Most of the focus on the upcoming presidential election has been around the handling of the coronavirus pandemic, choice of running mates and candidates’ reactions to protests centered around the BLM movement.
Not surprisingly, such issues attract the headlines and, of course, matter for society at large.
Policy has not taken center stage to the extent it has in previous campaigns. However, we should be aware that some policy ideas coming out of the Biden camp could have profound implications in the years ahead (if the polls are proved right and he enters the White House in January 2021).
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Net-zero emissions by 2035?
In a far-reaching policy initiative, the presidential hopeful would set the U.S. on the path of cutting net carbon emissions from the country’s electricity production to zero by 2035, according to the Financial Times.
Achieving that goal would mean all power comes from either one of two sources. On the one hand, power would come from clean energy sources such as nuclear, hydro, solar or wind. Aside from that, any carbon emitted by fossil fuels sources, such as coal or natural gas, is captured and stored (e.g., carbon sequestration).
As the post observes, that would be no mean feat in just 15 years.
Last year, 61% of U.S. electricity came from either coal or natural gas. Nuclear and renewables accounted for 37%.
Implications, changes Biden’s plan would bring
Such a policy would require a number of fundamental changes with far-reaching implications for industry and consumers.
Net-zero would require, on the one hand, a massive ramp-up in renewable capacity. While economically viable in terms of power costs, that is already facing opposition from groups opposing huge wind or solar farms.
On the other hand, to counter variability it would create huge opportunities for power storage, such as power banks and pump storage schemes. It would also require a dramatic upgrading of the U.S.’s aging power distribution network to handle distribution and fluctuating supply.
But most controversially it would require — for the moment, at least — the subsidy of carbon capture and sequestration technology. Despite numerous, largely government-sponsored trials around the world, it still remains stubbornly uneconomic at current carbon prices.
Even worse, most carbon dioxide so captured is used to recharge depleted oil wells for enhanced recovery. That application will decline as quickly as renewables rise to take its place in generating power for electrification of the automotive sector.
Cost, cost, cost
While we are not passing judgment on the desirability of such an ambitious target, we should not lose sight of the cost.
California has driven the green narrative in the U.S. in recent years.
The state has the most aggressive decarburization goals. California has also seen a dramatic increase in the cost of electricity. Electricity costs are rising five times faster in California than in the rest of the U.S.
Despite being an early adopter in the vanguard of renewables, California’s experience has been more costly than wider adoption across the country would prove in the future. The goal requires newer technology and a countrywide upgrading of transmission infrastructure. Realistically, it also requires zero-carbon assumes carbon capture and sequestration.
Unless there is a technological game-changer to reduce the cost and find a market for the 1.6 billion tons of carbon dioxide produced it’s hard to see how these costs won’t be passed on to consumers.
Undoubtedly, there will be tremendous opportunities for firms. With the development of new technologies that such ambitious targets will create, there will be winners and losers.
Let’s hope the former outweighs the latter.
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