美国和中国电力行业的脱碳-英

THE

U.S.

AND

CHINA

NEEDDECARBONIZING

THE

POWER

SECTORTO

REDUCE

METHANE

EMISSIONS,IN

THE

U.S.

AND

CHINASUBSTANTIALLY

AND

COLLABORATIVELYDECARBONIZING

THE

POWER

SECTORIN

THE

U.S.

AND

CHINAMikeO’Boyle,EnergyInnovation*MaxDupuy,Regulatory

AssistanceProject**Organizationsarenotedforaffiliationpurposesonly.Thispaperrepresentsauthors’views,andnotnecessarilythoseoftheirinstitutions.KEY

ISSUES

AND

TRENDSTogether,

the

United

States’

and

Chinese

power

systems

emitted

5,780

million

metric

tons

ofcarbon

dioxide

equivalent

(CO₂e)

in

2020,

about

36%

of

the

two

countries’

and

17%

of

the

world’sannual

carbon

emissions

(International

Energy

Agency

2022).

Consensus

is

growing

among

thescientific

community

that

majority

renewables-based

electricity

systems

exceeding

80%

carbon-free

can

be

operated

reliably

and

at

low

cost,

without

developing

new

technologies

(Abhyankaretal.2022;

MacDonald

etal.2016;

Novacheck,

Brinkman,

and

Porro

2018;

NREL

2012;

Phadke

etal.

2020).

The

U.S.

and

China

face

similar

physical

and

policy

challenges

to

transform

their

powersectors,

despite

different

economic

and

institutional

conditions.

The

transition

to

a

renewables-based

electricity

system

is

also

essential

for

decarbonizing

end-uses

–

such

as

transportation

andheating

of

buildings–

throughelectrification.The

Nationally

Determined

Contributions

(NDC)

of

both

countries

under

the

United

NationsFramework

Convention

on

Climate

Change

include

significant

power

sector

commitments.Figure

1

|

U.S.

and

China

Electricity

Sector

Greenhouse

Gas

Emissions,

2000-2019.Datasource:ClimateWatch(/ghg-emissions?end_year=2019®ions=CHN%2CUSA§ors=electricity-heat&start_year=1990)1However,

given

that

neither

country’s

NDC

pledges

for

2030

are

sufficient

to

support

a

1.5degrees

C

pathway,

and

given

the

centrality

of

the

power

sector

to

decarbonization

efforts,

bothmust

consider

redoubling

efforts

to

reduce

power

sector

emissions.

The

good

news

is

that

well-understood

andfeasible

policypathways,

applicable

to

both

countries,

can

improve

reliability

andhelpreducecostswhileacceleratingthe

power

sector

transformation.The

U.S.

recently

committed

to

reducing

economy-wide

net

greenhouse

gas

emissions

by

50%

below2005

levels

by

2030,

a

zero-carbon

power

sector

by

2035

and

a

net-zero

emissions

economy

by

no

laterthan

2050.TheU.S.

electricity

sectormustreduce

emissions

approximately

80%

below

2005levels

by2030

in

order

tomeet

the

2030

national

target

(Abhyankar

et

al.

2021;

Larsen

et

al.

2021;

Larson

et

al.2021).While

the

U.S.

electricity

sector

has

substantially

reduced

emissions

from

its

peak

in

2005,andis

currently

40%

carbon-free,

reaching

80%

carbon-free

in

2030

and

100%

in

2035

would

represent

adramatic

acceleration

of

clean

energy

deployment

and

fossil

retirement.

Sector

experts

widely

agreethat

meeting

these

targets

is

possible,

would

markedly

improve

public

health,

create

new

jobs,

and

evenpotentially

reduce

consumer

electricity

costs

(Abhyankar

et

al.

2022).

However,

doing

so

will

requireadditional

policy,including

new

federal

regulation

and

sub-national

action.U.S.

efforts

at

the

federal

and

sub-national

levels

are

evolving.

