Dive Brief:

• Some power providers are doubtful that President Joe Biden's plan to decarbonize the power sector by 2035 can be achieved, though they say reducing greenhouse gas emissions 80% by 2030 could be a relatively simple task as clean energy technologies spread.
• "I am skeptical of it, to be honest with you," Travis Kavulla, vice president of regulatory affairs at NRG Energy, said Wednesday in an online policy discussion hosted by Power Events. Kavulla, a former Montana regulator, said studies by E3 and Brattle conclude that 80% decarbonization is realistic, "after which the remaining 20% relies on technologies not widely commercially adopted and which end up hockey-sticking the cost of the policy."
• Investor-owned utilities have also questioned whether the Biden administration's goal is achievable. Xcel Energy CEO Ben Fowke called it a "stretch goal," and a December report from the Energy and Policy Institute found only a handful of utilities were on track to meet the 2035 target.

Dive Insight:

The Biden administration has many ways it can push for changes in energy and climate policy, but experts say there may be technical or financial limitations to wholly decarbonizing the electric sector within 15 years.

"There has been a slurry of legislative proposals and activity," Greg Matlock, a partner at Mayer Brown LLP, said during the webinar. He pointed to infrastructure negotiations and Biden's budget proposal. 

"The budget would reform taxation of fossil fuel income," Matlock said, repealing "a variety of deductions and tax credits, including the enhanced oil recovery credit," which is a credit for energy produced from marginal wells.

"The administration is looking at clean energy, and the revenue raisers for those are likely going to be fossil fuels," said Matlock. "There are a lot of changes potentially coming down the road."

The president's $1.52 trillion budget request for fiscal year 2022, sent to Congress in April, included billions of dollars in funding for clean energy. 

Negotiations between the White House and Senate on the president's infrastructure plan are ongoing. Biden's original proposal,  the American Jobs Plan, had included $174 billion for EV investments. House Democrats on Thursday passed a $715 billion infrastructure bill reauthorizing transportation programs that included some funding for electric vehicle infrastructure, but the bulk of the president's plan is still up in the air.   

Alex Dewar, senior director at BCG's Center for Energy Impact, said "what the Biden administration is attempting to do is potentially transformational." Along with eliminating economywide emissions by 2050, the plan calls for cutting the carbon footprint of buildings by 50% by 2035 and growing the domestic market for electric vehicles through installation of a half-million chargers. 

"Under any circumstance, we see significant impacts in the energy sector, in the real economy, from the measures being pursued by the administration," Dewar said during the Power webinar, "in particular, accelerated electrification," along with incentives for renewables and energy storage.

Regardless of how quickly the Biden administration moves on clean energy, however, experts say total decarbonization of the power sector will be a challenge. And moving too quickly, they warn, can have consequences.

"I'd also just say, the American power sector has seen tremendous reduction of carbon emissions in a very short period of time," said Kavulla. "The same cannot be said of the transportation sector. ... There comes a time when you need to stop expecting the electricity industry to be doing an outsized amount for decarbonization."

Focusing too much on decarbonizing the last 20% of the power sector immediately, Kavulla warned, also risks raising the cost of electricity and then disincentivizing electrification efforts. Dewar echoed those concerns and added that regional differences in power mixes further complicate the effort.

"Getting 80% of the way there is relatively straightforward and low cost, but the remaining 20% in power is incredibly challenging," Dewar said.

There are also questions about the possibility that Biden's infrastructure and jobs plan may include domestic manufacturing requirements for clean energy equipment. There is an inherent tension in this, said panelists, because in the near term, the United States simply doesn't have the supply chains in place and is still relying on China for manufacturing such equipment.

"I don't know whether there is going to be a comprehensive policy because, candidly, if you did impose those requirements, at least in the first several years you would in all likelihood delay significantly the uptake in renewable investments," said Kavulla. "That kind of manufacturing capacity simply does not exist in the United States today."

Primarily this affects solar panels and electric vehicle components like batteries. The United States has launched efforts to develop those supply chains, but experts say this will take years.

There can be "direct conflict" between the ambitions of scaling up deployment of new technology as rapidly as possible and domestic sourcing requirements, said Dewar. But the impacts of infrastructure spending on local labor forces, he said, could be significant.

"Mobilizing the scale of capital the administration is intending to mobilize ... really would reflect a broad expansion of jobs and especially the type of jobs they're targeted, in manufacturing and construction," said Dewar.