Dive Brief:

• While many investor-owned utilities (IOUs) have announced ambitious plans to reduce or eliminate carbon emissions by 2050, these plans will only result in a 2.9% decrease in overall U.S. energy emissions even if they are fully realized, according to a new report from the U.S. Energy Information Administration (EIA).
• Most emissions reductions on track to take place will occur before 2025 as the bulk of the nation’s coal generation fleet retires, primarily on account of market forces and existing policies, according to the report. Voluntary emissions goals will result in slightly greater emissions reductions on account of increased nuclear power generation and decreased use of natural gas.
• To trigger greater reductions in emissions will require broader federal policies and the maturation of new generation technologies, according to David Young, program and area manager for the energy systems and climate analysis group at the Electric Power Research Institute (EPRI).

Dive Insight:

Voluntary emissions reduction goals among IOUs may have the potential to take a bite out of utilities’ own carbon contributions, but the impact will be relatively small on emissions as a whole, according to EIA's analysis.

The new report builds on previous research projecting current progress on carbon emissions by estimating the reductions associated with goals and plans publicly announced by IOUs in the U.S. Assuming the utilities achieve their goals as advertised, the report concludes their voluntary efforts will result in an additional 11.6% decrease in carbon emissions from the electric sector, compared to the current trajectory created by existing policies and market forces. However, this reduction only amounts to a 2.9% decrease in total U.S. emissions, according to EIA.

The corporate utility goals could trigger the retirement of an additional 10.7 GW of coal generating capacity, and would preserve a greater amount of nuclear generation that is likely to retire in the absence of these voluntary emissions goals, according to EIA. No additional nuclear is added, but this trade-off, the report said, is the source of most of the additional emissions savings in the utility goals scenario. Wind and solar generation increased only slightly under the goals scenario, and energy prices were projected to be higher by $0.06/kWh.

While the EIA analysis did not attempt to estimate how many utilities would achieve their carbon goals, the minimal difference between the two scenarios could mean that “one key take-away from this study is that market conditions seem very favorable for the utilities that have announced these goals to be able to achieve them,” EIA renewables analyst Richard Bowers said in a statement.

The report also did not include public power providers, and there’s still a fair number of U.S. utilities that haven’t set renewable energy goals, Young said. But what the report mainly seems to demonstrate, he said, is that the bulk of emissions reductions to take place in the electric sector were likely to happen even in the absence of utility emissions targets.

“My takeaway is yes, a lot of the actions utilities are taking are ones that may well of happened anyway, but I see that as in keeping with trying to minimize the cost to customers,” Young said.

EPRI’s work has long suggested that current technologies could get utilities 60-80% of the way to decarbonization without accruing significant costs, Young said. The trouble is what to do for the final 20% of emissions. Wind and solar, as shown by the EIA report, come with diminishing returns after a certain point, Young said, and dispatchable renewable resources remain significantly more costly than fossil fuels.

To make more significant cuts to energy emissions, Young said, will require the creation of federal policies targeting CO2 that cover more industrial sectors, allow for the maximum level of flexibility, and empower businesses to make the transition in the most cost effective way possible. Market design will also require attention, as will transmission and support for the development of new technologies.

“If you don’t make the technology possible,” Young said, “it will be extremely costly to meet these net zero targets.”