Twenty-one

states

plus

the

District

ofColumbia

and

Puerto

Rico,

representing

one-third

of

electric

generation,

have

set

goals

for

100%

cleanelectricity,

although

many

of

these

are

2050

goals,

not

2035

as

in

the

U.S.

national

commitment.1

39

ofthe

41

largest

utilities

in

the

U.S.

have

made

public

commitments

to

hit

net

zero

emissions

by

midcentury(Esposito

and

Jeffrey

2022).

The

U.S.

passed

a

major

infrastructure

bill

in

2021

which

includes

fundingfor

end-use

energy

efficiency

and

transmission

projects

(along

with

provisions

to

support

transmissionsitingauthorization)thatwillsupportrenewableprojectdevelopmentandrenewableenergyintegration.In

August

2022,

the

U.S.

passed

into

law

a

historic

package

of

federal

policies

to

support

economy-widedecarbonization.2

The

package

includes

financial

incentives

for

wind,

solar,

energy

efficiency,

energystorage,

and

electrification

of

transportation,

buildings,

and

other

end-uses.

The

U.S.

Department

ofEnergy

estimates

that

the

package

will

reduce

economy-wide

emissions

to

40%

below

2005

levels

by2030.

With

additional

contributions

from

state-level

policy,

the

U.S.

economy-wide

2030

NDC

target(50-52%

below2005

levels

in2030)

will

be

withinreach.3In

September

2020,

the

Chinese

government

updated

its

NDC

targets

to

peak

carbon

emissionsbefore

2030

and

achieve

carbon

neutrality

before

2060

(known

as

the

dual

carbon

pledges).

Thegovernment

also

set

a

target

for

about

25%

of

total

energy

consumption

to

be

met

by

non-fossilfuelsby2030anda2030powersectortargettosurpass1,200gigawatts(GW)totalwindandsolarpower

capacity

(People’s

Republic

of

China

2021).

Meanwhile,

according

to

the

14th

Five-Year

Plan,non-fossil

power

generation

will

reach

39%

of

total

power

generation

in

2025.

While

it

appears

therapid

pace

of

wind

and

solar

investment

means

China

is

on

a

path

to

exceed

the

2030

wind

andsolarcapacitytarget,continuing

powersectorreform

willbeneededto

supportintegration

oflargeamountsof

newrenewableenergyintothegridandtomeet

thelonger-termdecarbonizationgoal.OPPORTUNITIES

AND

CHALLENGESTo

get

the

most

out

of

the

clean

energy

opportunities

and

meet

decarbonization

goals,policymakers

in

the

U.S.,

China,

and

around

the

world

are

considering

a

broadly

similar

setof

power

sector

issues,

centered

on

ensuring

a

reliable

grid

with

high

levels

of

wind

and

solargeneration.

Fortunately,

this

challenge

is

manageable.

With

a

well-designed

policy,

market,

andregulatory

framework

one

can

expect

a

very

reliable

power

sector,

even

at

very

high

penetrationsof

wind

and

solar

generation.

A

growing

body

of

international

experience

–

including

fromthe

U.S.

and

China

–

bears

this

out.

Here

we

summarize

several

key

aspects

of

the

commonopportunities

and

challenges

facedby

both

countries.12ForalistofthesestatesseeCleanEnergyStatesAlliance./projects/100-clean-energy-collaborative/The

package

is

part

of

the

Inflation

Reduction

Act

of

2022.

For

a

summary,

see

/imo/media/doc/summary_of_the_energy_security_and_climate_change_investments_in_the_inflation_reduction_act_of_2022.pdf3US

Department

of

Energy,

“The

Inflation

Reduction

Act

Drives

Significant

Emissions

Reductions

and

Positions

America

to

Reach

OurClimateGoals,”August2022./sites/default/files/2022-08/8.18%20InflationReductionAct_Factsheet_Final.pdf.2Reliability

challengesBoth

the

U.S.

and

China

have

struggled

recently

with

regional

power

sector

reliability.

