LCRI Net-Zero 2050: Sensitivity Analysis and Updated Scenarios
Conclusions
Achieving economy-wide net-zero goals requires deployment of low-carbon technologies across electric and non-electric sectors, including industry, fuels, buildings, and transportation. The potential for direct emissions reductions varies across sectors, and optimal strategies vary within each sector depending on technology costs and availability. In most net-zero scenarios, power sector emissions are near-zero by 2050, though some positive emissions can remain for infrequently used balancing resources. In the non-electric sectors, direct emissions reductions in net-zero scenarios span a broader range. In general, the buildings, industry, and fuels sectors achieve lower percentage reductions than the power and transportation sectors, reflecting their higher marginal abatement costs. Electrification and low-carbon fuels can substitute for conventional fuels to reduce emissions, but the marginal costs can rise steeply for some end-uses (such as space heating in cold climates and high-temperature industrial processes). Carbon dioxide (CO2) removal (CDR) from bioenergy with carbon capture and storage (CCS), direct air capture (DAC), and natural processes such as afforestation provide cost-effective options to offset emissions that would be the most expensive to reduce directly.
The least-cost resource mix for a reliable net-zero energy system varies depending on assumed technology development timeframes and costs. For example, the roles of nuclear and electrolysis are sensitive to both their own and other technology costs, and their importance is amplified when CCS is limited. The availability of low-cost bioenergy impacts both electrification and low-carbon fuel trade-offs, as well as carbon management options. For example, CO2 removal (CDR) via direct air capture and storage is only cost-effective in a scenario where limited bioenergy increases the costs and restricts the supply of CDR from biofuels with CCS.
Limited carbon market flexibility also leads to a less efficient (i.e. more costly) allocation of emissions reductions and less deployment of CDR options. This scenario illustrates the impact of individual sectors driving their direct emissions lower using low-carbon fuels such as renewable natural gas (RNG) and hydrogen. When either technology or market flexibility is limited, the costs of delivered energy incurred directly and indirectly by households are higher. These results reinforce the value of optionality to improve the affordability of net-zero pathways.
In all scenarios, final energy, or energy delivered to end-users, declines relative to current levels as efficiency gains from technological improvement and electrification more than offset service demand growth. In most scenarios, this translates to lower household energy expenditure on energy (inflation-adjusted) relative to today, although net-zero systems have higher costs than comparable reference cases. However, electricity use and electricity expenditures increase over time despite the overall decrease due to the rising share of electricity in the final energy mix.
Meeting growing electricity demand from data centers and other loads means accelerating technology development and deployment, relying on a portfolio of available resources to meet growing energy needs over the next decade. While higher data center load may imply an increase in new gas capacity and near-term emissions, in the longer run low-emitting resources are deployed to meet growing load across the economy (from data centers and other sources) under a net-zero target. New gas capacity remains an important firm resource for balancing variable renewables going forward, even as capacity factors decline with deeper decarbonization, and continues to play a role in net-zero systems with carbon management and low-carbon fuel flexibility.