LCRI Net-Zero 2050: U.S. Economy-Wide Deep Decarbonization Scenario Analysis

#Overview and Emissions

As shown in Figure 7, projected 2050 economy-wide CO₂ emissions in the Reference scenario are around 3.3 GtCO₂ or 33% below current emissions and around 45% below the 2005 benchmark. These reductions are primarily driven by electrification of on-road transportation, declining carbon intensity of electric generation, and efficiency improvements across the economy. While more significant changes are required to achieve net-zero emissions, the trends driving lower emissions in the Reference scenario are nonetheless important contributors to emissions reductions in the net-zero target scenarios as well.

The net-zero scenarios highlight changes to the evolution of the energy system relative to the Reference scenario that enable CO₂ emissions to reach the mid-century net-zero target cost-effectively. An important difference across the net-zero scenarios is the balance between positive and negative emissions, which reflects an economic trade-off between the marginal cost of direct mitigation and atmospheric removals. Figure 7 shows economy-wide flows of CO₂ broken out by fuel, including both emissions and captured carbon. While all three scenarios achieve the target, the All Options scenario entails around 1.1 GtCO₂ of positive emissions, offset by negative emissions primarily from bioenergy with CCS. This scenario also entails over 2 GtCO₂ of captured CO₂ from fossil (primarily gas) and bioenergy. In the Higher Fuel Cost scenario, where gas, bioenergy, and CO₂ storage are all more expensive, the positive-negative balance is smaller at around 800 MtCO₂, with around 50 MtCO₂ of negative emissions from direct air capture. In both cases, the remaining positive components reflect activities where the marginal cost of reducing or eliminating emissions is higher than that of atmospheric removals. In the Limited Options scenario, the potential for negative emissions is much lower, limited by construction to around 300 MtCO₂ from natural climate solutions. In this case, a net-zero target translates into something closer to an “absolute zero” or “zero fossil fuels” target.

One implication of an economy-wide net-zero target is that direct emissions can remain positive in each sector. Figure 8 shows direct CO₂ emissions by sector, separating the positive components (i.e., uncaptured emissions from fossil combustion) from the negative components. The allocation of positive emissions across sectors varies based on the cost of direct abatement via efficiency improvements, electrification, or switching to low-carbon non-electric fuels such as bioenergy or hydrogen. Because costs and opportunities of direct emissions reductions vary across sectors, the extent of positive emissions reductions also varies. For example, while the electric sector reduces positive emissions nearly completely in all scenarios, the buildings sector only reduces emissions by 46% (relative to the 2005 benchmark) in the Net-Zero All Options scenario, with negative emissions from other sectors making up the difference. In the Net-Zero Limited Options scenario where negative emissions technologies are restricted, positive across sectors are lower, with the buildings sector reducing direct emissions by 91% relative to 2005. Because most of the emissions sources that cannot be avoided (as represented in the modeling for this analysis) are industrial uses, that sector has the largest positive residual in the Net-Zero Limited Options case.

#Carbon Prices

For each net-zero scenario, the model calculates an economy-wide carbon price, which reflects the marginal cost of emissions reductions (or atmospheric removals) needed to achieve the net-zero target. This carbon price, shown in Figure 7, is an outcome of the optimization subject to the net-zero emissions constraint, not an input assumption. The Net-Zero All Options scenario has the lowest carbon price because it has the most options available for achieving the net-zero target. The 2050 carbon price, in this case, is around $165/tCO₂. In the Net-Zero Higher Fuel Cost, low-carbon energy from technologies using gas and bioenergy with CCS is more costly, which drives up the marginal cost of emissions reductions to around $260/tCO₂. Note that this price essentially coincides with the levelized cost of direct air capture in this scenario (which is also linked to the price of gas and electric inputs). In the Net-Zero Limited Options case, the carbon price in 2050 is much higher than the other two cases at around $1,200/tCO₂. This result reflects the steep cost curve associated with driving positive emissions to near-zero based on the high cost of substitution to alternative fuel pathways and end-use fuel-switching at the margin. Note that the marginal cost of the target rises sharply as it approaches zero in this case, implying carbon prices only reach these very high levels at the end of the time horizon.