In

bothcountries,

some

stakeholders

argue

trade-offs

exist

between

an

electric

power

system

based

onclean

energy

and

other

goals

such

as

power

sector

reliability

and

energy

security.

These

argumentspose

a

threat

to

the

pace

of

the

energy

transition.

However,

evidence

indicates

that

powersector

reforms,

such

as

those

recommended

below,

can

improve

power

sector

reliability

whileaccelerating

the

clean

energy

transition,

at

low

(or

even

reduced)

cost

(Abhyankar

et

al.

2022;EnergyResearch

Institute2022;

Geocaris

2022).In

2020-2021,

the

two

largest

U.S.

states,

California

and

Texas,

faced

extreme

weather

conditionsand

experienced

rolling

power

outages.

In

California,

extreme

regional

heat

and

wildfire

threatsaffected

the

reliability

of

the

regional

fossil

fleet,

transmission

system,

and

wind

output,

forcingrolling

outages.

In

Texas,

extreme

cold

shut

down

significant

gas

capacity

and

led

to

extended

outagesduring

life-threatening

weather

conditions.

In

2022,

the

national

grid

reliability

authority

warned

thatextreme

heat

would

threaten

summer

reliability

for

most

of

the

U.S.

grid,

citing

faster-than-expectedcoalretirements

and

a

failure

to

quickly

replace

that

capacity

(NERC

2022).While

no

such

outagesoccurredin2022,

therewereseveral

closecallsinregionswithhighsharesof

renewableenergy.In

2021,China

experienced

a

series

of

power

crises

affecting

large

parts

of

the

country

and

manymillions

of

consumers

experienced

power

outages.

The

summer

of

2022

has

brought

a

majorheatwave,

severe

drought,

significantly

reduced

hydroelectric

generation,

and

renewed

powerreliabilityproblems,

particularlyin

thecentralpart

of

thecountry.Control

and

Retirement

of

Coal-fired

Generation

CapacityCoal

power

is

among

the

most

emissions-intensive

power

sources

and

is

responsible

for

amajorityof

U.S.

and

China

power

sector

emissions.

The

April

2022

Intergovernmental

Panel

on

ClimateChange

report

finds

that

“limiting

global

warming

to

2

degrees

C

or

below

requires

a

rapid

shiftawayfromunabated

coal

consumption….

Thiswillrequirecancellationof

new

coal

powerprojectsand

accelerated

retirement

of

existing

coal

plants.”

(IPCC

2022).

Coal

also

creates

large

publichealthcoststhroughairand

water

pollution.Fortunately,

it

is

increasingly

clear

that

new

coal

power

is

not

needed

for

affordable,

reliablepower.

Internationally,

well-designed

markets

and

planning

mechanisms

no

longer

identify

new

coalgeneration

capacity

as

the

best

solution

to

meet

power

system

needs,

for

several

reasons.

First,

inthe

U.S.,

China,

and

many

other

countries,

the

levelized

cost

of

solar

and

wind

generation

is

now

nearorbelowthefuelcostofcoal-firedandgas-firedpowerplants,meaningthatitcanbelessexpensiveto

construct

new

solar

and

wind

generators

than

it

is

to

operate

existing

thermal

plants

(IRENA2022).

This

renewable

energy

cost

advantage

has

been

strengthened

by

coal

price

increases

seen

bymany

countries

in

2021

and

2022.

Second,

compared

to

hydro,

demand

response,

energy

storage,and

gas-fired

generation,coalpoweris

relatively

ill-equipped

to

provide

the

rapid

changesin

outputtocomplementlow-costwindandsolargeneration(Linetal.2022;

Luetal.2019).The

U.S.

has

made

significant

progress

reducing

coal

generation

and

retiring

coal-fired

powerplants

in

the

last

decade.

Since

peaking

in

2007,

coal

generation

is

down

55%.

