Breakthroughs in clean energy technology can reduce the cost associated with implementing clean energy policies, effectively growing the economy while decarbonizing our energy use. Policies can also amplify the economic, security, and pollution benefits of breakthroughs by creating markets, disincentivizing the highest-emitting technologies, and leveling the playing field for clean energy, leading to increased adoption of clean energy.
We set very optimistic rates of innovation, pushing technologies hard on cost and performance. Even with aggressive breakthroughs, we achieved only a 49% reduction vs. 2005 emissions by 2050 in the All Tech Breakthrough scenario, well short of the standard, IPCC-inspired reduction targets of 80% by 2050.
While our optimistic scenarios did not reach 80%, they did make substantial headway. Since innovations in biofuels, agricultural practices, or industrial energy efficiency were not modeled in detail, it is possible that a more comprehensive mix of energy innovation could achieve 80% reductions.
Reaching 80% reductions by 2050 will be difficult and likely require much more aggressive innovation and policy than we currently have today. This analysis points to the need a multi-pronged strategy, combining both innovation and policy to mitigate climate change while growing the economy.
Coal power is abundant and cheap in the United States, especially from older and fully depreciated plants. Major displacement of coal generation did not occur until clean energy became cheaper than the marginal cost of coal, which occurred predominately after 2030 even with clean power breakthroughs.
Post-2030, breakthroughs in generation became cost advantaged vs. coal and start to pay off significantly. As clean power reached its lowest price points, displacement of coal accelerated rapidly from 2030 to 2050. By 2050, the All Tech Breakthrough scenario reduced coal 66%, and the $30/ton Carbon Price + Breakthrough scenario reduced coal use 87% vs. BAU.
Initially in our hypothetical cheap gas scenario ($3/MMBTU), the improved economics of natural gas generation led to coal-to-gas switching and made coal plant retirements more economical. In the long term, if gas prices stay cheap, gas could out-compete carbon-free energy technologies.
In our Cheap Gas scenario, total gas generation surged by 86%, overall emissions were reduced slightly by 6% from coal displacement, and households saved an average of $555 through switching to CNG vehicles by 2030. But cheap gas reduced total 2030 renewables, CCS and nuclear capacity by 47% vs. All Tech Breakthrough and 57% vs. Clean Policy + Breakthrough.