This proposed U.S. energy policy report provides an overview of the pressures that are catalyzing the need for bold short-term and long-term solutions regarding the transition and decarbonization of the country’s energy portfolio. This report assesses the primary challenges in these transition efforts, and highlights the critical needs required for developing effective solutions. Renewable and alternative energy analysis helped to determine which resource would provide the best solutions to each of these primary challenges. The report concludes with a summary of the unified proposed policy actions that would be required to enable the shift to a net zero emissions economy.

Author: Logan Callen

Introduction

The goal of this proposed U.S. energy policy report is to identify the policy actions that will be needed to enable short- and long-term solutions to decarbonize the country’s energy mix. There are several renewable and alternative energies that can provide solutions to the various challenges our country faces in the transition to decarbonize. However, no single energy resource can meet all the projected demand or solve all the additional issues and challenges alone. A blend of resources and actions will be required if effective progress is to be achieved. Each of these renewable and alternative energy resources is also at different stages of readiness for implementation, so bold short-term actions are needed that will utilize our current assets to their best value while transitioning to proven technologies quickly. Concurrently, it is necessary to remove barriers to longer term solutions and spur innovation in the emerging resource opportunities. Aggressive pursual of short-term transitions allow more time to develop the emerging technologies fully.

These actions and investments will need to not only focus on decarbonization but will also need to satisfy requirements for a safer, lower cost, equitable, reliable, and more resilient energy system. Electrification of all sources possible will be a key component. However, aging transmission infrastructure indicates the need for incentivizing and financing new solutions that will create resilience against the more extreme weather that is expected from climate change and the increase in electricity demand. The transmission system will need to be upgraded to provide more cost-effective and reliable service, utilizing a mix of centralized and decentralized energy resources. Ensuring reliability will also require implementation of baseload zero-carbon energy resources like geothermal and nuclear to offset the intermittent resources like wind and solar as well. Investing in energy storage in the form of renewable natural gas and renewable hydrogen will also be critical components of an effective solution for transportation, industrial uses, and peaking energy demand needs that are hard to achieve through electrification and battery storage alone.

A more reliable and resilient system will require energy resources that ensure health impacts and safety, including cybersecurity, are improved as well. Spurring investment in cleaner solutions, while removing subsidies for fossil fuels and implementing social costs of carbon, will not only speed up this transition to a lower carbon future, it will also move the country towards greater energy independence and provide options for more equitable cost distribution. Energy independence reduces the geopolitical risks that impact energy pricing, keeping it affordable, and enables new clean energy jobs within the country. These actions also provide the ability for the United States to model positive behaviors and regain global leadership in this area, spurring greater international collaboration and action. While the efforts required to make these transition goals are large, these goals are possible to achieve and they ensure a cleaner, safer, lower cost, equitable, reliable, and more resilient country and should be undertaken aggressively.

The Need for Change

Energy is a critical aspect of human life and the need for various forms of energy are intertwined into all aspects of human activity. The largest source of emissions in the U.S. stems from our need for mobility, with transportation representing 29% of our emission as seen in figure 1. Direct electricity needs make up the second highest source of emissions and much of the remaining emissions stem from industry and commercial and industrial buildings. Approximately 79% of that energy use comes directly from fossil fuel resources like coal, natural gas, and petroleum as seen in figure 2 (EIA 2021). These emissions are impacting our regional air quality as well as the entire planet as global warming begins to intensify.

Figure 1. Total U.S. Greenhouse Gas Emissions by Economic Sector in 2019

Source: (EIA 2021).

Figure 2. Total U.S. Greenhouse Gas Emissions by Economic Sector in 2019

Source: (EIA 2021).

Global warming and climate change are terms that are often interchanged but have different yet intertwined meanings. Global warming is specific to the rise in global temperatures, primarily due to increases of greenhouse gas (GHG) emissions in the atmosphere. However, climate change refers to various measures of climate over time like precipitation and wind in addition to the temperature impacts that global warming would bring (USGS n.d.). Based on the most comprehensive set of information available and research by the scientific community, man-made emissions are impacting global warming and subsequently climate change due to increases in temperature that create additional impacts to oceans, precipitation patterns, and ecosystems. To limit global warming to a 1.5°C above pre-industrial levels, emissions of carbon dioxide would need to reach net zero around 2050 (IPCC 2018).

