Midwest, MISO could bring regional parties together with a shared vision of more opportunities for wind power development and greater electrical reliability. He was able to produce an efficient multi-state power grid plan to integrate renewable energy.
However, when utilities in more distant (and less windy) states joined MISO, they disputed these initiatives as not bringing benefits to their local networks. The challenges were not successful, but raised questions about the extent of cost and benefit sharing.
Wait for the right kind of pressure
Energy leaders also said companies weren’t keen on taking the risk that low-carbon energy projects would drive up costs or degrade grid reliability without some kind of financial or regulatory.
For example, tax credits for electric vehicles are great, but powering those vehicles could require a lot more carbon-free electricity, not to mention a major upgrade to the national transmission grid to displace that electricity. own.
This could be solved with “smart charging” – technologies that can charge vehicles during times of excess electricity or even use electric cars to meet some of the grid’s needs on hot days. However, utility regulators often dissuade companies from investing in power grid upgrades to meet these needs, for fear that customers will end up paying large bills or that the technologies won’t work as promised.
Energy companies also don’t seem to be feeling any major pressure from investors to move away from fossil fuels.
Despite all the talk of environmental, social and governance concerns that industry leaders need to prioritize – known as ESG – we heard during the roundtable that investors aren’t making much money from energy companies whose responses to ESG concerns are not satisfactory. With little pressure from investors, energy companies themselves have little good reason to take clean energy risks or push for regulatory changes.
These conversations have reinforced the need for increased leadership on climate issues from legislators, regulators, energy companies and shareholders.
If the energy industry is stuck with outdated regulations, we believe it is up to the public and forward-looking leaders in business, government and investors to push for change.
Seth Blumsack, Professor of Energy and Environmental Economics and International Affairs, Penn State and Lara B. Fowler, Acting Director, Penn State Sustainability Institute, Penn State
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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