LCRI Net-Zero 2050: U.S. Economy-Wide Deep Decarbonization Scenario Analysis
Conclusions
Achieving economy-wide net-zero CO2 emissions while maintaining reliable delivery of energy and energy services across the economy will require a broad set of low-carbon technologies. These include energy supply technologies: renewable energy, nuclear, carbon capture and storage, bioenergy, and hydrogen and hydrogen-derived fuels; and energy demand technologies: efficiency improvements in all sectors, electrification, and fuel-switching to alternative non-electric energy carriers (i.e., low-carbon fuels). Consistent with previous research, this study shows that clean electricity plus direct electrification and efficiency are cost-effective strategies in many sectors for near-term decarbonization efforts and can drive significant emissions reductions. Some elements of these strategies can be cost-effective even without decarbonization incentives. However, they are not sufficient by themselves to achieve net-zero economy-wide emissions. A broad portfolio of options that includes low-carbon fuels and carbon removal technologies will be required to achieve deep decarbonization across all sectors.
Decarbonizing electric generation entails increased shares of intermittent renewables combined with clean firm capacity. Balancing resources to integrate renewables in a net-zero electricity system could include natural gas (conventional or renewable, with or without carbon capture), solid biomass with or without carbon capture, hydro and geothermal in some regions, nuclear, hydrogen, and a range of electricity storage technologies. The optimal mix of renewables and clean firm resources will vary by region and will depend on interactions with decarbonization options outside the electric sector. Existing nuclear capacity remains valuable in any decarbonization scenario. New advanced nuclear technologies, such as small modular reactors, could become cost competitive versus gas with CCS as a low-carbon baseload option with technological innovation and/or limitations on CCS. Electric transmission and distribution (T&D) infrastructure must be expanded and modernized to support electrification, including vehicle charging, integration of renewables and flexible demand-side resources, and enhanced reliability and resilience during the energy system transition. These investments are needed in all scenarios—even those without an explicit carbon target but are accelerated in net-zero scenarios.
In all scenarios, regardless of the extent of fossil gas use, gas infrastructure plays a crucial role in providing firm capacity in the power sector (including in the near term as coal capacity is retired) and delivering low-carbon fuel to buildings and industry, particularly in colder climates. Natural gas could continue to play a large role in a net-zero energy system if CCS is available, both by enabling the use of gas with carbon capture and by allowing limited gas use via CDR offset where capture is not possible. Without CCS, renewable and synthetic natural gas can substitute for fossil supply as the emissions target approaches zero. Pipeline gas infrastructure capacity must be maintained and modernized to support the reliable delivery of gas for peak energy needs, as well as the use low-carbon fuels in the gas system. Reduced methane emissions rates from gas production and distribution will be essential to minimize the greenhouse gas impacts of the system.
CCS technologies are pivotal in determining technology pathways to deep decarbonization. Natural gas with CCS is a cost-effective clean firm capacity option for electric generation, as well as hydrogen and ammonia production. Combining bioenergy with CCS, particularly in the production of liquid fuels, provides a cost-effective pathway to remove CO2 from the atmosphere. In addition to bioenergy with CCS, direct air capture and storage and augmentation of natural carbon sinks also provide pathways for atmospheric carbon dioxide removal (CDR). The ability to introduce negative CO2 flows via CDR in some portions of the energy system enables the continued positive flow of emissions (i.e., continued use of unabated fossil fuels) in applications with high relative costs of direct abatement. Scenarios that include CDR technologies leverage this flexibility to achieve net-zero emissions at lower costs. If CCS is unavailable, a very different and more costly mix of energy technologies emerges to achieve a net-zero target, with very little remaining fossil energy.
Advanced cellulosic biofuels, particularly when combined with CCS, can provide both low-carbon alternatives to petroleum-based fuels as well as CDR to offset other positive emissions sources. Agriculture and forestry residues, in addition to energy crops, are most effectively leveraged as feedstocks to “drop-in” equivalents of current liquid hydrocarbon fuels but can also be converted to power or renewable natural gas or hydrogen. Bioenergy is a potentially key decarbonization technology; a complete analysis of the trade-offs needs to characterize its impacts on land, air, and water.
Hydrogen can play a role in a net-zero system as a low-carbon fuel, whether in fuel cell vehicles, blending with the natural gas supply, or direct use for process heating in industry. Hydrogen’s role is significantly expanded if CCS and CDR are limited, which places a higher premium on low-carbon end-use fuels. In such a scenario, electrolysis is a potentially large source of (flexible) electricity demand, driving significant increases in generation, particularly from renewables. Synthesis of net-zero fuels from (typically electrolytic) hydrogen and biogenic carbon is a relatively expensive alternative to bio-fuels and conventional fuels with carbon offsets, but the value of “e-fuels” emerges when CCS and bioenergy are limited. Similarly, ammonia from hydrogen as a fuel pathway is deployed only in scenarios with very limited options available.
Opportunities and costs of emissions reductions and low-carbon technology deployment vary significantly across the electric power, other energy sectors, and end-use sectors. Regional differences in resource availability, climate, and economic structure can also lead to significant differences in the optimal low-carbon technology mix. An economy-wide net-zero target with flexibility to allocate positive and negative emissions allows each sector and region to follow its own decarbonization path while minimizing overall costs. There are many potential low-carbon technology pathways, with significant uncertainty around future cost and performance. Continued RD&D is essential to expand available options. The total system costs of achieving net-zero depend on costs and availability of key technologies, as well as the flexibility of policy design. While the net-zero scenarios entail increased delivered fuel prices, projected structural changes in the economy leading to declining energy intensity combined with energy efficiency and electrification trends will potentially mitigate the economic impact on households of higher prices for decarbonized energy. Nonetheless, affordability and equity will be significant challenges for achieving economy-wide decarbonization goals.
This analysis has described a range of possible strategies for achieving economy-wide net-zero CO2 emissions in the US. Although many aspects of the relevant technologies and trends are uncertain, the analysis focuses on the implications of alternative assumptions about the role of bioenergy, CCS, and negative emissions. At one end of the range, a fully flexible interpretation of a net-zero target implies broad use of natural gas, bioenergy, CCS, and negative emissions to achieve the target at minimal incremental cost. This scenario leans on the large resource base in the U.S. of natural gas, geologic storage capacity, and renewable and bioenergy production potential, allowing supply-side changes to drive emissions reductions. Changes in energy consumption by end-users are driven primarily by efficiency, electrification, and other fuel-switching opportunities that provide value even apart from facilitating emissions reductions. This pathway entails major changes throughout the energy system relative to today, but it minimizes incremental costs by avoiding more costly substitutions. By contrast, at the other end of the range, the Limited Options scenario describes a pathway to net-zero that shifts almost entirely away from fossil fuels, resulting in more a significant transformation of the energy system (particularly with respect to the roles of hydrogen and electrolysis), at a considerable cost relative to the more flexible solution. Both scenarios achieve the same target with respect to greenhouse gases by 2050, but they have different implications for the transition path and illustrate different challenges and opportunities.
This analysis tells an incomplete story of decarbonization pathways in several respects. Future research will address questions related to impacts of these and other scenarios on criteria pollutants and air quality; water and land use; operational reliability and resilience to climate and other extremes; and distributional economic and environmental justice impacts on households and communities. This study has provided a framework for integrated assessment of low-carbon technology development pathways to support the transition to a sustainable, reliable, and affordable energy economy.