The need to decarbonize the country’s energy needs is becoming an increasingly important element to reduce the effects of global warming and climate change. Shifting to renewable resources cannot happen overnight and will require short- and long-term transition solutions to make this big pivot. The U.S. is currently lagging in the move to invest in a renewable and energy independent future. Investigating the challenges to this transition can help illuminate the unified policy actions that are required to solve these complex issues.

Transition Challenges

The United States’ reliance on fossil fuels has enabled the industrial revolution, but also created complex issues around geopolitics and environmental concerns (Council on Foreign Relations 2021). In the late 1900s, fossil fuel reserves were in steady decline until directional drilling and hydraulic fracturing led to massive increases in proven reserves and extraction (EIA 2021). These increases have led to the U.S. having the world’s largest recoverable oil reserve base (Nysveen 2016). However, the U.S. continues to be a net importer of petroleum products leaving it at risk from geopolitical issues (EIA 2021). This reliance on fossil fuel represents one of the largest challenges to decarbonization.

Fossil Fuel Infrastructure and Reserves

The U.S. is currently working on transitioning to renewable energy sources to reduce carbon emissions that contribute to climate change. However, the speed of transition has not been adequate to achieve net zero emissions by 2050. Around 18 million barrels per day of petroleum products were consumed in 2020, and with total proven reserves at 44 million, there would only be around 7 years of oil left available without imports (EIA 2021). In 2019 the U.S. consumed 31 trillion cubic feet (Tcf) of natural gas and with proven reserves of 495 Tcf this leads to around 16 years left of natural gas in proven reserves (EIA 2021). If the U.S. were to utilize these resources to bridge the gap until alternative resources were implemented, there would likely only be around one or two decades of energy available where the U.S. would be independent from foreign oil imports. This indicates that a swift transition away from fossil fuels should be pursued for more reasons than decarbonization alone.

Short-term solutions will need to focus on optimally utilizing our current infrastructure while restricting any new development of additional oil and gas fields or coal mines. The use of carbon capture, utilization, and storage (CCUS) technology will also be important additions to decarbonizing our current assets. Spurring investment in currently proven and cost-effective renewable resources is critical over the next decade while also focusing on reducing the barriers to emerging renewable technologies so longer-term solutions, like renewable natural gas or renewable hydrogen, that replace fossil fuels with renewable resources can take place.

Natural gas infrastructure supports the increased use of renewable natural gas that can be captured from wastewater treatment plants, solid waste, and dairy farms for example. Renewable natural gas resources are considered carbon neutral or carbon negative because they turn materials from methane-releasing into carbon-releasing, greatly reducing the global warming potential of the materials that would have otherwise had a larger impact and reducing the solid waste stream (Jaffe 2016, 50-52). Natural gas also helps manage peaking energy demands due to increased renewable penetration. Renewable natural gas, combined with hydrogen, can utilize a lot of current infrastructure, and could help satisfy hard to electrify needs if policies are made to spur clean energy investment and release public funding for new energy projects and technologies.

When combined with the continuation of running currently active nuclear power plants, and additions of new nuclear technology like small modular nuclear reactors (SMR), that provide carbon-free baseload energy the generation mix could reduce carbon emissions while enabling more renewable resources. Utilizing our current natural gas infrastructure assets is important to ensuring cost effective decarbonization, however, it is critical that policies are put in place that completely avoid new natural gas plant buildouts within the next fifteen years to avoid infrastructure lock-in due to the long lifespans of those plants and the need to avoid the costs of stranded assets. Continued use of the natural gas infrastructure will require CCUS until transitions can be made to renewable natural gas and renewable hydrogen and can help ease some of the burdens seen with high penetration of intermittent renewable resources like wind or solar.

