The Role of Technology Development in Managing the Costs and Deployment Challenges of Meeting a CO2 Emissions Reduction Target in the United States
This study, performed for the National Commission on Energy Policy, explores the future evolution of the U.S. energy system under a representative climate policy implemented between 2012 and 2050, designed to limit U.S. CO2 emissions to 70% of 2005 levels by 2050. The policy consists of annual emissions caps on CO2 emissions that decrease on a linear path between 2012 and 2050. Six different technology futures are presented, differing in availability, improvement, and deployment of advanced technologies in energy transformation sectors (electricity and liquid fuel refining) and energy end-use sectors (buildings, industry, and transportation). Specifically, technological improvement is focused on carbon dioxide capture and storage (CCS), nuclear energy, renewable energy and bioenergy, and end-use energy efficiency. Costs of meeting the emissions constraints are reduced by 75% by having all technology areas advanced, as compared with a reference scenario with modest technological improvement, no expansion of nuclear power, and no CCS option. Also analyzed are the implications of the different technology futures for the structure of the nation’s energy system. The different technology scenarios do not differ dramatically in 2020, due to the relatively modest near-term reductions required by the policy, and due to the long-lived nature of capital, particularly in the energy transformation sectors. However, by 2050 the scenarios describe dramatically different futures, particularly in the fuel blends consumed by the electricity and liquid fuel refining sectors, and in the types of vehicles used for passenger transportation. Allowing intertemporal flexibility of the emissions path (i.e. banking or borrowing) can also reduce policy costs, but these cost savings are likely an order of magnitude less than the savings afforded by advanced technology. The results support a hedged portfolio approach to climate change technology development, but technologies allowing for electrification of end-use energy demands appear especially important, as do technologies allowing for zero or net-negative CO2 emissions in energy transformation.