Feasibility and Costs of Natural Gas as a Bridge to Deep Decarbonization in the United States

Abstract:

Achieving emissions reductions consistent with a 2 degree Celsius global warming target requires nearly complete replacement of traditional fossil fuel combustion with near-zero carbon energy technologies in the United States by 2050. There are multiple technological change pathways consistent with this deep decarbonization, including strategies that rely on renewable energy, nuclear, and carbon capture and storage (CCS) technologies. The replacement of coal-fired power plants with natural gas-fired power plants has also been suggested as a bridge strategy to achieve near-term emissions reduction targets. These gas plants, however, would need to be replaced by near-zero energy technologies or retrofitted with CCS by 2050 in order to achieve longer-term targets.

Here we examine the costs and feasibility of a natural gas bridge strategy. Using the Global Change Assessment (GCAM) model, we develop multiple scenarios that each meet the recent US Intended Nationally Determined Contribution (INDC) to reduce GHG emissions by 26%-28% below its 2005 levels in 2025, as well as a deep decarbonization target of 80% emissions reductions below 1990 levels by 2050. We find that the gas bridge strategy requires that gas plants be retired on average 20 years earlier than their designed lifetime of 45 years, a potentially challenging outcome to achieve from a policy perspective.

Using a more idealized model, we examine the net energy system costs of this gas bridge strategy compared to one in which near-zero energy technologies are deployed in the near tem. We explore the sensitivity of these cost results to four factors: the discount rate applied to future costs, the length (or start year) of the gas bridge, the relative capital cost of natural gas vs. near-zero energy technology, and the fuel price of natural gas. The discount rate and cost factors are found to be more important than the length of the bridge. However, we find an important interaction as well. At low discount rates, the gas bridge is more expensive and a shorter bridge is preferred. At high discount rates, the gas bridge is less expensive and a longer bridge is preferred. This result indicates that the valuation of future expenditures relative to present day expenditures is a major factor in determining the merits of a gas bridge strategy.