Achieving ‘net zero’ emissions: how energy leaders plan to tackle climate change in the future

While the federal government has pledged more than US$360 billion in clean energy incentives under the Inflation Reduction Act, energy companies are already lining up investments. It’s a huge opportunity, and analysts predict it could help reduce greenhouse gas emissions in the United States by about 40% in 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 reaching net zero emissions by 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 around energy and climate with leaders from several major energy companies – including Shell USA and power utilities American Electric Power and Xcel Energy – as well as with leaders 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 optionin their view, 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 power and energy storage have declined rapidly during the last years. But reliance on these technologies has caused some network operators to worry that they cannot rely on the wind blowing or the sun shining at the right time – especially as more electric vehicles and other new users connect to the power grid.

Energy companies are understandably nervous about power grid outages – no one wants this to happen again blackouts in texas in the winter 2021. But some energy companies, even those with ambitious climate goals, profit generously traditional energy technologies and are investing heavily 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 massive deployment of other technologies, including advanced nuclear power and carbon capture and sequestration technologies that capture carbon dioxide, either before it is released or into the air, and then put it away in nature or pump it underground. 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 on 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 as well as 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. Appalachian mine waste could boost the domestic 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. The Midcontinent Independent System Operator, known as MISOwhich runs the power grid for the Upper Midwest and parts of the South, is a good example.

Among the large power system operators, MISO has a large and varied territory, which also extends into Canada, which can make management decisions more difficult. Federal Energy Regulatory Commission

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, as utilities from more distant (and less windy) states joined MISO, they challenged 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 fixed with “smart charging” – technologies that can recharge vehicles in times of excess electricity or even use electric cars to provide part of the network’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 don’t move a lot of money among 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.

Direction needed

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.

The conversation

Seth BlumsackProfessor of Energy and Environmental Economics and International Business, Penn State and Lara B. Fowler, Acting Chief Sustainability Officer, Penn State; Acting Director, Penn State Sustainability Institute; Teaching Professor, Penn State Law, Penn State

This article is republished from The conversation under Creative Commons license. Read it original article.

Comments are closed.