Generation Mix Transitions

While utilizing our current energy resources to their maximum, it is important to reduce the barriers that prevent long-term integration of renewables. Due to the higher upfront capital costs for renewable technologies based on the issues of fossil fuels being able to pass the fuel costs to customers instead of investors, implementing a carbon tax or social cost of carbon nationwide will help even the investment disparities between fossil fuels and renewable resources. Phasing out fossil-fuel subsidies over the next couple of decades will also be important to level the playing field. Utilizing SMRs and geothermal energy will be critical for providing baseload energy needs while reducing transmission issues due to their centralized sourcing (Union of Concerned Scientists 2017). These barrier removing actions, combined with the short-term actions around utilizing abundant and resilient natural gas reserves and infrastructure, will be necessary to achieving a carbon-free energy resource mix without intense economic and social disruptions.

These energy mix transitions also help to reduce health and safety risks to humans. As seen in figure 3, renewable energy not only greatly reduces emissions, it also reduces fatality rates significantly. While natural gas is significantly better than oil and coal in both emissions and fatality rates, it will require CCUS to reduce emissions and health issues related to emissions to continue to be useful in the energy mix. Renewable natural gas still has the issue of localized emissions when combusted, however, hydrogen can provide emission free energy when combusted. Policies to move to renewable energy and low emission fuels, greatly expand electrification and CCUS, combined with efficiency and grid improvements will be critical to achieving net zero by 2050 goals, as seen in figure 4.

Figure 3. Safest and Cleanest Sources of Energy

Source: (Ritchie 2020).

Figure 4. Global Average Annual Energy Investment Needs by Sector and Technology to Achieve Net Zero Emissions

Source: (IEA 2021).

Aging Infrastructure

With an already outdated and aging electricity transmission grid, the United States has had an increasing number of outages due to weather as well as physical and cyber-attacks. These outages impact millions of people across the country and cost an average of $26 billion dollars annually (Executive Office of the President 2013). Investing in updating the grid will create a less vulnerable and more resilient system that will reduce overall costs and emissions; however, complimentary actions will also be required to ensure the greatest results from these improvements.

Figure 5. Cost Estimates of Economic Damages from Weather Outages

 Source: (Executive Office of the President 2013).

Transmission Updates

Installing smart grid upgrades to the energy system should be prioritized to ensure a safer, cleaner, cost effective, and more resilient energy delivery system. The current grid is composed of outdated, and often manual equipment, that creates cascading impacts when weather or attacks are focused on the system. Smart grid technologies like energy management systems, advanced meter infrastructure, and line sensors or smart relays allow the grid to respond quickly to issues and maintain delivery (The GridWise Alliance 2013). Intermittent renewable energy like wind and solar are also able to be integrated and managed more effectively without curtailment events and complex energy efficiency actions can be implemented. These improvements not only reduce physical vulnerabilities, but as seen in figure 6 below, also provide additional reductions in energy use and carbon emissions that generate large cost savings as well (Munday 2011).

Figure 6. Savings Estimates of Transmission Upgrades

Source: (Munday 2011).

New modern technologies reduce a lot of costs and physical risk; however, they do introduce cyber vulnerabilities that have been increasing over the past few years. In addition to grid hardening measures like burying power lines to reduce physical risks, technological improvements will be required to further secure the digital infrastructure. Cybersecurity can be improved through three primary actions that include strengthening the preparedness of the energy sector, coordination of cyber incident response and recovery, and increasing research and development of additional resilient energy delivery system technologies (Energy.gov n.d.). With smart grid updates, storm hardening, and cybersecurity enhancements the energy grid can reduce outage risks and increase efficiency while reducing costs.

Figure 7. Increasing Cybersecurity Risk

Source: (Ferris and Van Renssen 2021).

Grid modernizations require capital investment, and often the energy grid needs are competing with other national priorities like entitlements, national security, job creation, and environmental stewardship for example. However, it should not be viewed as a competing investment and should be viewed as a way to help these other priorities like reducing equity issues by lowering the costs of delivered energy and reducing usage. Developing a more secure and robust energy grid also increases national security while creating jobs. As discussed previously, smart grid upgrades also reduce energy emissions. Smart grid investments should be viewed as a useful and efficient method to achieving other national priorities and should be prioritized highly as an effective solution that helps reduce these other issues.

The transmission grid is critical to the economy and life within the United States. Smart grid updates, with additional storm hardening and cybersecurity, should be viewed as a high priority investment opportunity to help solve many other security and economic issues. These updates not only create a more resilient, safer, and affordable service, but they also help reduce greenhouse gas emissions and provide greater opportunities for future improvements.

