How to decarbonize California’s economy without breaking the bank

As temperatures rise and the impacts of climate change become more prevalent, California is aggressively implementing solutions that will take more greenhouse gases out of the atmosphere. California has one of the most ambitious climate goals of any state in the country, pledging to get to 100% clean electric power by 2045.

To get to 100% clean electricity, California will have to remove carbon (or “decarbonize”) in two major areas: vehicles and buildings. For California’s residential and commercial buildings – which, combined, make up about 25% of the state’s total greenhouse gas pollution — decarbonizing means changing how we heat (space heating for warmth, water heating and clothes drying are the best examples) and how we cook.

Tackling building electrification

A recent E3-UC Irvine study found that electrifying our buildings is the most cost-effective strategy to decarbonize. For both buildings and vehicles to be cost-effectively decarbonized, it means using more carbon neutral energy sources like wind and solar. As part of the transition we will need to stop using electricity generated from natural gas plants, which right now, generate about 30% of California’s electricity portfolio.

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Note that biogas (gas generated from landfills and agriculture rather than from fossil sources) is another strategy to decarbonize some of California’s buildings. This could be a viable strategy for buildings that would be hard to electrify, such as large commercial, heavy industry and electric generation applications. EDF contends to maximize the environmental benefit that this biogas needs to be from sustainable sources.

High integrity biogas is in high demand, and there is limited available quantities of the gas available. Biogas also comes at a cost premium compared to fossil gas. All of this means that California should deploy this biogas strategically, which means not in residential buildings where electrification is an easy option.

Last April, E3 examined the costs of building electrification for customers. The analysis indicates that while customer’s electricity bills will go up, their overall energy bills will go down. While this is not a guarantee in every instance and is dependent on the climate/weather in the state, it does indicate that customers will be motivated to transition in most parts of the state for economic reasons alone. Meaning, it is cost-beneficial to many customers to use electrification as a strategy to decarbonize a large portion of our economy.

Managing gas infrastructure

An E3 analysis sponsored by the electricity generator Calpine, says approximately 17-35 gigawatts of gas-fired electricity generation will need to stay online to ensure reliability. The state will not run these units very often, but will need to keep them online to act as a rapid response to help keep the lights on. While most of the reactions to this study are about the reliability portions of the grid, there is also a financial component that is equally critical to understand. Using a small amount of gas-fired electric generation (whether derived from fossil or biological sources) means that California needs to keep a vast network of gas pipelines, storage facilities and other gas-associated equipment across California.

Presently, most of the costs of the gas system are borne by residential customers. As those customers electrify, they will use the gas system less and therefore pay for less of it. Yet all customers will benefit from having some of the gas pipelines maintained since they will fuel some portion of our electric generation portfolio. This poses an important policy question: who will pay for the ongoing costs of maintaining, repairing and (eventually) decommissioning the gas system? After all, ratepayers are unlikely to want to keep paying for infrastructure they are not using. On the other hand, maintaining the gas pipeline transmission network will be critical to ensure electric reliability, and few folks want to pay for an electric grid that is not 100% reliable.

Developing an affordable, effective transition away from gas is extremely complicated, but it is not impossible. Earlier this year EDF published a report that examines some of the economic challenges and nuances associated with the complicated, but necessary, goal of decarbonizing our gas system.

To effectively manage the switch to cleaner energy, we need to do a handful of things. First, we must make sure we fully understand and evaluate all of the data that can help us assess various risks. We also need to have a plan for switching strategically. For example, converting buildings to cleaner electricity on a neighborhood-by-neighborhood scale could help retire certain segments of the gas network faster. The analysis that EDF conducted was reinforced in the E3-UCI study.

These are just a handful of the many management strategies that California’s policymakers will need to consider as we move closer to our 100% clean goals. These recent reports indicate there are a variety of decarbonization pathways available to California, but it will be up to all of us to come to the table together in order to implement solutions to ensure that the energy powering our economy is affordable, clean and safe.

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