Carbon pricing and energy efficiency: pathways to deep decarbonization of the US electric sector
Despite the commitment of the Paris agreement to pursue efforts to limit end-of-century global warming to 1.5°C above pre-industrial levels, few have studied mitigation pathways consistent with such a demanding goal. This paper uses a fully integrated engineering-economic model of the U.S. energy system, to explore the ability of the U.S. electricity sector to operate within a budget of 44 gigatons of CO2 (GtCO2) between 2016 and 2040 - almost 20 percent less than projected. Our modeling results suggest that carbon taxes coupled with strong energy-efficiency policies would produce synergistic effects that could meet deep decarbonization goals. Combining energy-efficiency initiatives with a $10/tCO2 tax rising to $27/tCO2 in 2040 (in $2013) would achieve the U.S. electric sector's carbon budget with a net savings to the U.S. economy. A $20/tCO2 tax rising to $53/tCO2 in 2040 would also stay below this budget, but it would cost more if not coupled with strong energy efficiency. U.S. regions will win or lose depending on their generation mix and how carbon tax revenues are recycled.
KeywordsCarbon pricing Deep decarbonization Clean energy transition Energy efficiency Carbon tax recycling
The valuable comments of three anonymous reviewers are greatly appreciated. Many colleagues and stakeholders contributed meaningfully to the development of this paper’s scenarios and the presentation of results, including Melissa Lapsa (Oak Ridge National Laboratory), Luis Martinez, Katie Southworth, and Starla Yeh (Natural Resources Defense Council), Joe Kruger (Resources for the Future), Charles Rossmann (Southern Company), Joe Hoagland (Tennessee Valley Authority), Meredith Wingate (Energy Foundation), Etan Gumerman, Brian Murray, David Hoppock, and Martin Ross (Duke University’s Nicholas Institute), and Dan Matisoff, Emanuele Massetti, Alice Favero, Gyungwon Kim, and Anmol Soni (Georgia Tech’s Climate and Energy Policy Lab). In addition, Laura Martin, Jeff Jones, and Erin Boedecker of the US Energy Information Administration and John Cymbalsky, Colin Cunliff, Erin Boyd, and Aaron Bergman of the US Department of Energy provided helpful advice on several key NEMS modeling issues. Last but not least, Liz Hyman provided excellent assistance with our graphics.
This research received support from the Brook Byers Institute of Sustainable Systems at the Georgia Institute of Technology.
Compliance with ethical standards
Conflict of interest
The authors declare that they have no conflict of interest.
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