Tectonic shifts are rocking the power grid: Clean energy costs are plummeting as new businesses enter the power industry, shifting a historically monopolistic sector into a highly competitive age. The changing cost dynamics between fossil and renewable resources has caught Wall Street’s attention, prompting investors to support the clean electricity transition. After a decade of flat demand, transportation and building electrification will drive new growth. And climate change is making extreme weather more common, testing the resilience of critical infrastructure.
Policymakers face the difficult task of balancing three must-haves for the power sector: affordability, resilience, and environmental performance. It’s a tall order to get this right—and getting it wrong imperils the economy and decarbonization efforts.
Raising the stakes, electrification of transportation, buildings, and industry using a near-zero carbon electricity system is now the quickest and cheapest path to economy-wide deep decarbonization. These new sources of demand have the potential to lower costs for all consumers if done intelligently, or risk grid reliability if managed poorly.
Energy Innovation’s Power Sector Transformation team works with national, regional, and state policymakers to develop policies that will manage the grid’s transition to a lower-emissions, affordable resource mix.
Energy is a mammoth portion of the global economy and the world spends trillions every year on energy and the capital equipment that generates or consumes it. Most energy infrastructure lasts for decades, making it crucial to get energy policy right.
Well-designed and well-implemented energy policy can improve energy security and minimize emissions at no additional cost (or even net savings) to the economy. Done wrong, energy policy can waste billions of dollars and lock in dirty, inefficient systems for decades to come.
Our free and open-source Energy Policy Simulator computer model uses government data to estimate the environmental, economic, and human health impacts of hundreds of climate and energy policies. We have developed a United States version of the simulator and has partnered with a handful of international organizations and government agencies to develop models for Canada, China, India, Indonesia, Mexico, Poland, and Saudi Arabia, among others — with more to come. Together, these countries represent 55 percent of global emissions .
The EPS identifies policies to achieve policymakers’ goals and recommend the most effective policies, as well as evaluate the impacts of policy or program announcements.
California has proven vibrant economic growth and ambitious decarbonization efforts can happily co-exist. While driving emissions down to hit its 2020 decarbonization target four years early, the state’s economy outperformed most other major economies, growing from the world’s 10th largest economy in 2012 to 5th largest today. This example has inspired others, as has the state’s continued ambition, and Energy Innovation’s California climate policy program promotes lessons from the Golden State’s pioneering efforts while working to support success in the next phase of its decarbonization journey.
Looking forward, the state’s commitment to carbon neutrality by 2045 implies emission reductions will have to accelerate, more than doubling its rate of emissions reductions over the past decade. To assist policymakers in identifying the most important next steps in the evolution of the state’s climate strategy, we developed the California Energy Policy Simulator (EPS). The California EPS has identified several opportunities for stronger climate policy that will also bolster economic growth while delivering clean air and public health benefits.
As China’s urbanization rate grew from 20 percent to 60 percent in 40 years, 1 million people moved to its cities every week, and this trend is expected to continue in the coming decades. Considering that 70 percent of greenhouse gas emissions come from cities, how they are built in China today will strongly affect the world’s low carbon future.
The China Sustainability Policy program works to implement green development principles learned across decades’ of experiences in China and abroad into urban design. The principles and their step-by-step implementation guidelines were established in the book: “Emerald Cities: Planning for Smart and Green China.” Cities can be built green, healthy, and economically vibrant while solving pollution and livability challenges by following green development principles.
The ultimate goal of the China Sustainability Policy program is to transform urban planning and design regulation systems to change the development pattern of all cities. Our team develops large-scale training programs and carefully selected demonstration projects to enhance the technical capacity and provide real-world best practices to the field.
Industrial sector decarbonization is critical to achieving a livable climate future. Activities such as manufacturing and construction generate roughly a third of global greenhouse gases when including emissions from purchased electricity and heat – more than any other economic sector. Even without indirect emissions, industrial processes contribute one fifth of global emissions.
Our industrial sector decarbonization work focuses on promising technologies and well-designed policy that enable a global net zero industrial sector by 2050-2070. Three industries – iron and steel, chemicals and plastics, and cement – produce roughly 55 percent of industrial emissions, and the top ten industries generate roughly 90 percent of industrial emissions, so focusing on these industries drives outsized results.
Energy Innovation provides best-in-class advice to policymakers, regulators, and industry on the most efficient and cost-effective industrial sector decarbonization technologies and policies to accelerate deployment and reduce industrial emissions to zero. We also seek recommendations compatible with human and economic development goals, which is crucial for adoption.
Electrification – replacing technologies and systems that run on fossil fuels with alternatives like electric vehicles, heat pumps, and induction stoves that run on clean electricity – is a proven way to reduce pollution and decarbonize the economy. Since the technologies already exist to run our grid on clean energy, “electrifying everything” can secure deep economywide emissions reductions. This transition must start today because every new fossil-fueled car, building appliance, and industrial machine locks in emissions for decades. Integrating widespread electrification into grid planning and operations can also boost power system reliability and optimize the full benefits of cleaner technologies.
Energy Innovation provides original research and analysis to policymakers and regulators to support the rapid, equitable, and affordable electrification of transportation, buildings, and industry. Our research has gained early traction in California, which is setting policies now that will be the benchmark for ambitious electrification and will provide a leading example for other states, federal policymakers, and internationally. Our podcast Electrify This! features electrification experts around the world who are accelerating the transition to 100 percent clean electricity and explores the legislative, regulatory, and market issues surrounding electrification.