Generation Source Economics

Ensuring that solutions are affordable is going to be an important element for success. Solar, wind, and geothermal energy has a levelized cost of electricity (LCOE) that is lower than all other resources, fossil fuels included. These resources should have investment tax credits secured and extended for the next two decades to spur development. Solar and wind are intermittent resources and geothermal is a baseload resource, however, effective geothermal resources are not available in all areas of the country. Nuclear has a higher LCOE of $69.39 per megawatt-hour when compared to other renewable energy resources like geothermal that comes in at $36.40 per megawatt hour as seen in table 1 (EIA 2021). However, nuclear remains cheaper than coal, combustion turbines, and biomass, indicating that utilizing it in areas where geothermal energy is not available, or available land-use size is restricted, is a strong economic choice for decarbonizing the energy grid for baseload needs.

Table 1. Value-cost ratio (unweighted) for new resources entering service in 2026

Source: (EIA 2021).

Transportation Complexity

In addition to demands on the energy grid, transportation fuels and resources also require infrastructure but with a focus on storage and mobility. Electrification of vehicles is the most useful and effective fuel source to replace fossil fuel sources. Electricity resources are useful in other industries as well, so the fuel is widely available. Additionally, there are also much more charging facilities in place when compared to hydrogen or biodiesel as seen in figure 8 below. Biodiesel may have better driving range in vehicles but there are still limited fueling stations, and tailpipe emissions from biodiesel that make it difficult to utilize when efforts to decarbonize all industries are ramping up. Electric vehicles are expected to represent 58% of all passenger sales in 2040, and combined with a decarbonizing energy grid, will represent the most useful current alternative fuels technology (BloombergNEF 2020). Providing tax incentives and mandates to restrict manufacturers from producing internal combustions engines will be useful in spurring greater implementation of electric vehicles.

Figure 8. Alternative Fueling Station Locations

Source: (NRCAN 2018).

Emerging Fuels

When looking at different emerging fuels, renewable natural gas looks to be a promising fuel that will help transition our system away from traditional gasoline and diesel. As mentioned previously, renewable natural gas is important because it can be derived from wastewater treatment plants, solid waste, and livestock operations for example (The Energy Co-op n.d.). By utilizing the waste from one industry it avoids issues of entanglement that drop-in biofuels have regarding the use of farmland that could be used for feeding humans for example. Since renewable natural gas can be compressed, liquified, or used in many other industries like building heating and energy generation, it represents the best option for emerging transportation fuels. Financing should be made available to local governments, in addition to tax incentives to dairy farms, to enable the infrastructure investments needed.

Figure 9. Renewable Natural Gas Collection Process and Uses

Source: The Energy Co-op n.d.

Expanding and incentivizing electrification of vehicles will be critical in the near- and long-term efforts to decarbonize transportation fuels. Incentivizing and spurring investment in renewable hydrogen and renewable natural gas technology and infrastructure will help decarbonize the longer-term hard to electrify end-uses. Incentivizing circular economy methods, like renewable natural gas, will also ensure that additional emissions are not created for transportation fuels alone and create resources that benefit other industries as well. Through electrification, hydrogen, and renewable natural gas fuels, the U.S. can achieve energy independence and decarbonization of both the energy grid and the transportation fuel mix.

Energy Storage

Energy storage is also a critical element for both the energy grid and transportation sectors. Batteries and renewable hydrogen are the two primary options for accomplishing this directly for both sectors. However, batteries are both heavier and requiring of more space than conventional fuel, making it difficult to scale for things like air and sea travel, as well as heavy duty requirements (EIA 2014). When looking at those sectors as shown below in figure 10, they account for a sizeable portion of the remaining emissions that do not come from light-duty vehicles, a sector where use can also be mitigated other ways with the combination of biking, walking, and public transit. This indicates that batteries simply are not able to handle all transportation modes, and hydrogen fuel cells will be required for those additional uses anyway. In addition to transportation use, renewable hydrogen could be used to heat buildings as well so incentivizing infrastructure and investment in that technology can be utilized for decarbonizing other industries as well.

Figure 10. 2018 U.S. Transportation Sector GHG Emissions by Source

Source: (EIA 2021).

