US emissions have gradually
declined
over the last decades — thanks to the combined impacts of long-term trends in
population, economic growth, energy markets, energy efficiency, and the carbon
intensity of fuel choices; but the oil lobby is stronger than
ever
and shows no signs of backing down.
On the bright side, the Inflation Reduction
Act
— which turned one on Aug. 16 — has made decarbonization technologies cheaper
through a bevy of financial stimuli; but there are limits to what even the most
generous incentives can achieve. A recent BloombergNEF
report highlights how the
IRA is likely to impact the US’ energy transition, considering three scenarios:
-
Economic transition scenario (ETS): A baseline assessment only factoring
in cost-based technology changes (not policy). If the economy is the main
driver in decarbonization and no other major policy interventions are
implemented, we can expect a third of 2021 emissions by 2035, and half of
2021 emissions by 2050. Under this scenario, the US will not meet its
climate goals.
-
Policy scenario: This scenario factors in the impact of the IRA on the
US energy transition. There are similar emissions reductions by 2035 as the
ETS. By 2050, the IRA will have helped the US achieve 54 percent emissions
reductions over the 2021 baseline — still not rapid or deep enough to meet
the US’ Paris Agreement commitments.
-
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Net-zero scenario: In a Paris-aligned net-zero scenario, by 2035 US
emissions are two percent lower than the US’ Nationally Determined
Contributions. This scenario requires hard carbon caps in all sectors,
as well as a $29.6 trillion investment in the nation’s energy system now
through 2050.
The report concludes that “[for] ambitious federal policies to translate to a
sustained diversification away from fossil fuels, the hard work of building
supportive physical infrastructure, streamlining permitting, and regulating
reluctant parts of the economy remains. Without a concerted push on these
fronts, the US is unlikely to hit the targets that it has committed to under the
Paris Agreement.”
The report makes market assumptions to be expected in a warming world with a
growing population — such as increased A/C demand, increased demand for miles
traveled, decreased car
ownership,
increased GDP and its subsequent effects, increased demand for certain
metals,
and more. For the policy and net-zero scenarios, the report assumes that current
incentives in the IRA will continue into 2050.
As Tara Narayanan, a senior
analyst at BloombergNEF and lead author on the report, told Sustainable
Brands®: “These incentives actually do get us pretty far. It’s just that
it’s not far enough … Voluntary incentives can only take us so far. The IRA
really focuses on tax credits, which are essentially voluntary incentives; to
ensure we actually meet our decarbonization goals, we need mandates.”
Many key sectors — particularly, energy and heavy industry — are reluctant to
change; and tax credits aren’t likely to get them across the net-zero finish
line. However, Narayanan explained, the IRA does lay some pretty hefty
incentives for decarbonization solutions tailored for the inertial energy sector
— such as carbon capture and storage
(CCS)
and
hydrogen.
Despite massive investments — the Department of Energy, for example, just
invested $1.2 billion in two direct-air-capture
projects
— hydrogen and CCS are likely to only play a marginal role and not make major
cross-sectoral inroads without additional interventions.
“The things that can be accomplished with incentives are really around sectors
where you already see some transition happening,” Narayanan said. “In sectors
where the initial momentum [for decarbonization] has already begun, you’ll see a
lot more adoption from the sector.”
Transportation, for example, is transitioning rapidly — so, incentives will go a
long way in fueling further adoption. They won’t, however, be as effective in
building new industries or demand for low-carbon technologies that aren’t yet
financially
viable
— for example, in heavy industries such as
cement
and steel.
To compel these to decarbonize, the world needs to pick up some sticks. Policy
recommendations from the report include:
-
“Sticks” complementing IRA “carrots”
-
Flexible funding leveraged wisely to advance decarbonization goals
-
Buildout of energy infrastructure
-
Facilitating cross-sectoral adoption of carbon-capture technologies
Other sticks, Narayanan said, should include harmonized emissions standards,
phase-out of internal combustion
engines,
and efficiency mandates. These policy structures, she said, either force
companies to turn to existing technologies or develop new ones.
Other mechanisms, predominantly permitting reform and mandates, will play a key
role in reducing the non-economic barriers to decarbonization: It doesn’t matter
how cheap a solar project becomes if it can’t be easily integrated into the grid
— permitting and red tape are apparently preventing 10,000+ energy
projects
from connecting to the grid. Put together, these proposed projects — if
completed — would produce 1,500 times the US’ current energy production every
year.
Key to decarbonization will be making it easier for pipelines and electric wires
to quickly and safely connect to national infrastructure. Right now, that’s an
impossible ask; this will require agencies to be well staffed and policy to be
well defined and executed, Narayanan said.
The report doesn’t take into account currently underdeveloped technologies such
as
fusion.
In the meantime, however, carbon
capture
will likely play an outsized role in removing emissions from laggard industries,
as well as legacy emissions (Even if we stop emitting carbon now, we’ll still
need to drawdown carbon from the atmosphere to maintain safe global
temperatures).
Keeping the planet below 1.5ºC will require rapid scaling of current
technologies and development of new climate solutions that either don’t yet
exist or aren’t yet commercially available — as well as sweeping and innovative
policy interventions. All of these must be adopted as quickly and universally as
possible.
“It’s time for mandates in the form of emissions reduction, potentially phasing
out fossil fuel equipment,” Narayanan concluded, pointing to hard-to-abate
sectors such as heavy industry. “It’s also time to build infrastructure and
ensure that the process of infrastructure building does not get in the way of
supply-and-demand typologies.”
And with both the climate crisis and the 2024 election looming, there’s no
time like the present.
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Christian is a writer, photographer, filmmaker, and outdoor junkie obsessed with the intersectionality between people and planet. He partners with brands and organizations with social and environmental impact at their core, assisting them in telling stories that change the world.
Published Sep 19, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST