US could reach 90% carbon-free by 2035, bolster economic recovery, UC Berkeley report finds

Source: By Kavya Balaraman, Utility Drive • Posted: Tuesday, June 9, 2020

  • The U.S. can deliver 90% of its electricity from carbon-free sources by 2035, according to a new report from the University of California, Berkeley, and experts say accelerating clean energy deployments could also play an important role in the country’s economic recovery.
  • Building out renewables to achieve this target will add more than 500,000 jobs per year as well as $1.7 trillion in investments into the economy, without raising customer bills, the report found.
  • The country is experiencing a cost-crossover, as clean energy resources become cheaper than continuing to run existing fossil fuel resources, Sonia Aggarwal, vice president at Energy Innovation and co-author of an accompanying report outlining policy measures to achieve the 2035 target, told Utility Dive. “I see it as an amazing opportunity for America to create a bunch of jobs to decarbonize our electricity sector, and do all of that without raising electric bills for customers at a time when budgets are awfully tight,” she said.

Dive Insight:

Unemployment data indicates that around 600,000 people working in clean energy lost their jobs in March and April alone, Bob Keefe, executive director of Environmental Entrepreneurs (E2), told Utility Dive. But “these aren’t jobs that have disappeared. These are jobs that are still there — we just need to get them back to work.”

After the 2008 recession, the U.S. invested around $90 billion in clean energy, resulting in around 100,000 projects across the country and putting thousands of construction workers back on the job, according to Keefe.

“History shows us that clean energy is the best way to restart our economy,” he said.

Most policy proposals for near-complete decarbonization target a 2050 deadline, according to the Berkeley report, but the falling costs of solar, wind and battery storage makes a 90% carbon-free grid by 2035 feasible.

Achieving that target will require retiring all coal plants by 2035 without building more fossil fuel plants, retaining existing hydropower and nuclear capacity, and reducing generation from natural gas plants to 10% of total annual electricity generation.

Within that mix, renewables and battery storage will provide 70% of annual generation, while hydropower and nuclear will provide another 20%. This portfolio will reduce wholesale electricity costs by about 10% by 2035, and avoid $1.2 trillion in environmental and health-related damages — including 85,000 premature deaths — through the middle of the century, the report’s authors say.

And as the U.S. faces the prospect of recovering from the economic turmoil caused by the COVID-19 pandemic, this scenario would support 500,000 more jobs per year compared to a business-as-usual scenario.

“Everybody’s asking what we can do to speed the recovery,” David Wooley, professor at the UC Berkeley Goldman School of Public Policy and co-author of the report, told Utility Dive. “And we think this strategy is very effective because of the large number of jobs it produces with no adverse impact on consumer costs, and very low costs in terms of government.”

The researchers undertook the study because they sensed that the rapidly declining costs of utility-scale renewables weren’t being captured in most plans, he said. What they found is “particularly in a slack labor market like we’re in now because of the crisis, this can have a really powerful effect on employment. It’s not the only thing you would do in regard to recovery, but it’s one thing you could do.”

The findings mirror arguments that a coalition of California energy groups — including Advanced Energy Economy, California Energy Storage Alliance and the Solar Energy Industries Association — made in a letter to state lawmakers and Gov. Gavin Newsom last week.

With policy support, the clean energy sector could restore over 100,000 jobs in California and unlock billions of dollars in private investments, the groups said. They urged decision-makers to create an inter-agency working group that could look at ways to promote this growth, including by accelerating the deployment of renewables and achieving California’s 2030 climate goals ahead of schedule.

“The clean energy economy was a huge reason for California’s success coming out of the 2008-09 recession. We did it before, we can do it again,” Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund’s (EDF) California energy program, told Utility Dive. EDF is a member of the coalition.

California has suffered more clean energy job losses than any other state by huge margin, he said, and putting the sector back to work can help stimulate the rest of the economy.

“Energy is such a foundational input to the economy that if you can stimulate that, you end up stimulating a lot of other things simultaneously,” Colvin added.

One way for the state to do that would be through its integrated resource planning proceeding, according to Colvin. In March, the California Public Utilities Commission approved a decision asking load-serving entities to craft plans around two greenhouse gas reduction targets for the electric sector — a 46 MMT target, and another for 38 MMT. Opting for the lower target is “an immediately obvious” measure to help accelerate clean energy deployments, he said.

There are, however, uncertainties around the ability to get to a 90% carbon-free electricity by 2035, especially because that goal is dependent on a set of policy changes, according to Wooley. Some of those changes are outlined in the accompanying paper from Energy Innovation.

A key action would be adopting a federal standard to reach 55% carbon-free electricity by 2025, 75% by 2030, 90% by 2035 and 100% by 2045, as well as extending investment and production tax credits for clean energy resources and tying them to battery storage as well. A federal standard will provide some investment certainty and market consistency to help build clean energy resources at the required scale, Aggarwal said.

The scenario’s reliance on federal policy changes is “a big if,” according to Wooley.

“[U]nder the current Congress, that seems pretty unlikely. But we’re not that far away from what potentially could be an important political change at the federal level,” he said.

Another policy measure involves utility and government-backed refinancing of retired coal equity and debt.

“There’s actually a lot of undepreciated balance on the remaining coal fleet that utilities have on their balance sheets,” Aggarwal said.