In addition to looking at direct or tailpipe emissions, other environmental impacts during the lifecycle of the fuels is important to understand as well. Batteries require large volumes of precious metal like cobalt, nickel, and lithium, that require mining and have issues around recycling at the end of their lifecycle (Statista 2021). Hydrogen fuel cells create a by-product of pure water, which could be useful in other applications, reducing the environmental issues around water use. Other storage mechanisms that do not rely on precious metals, like gravity storage, should be incentivized as well to prevent environmental issues from mining.

Figure 11. Precious Metal Battery Needs

Source: (Statista 2021).

While hydrogen may not be the primary solution for transportation needs, no fuel source can either, so implementing an infrastructure around hydrogen provides additional benefits to building heat decarbonization, improved land and water use, and non-toxic material usage. Combined with electrification of light-duty vehicles, it will be important to reduce emissions from airlines, marine, and heavy-duty vehicles, and renewable hydrogen is an excellent option to achieving greenhouse gas reductions in those sectors. Policies that focus on utilizing renewables and aggressive electrification of transportation can provide emerging technologies like renewable hydrogen, and other technologies under development, more time to create prototypes and demonstrations.

Figure 12. Global Emission Changes by Technology Maturity Category for Net Zero Emissions

Source: (IEA 2021).

Policy Summary

While the challenges facing the path to net zero emissions are numerous, there are policy actions that can be taken that can drive the investments and changes necessary to achieve this high priority goal. The issues of transitioning from a fossil fuel infrastructure to a new generation mix, updating transmission infrastructure, transitioning fuels, developing energy storage solutions, and ensuring the energy system is economical all have a similar set of solutions that support each other and other industries as well.

Aggressive Renewable Penetration

The move away from fossil fuels will need to be aggressive. Implementing policies that do not allow for new oil and gas fields or coal mines needs to occur immediately. No new coal plants should be approved for development and any new fossil fuel boilers should be phased out of production within the next five years. Funding and easing of permitting for solar and wind should be implemented along with baseload energy needs like geothermal and nuclear, especially nuclear designs that promote recycling of spent fuel. Removing fossil fuel subsidies and implementing a social cost of carbon will be important elements to leveling the economic playing field as well. This rapid cutting of industry emissions requires greater funding allocations for research and development of infrastructure and new technologies like low-emissions fuels and renewable hydrogen that will solve the hardest to decarbonize elements in the 2050 timeframe.

Electrification

With more renewable penetration in the electricity grid, mandates for electrification will be important. Within the next decade, sales of electric vehicles should make up a majority of purchases through the use of tax incentives and phase out mandates for internal combustion engines in addition to all new buildings being required to be zero-carbon ready. Appliance efficiency requirements should be continually ratcheted up annually so within the next fifteen years all appliances and cooling systems are as efficient as possible. After twenty years, any remaining carbon-emitting buildings should be required to be retrofitted where needed to meet zero-carbon levels as well and could be funded from a carbon tax on the remaining emitting resources.

Electricity Grid Updates

Easing of permitting and providing funding for electricity grid updates will be critical to greater renewable penetration and use of electricity. Allocating funding to hardening our electricity grid is critical to reducing costs seen from weather disasters. With a more decentralized grid and intermittent resources, smart grid technology will need to be deployed as well. Cybersecurity for a smart grid will be important and can be improved through three primary policy actions that include strengthening preparedness of the energy sector, coordination of cyber incident response and recovery, and increasing research and development of additional resilient energy delivery system technologies.

Possible Through Bold Actions

Policies should remove barriers and spur investment and actions that are focused on aggressive development of renewable resources, electrification of all possible energy uses, electricity grid updates, efficiency improvements, and the shift to low-emissions fuels and renewable hydrogen. These actions not only lead to a zero emissions country, they also provide safer, lower cost, equitable, reliable, and more resilient energy systems while developing energy independence and more local jobs. It is vital that the U.S. adopt these energy policies and act urgently to address the short- and long-term needs of our energy resources to meet increased demand and reduce environmental degradation. Leading this global charge will allow the U.S. to be a key player in the international cooperation needed to solve these issues.

Figure 13. Important Milestones for Achieving Net Zero Emissions

Source: (IEA 2021).

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