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Biden loss would end hopes of US decarbonisation before 2050
1 minute read
The outcome of the 2020 US presidential election will dictate the pace of decarbonisation for decades, according to new research from Wood Mackenzie.
Democratic presidential candidate Joe Biden is proposing a US$2 trillion climate plan with a mandate to eliminate carbon emissions from the US power sector by 2035.
“If Biden's bid fails, the US will forfeit four more years in the fight against climate change. This would dramatically reduce the possibility of eliminating carbon emissions from the region’s power grid before 2050. However, If Biden’s climate plan comes to pass, it will have widespread consequences for the US power sector,” said Dan Shreve, Wood Mackenzie Research Director.
As noted in Wood Mackenzie’s report, a Biden win will see capital investments in renewable energy and energy storage assets top US$2.2 trillion through 2035. Utility-scale solar demand will soar to over 100 GW/yr, while battery storage capacity will surpass 400 GW - nearly 40% of the total installed power generating capacity of the US in 2020. Coal-fired generation will exit the market in its entirety.
Biden’s decarbonisation target date of 2035 is 15 years ahead of Wood Mackenzie’s base case, which models 87% clean energy in the US power grid by 2050. So, is this aggressive target achievable? And what could the plan mean for US renewable energy?
“The deployment of 1.5 TW of renewable generation in less than 15 years is a daunting task. Doing so at that scale and speed would shake up the hierarchy of the energy industry and turn the power market on its head.
“Most production in the US is focused on assembly, with structural components and equipment imported from countries where manufacturing costs are low. But to satisfy Biden’s potential “Made in America” requirements, domestic wind, solar and storage would need to expand rapidly,” added Shreve.
As an illustration, according to Wood Mackenzie’s analysis, current US-based solar module supply stands at around 4.7 GW. Under Biden’s plan, US module demand would be more than 100 GW per year. Similarly, the potential demand for battery supply is 600 GWh per year – vastly exceeding the current ~46 GWh.
“Biden’s plan teeters between achievable and aspirational but the backing of energy sector giants could tip the balance and once again establish the US as a leader in the fight against climate change,” said Shreve.
If Biden’s plan comes to fruition, the US power sector will gain policy certainty, but risks will remain.
“The oil and gas sector must carefully hedge against a failure of the carbon capture, utilisation and storage market to reach commercialisation. Failure to engage now may result in surrendering market position to a burgeoning club of energy majors in a zero-carbon future.
“Natural gas will drive around 40% of US power generation this year, consuming 33% of domestic gas supply. Consequently, maintaining a presence in the US power sector is important to both gas suppliers and generators.
“Partnerships and acquisitions of upstart storage providers, renewable energy developers and green hydrogen technology suppliers must all be on the table,” added Shreve.