The Cost of an 80% Reduction in Emissions – 9/13/16

A recent working paper by Geoffrey Heal, published with the National Bureau of Economic Research, asks what would it take to cut U.S. greenhouse gas emissions to 80% below their 2005 level by 2050 i.e. the goal the Obama administration submitted to the United Nations.

In summary, the paper suggests the following as a way of replacing the 66% of U.S. energy output from coal and gas used in electricity generation: split the 66% into half-solar and half-wind generation, and then price out the panels and turbines; assume that the U.S. will need to boost its transmission grid by 25% at as much as $3 million a mile; and subtract the cost savings from never having to buy fuel again, as well as expected investment to upgrade the old infrastructure.

The biggest problem appears to be the intermittent nature of solar and wind power, a trillion dollar problem that is inspiring massive investment in battery technology. Heal acknowledges a lack of information on how much storage the country needs and how much it would cost, though he believes the cost will be lower than the $350 a kilowatt-hour standard currently set by Tesla’s PowerWall battery.

Battery prices are dropping as demand increases and the technology gets more advanced.

battery-costs-falling

Further drops are expected as more car companies invest in electric car manufacturing for which batteries make up a large portion of the cost.

In the end, the paper concludes that reaching the 80% cut in greenhouse gas emissions by 2050 would cost anywhere from $1.28 trillion to $5.28 trillion.

“So in the best case, we are on track,” Heal writes. “In the worst, we are scaling up the U.S.’s level of expenditure on new generating capacity by a factor of about four.”

Although many praise Heal’s approach, the paper is not without critics.

“I think he has made a major mistake in the numbers,” said Mark Z. Jacobson, a Stanford University professor of civil and environmental engineering. “When the mistake is corrected, the result encompasses our previous calculation results.”

Jacobson refers to the overall estimate in Heal’s paper, which accounts only for reductions from electricity generation, transmission, and storage, whereas Jacobson would include transportation, industry, and residential and commercial use resulting in much higher totals. For an economy-wide, 100% renewables, Jacobson central estimate is about $14.6 trillion.

Many questions have come up in response to the paper on the rate of efficiency increases, costs of not lowering emissions, effects of distributed generation, what would be the added costs from legal challenges, etc.

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