Ending

unabatedcoal

power

by

2030

is

within

reach,

although

additional

national

and

subnational

action

willlikely

be

necessary

to

eliminate

many

of

the

last

unabated

coal

plants.

Coal

mining

and

coalpower

remain

culturally,

economically,

and

politically

important

in

some

parts

of

the

U.S.Furthermore,

insulation

from

the

full

social

(e.g.,

health)

costs

of

coal,

along

with

strandedasset

concerns,

have

led

some

utilities

to

delay

coal

retirements.The

opportunity

to

developlower-cost

clean

energy

portfolios

locally

to

replace

retiring

coal

is

virtually

ubiquitous

inthe

U.S.

(Gimon,

Myers,

and

O’Boyle

2021)

The

Infrastructure

Investment

and

Jobs

Act

of2021

and

Inflation

Reduction

Act

of

2022

provide

grants

and

incentives

to

coal-dependentcommunities

to

invest

in

clean

energy

manufacturing,

and

provide

the

utility

industry

withlow-cost

financing

to

transition

from

coal

to

cleaninfrastructure.3In

China,

many

of

these

factors

are

also

relevant.

A

well-designed

“scientific”

set

of

market

andplanning

mechanisms,

such

as

those

currently

being

pursued

under

the

banner

of

power

sectorreform,

will

likely

identify

better

and

lower-cost

solutions

than

new

fossil-fired

generation

capacityto

support

a

power

grid

with

increasing

amounts

of

renewables.

These

reformed

mechanismswill

also

likely

reject

the

proposition

to

“cut

and

replace”

old

coal

plants

with

new

more

efficientcoal

plants.

Replacing

old

coal

power

plants

with

cleaner

and

more

flexible

resources,

includingdemand

response

and

energy

storage,

will

likely

be

lower-cost

and

better

for

reliability.Regional

integrationWhen

optimizing

demand

and

supply

on

thegridinrealtime

and

when

planning

new

transmissionand

newresources,widening

the

geographic

operational

balancingareaisbeneficial.

Thisregionalapproach

canbe

an

effectiveand

low-costwayto

boostsystem

reliability

and

supportintegrationof

wind

and

solar

generation

(IRENA

2019).

Real-time

economic

dispatch

across

broad

regionsdirects

dispatchable

fossil

resources,

which

incur

costs

by

purchasing

and

burning

fuel,

to

adjustoutput

based

on

the

availability

of

complementary

sources

of

zero-marginal-cost

wind

and

solarenergy,

reducing

cost

and

increasing

the

share

of

renewable

energy

in

the

generation

mix.

Unifyingthis

dispatch

function

over

a

wide

geographic

area

leverages

the

diversity

of

wind

and

solar

output,increasing

reliability

contributionsfrom

wind

andsolar,

reducingrenewableintegration

costs,andreducing

the

need

for

fossil

reserves.

Both

the

U.S.

and

China

have

made

significant

progress

inthisregard,butthere

are

more

opportunitiesto

leveragethe

benefits

ofregionalintegration.Regional

transmission

organizations

(RTOs)

in

the

U.S.

feature

competitive

markets

and

economicdispatchof

electricity

inreal-timeover

largegeographic

areas

and

demonstrate

asubstantial

trackrecord

of

regional

coordination.

About

two-thirds

of

the

U.S.

are

served

by

these

markets.

Thesoutheast

and

western

parts

of

the

U.S.

currently

lack

RTOs,

although

the

western

U.S.

has

beengradually

moving

in

this

direction

and

has

established

interim

regional

market

mechanisms.

TheSoutheast

has

lagged

behind,

although

nascent

efforts

are

afoot

in

that

region

toincrease

regionalcoordination.

Regions

with

RTOs

have

seen

substantial

benefits,

including

reduced

consumer

costsand

reduced

emissions.

In

these

markets,

renewable

energy

investment

and

low

gas

prices

havecontributed

to

competitive

pressure

on

coal

power,

prompting

rapid

coal

retirements.

However,increasing

renewable

energy

investment

has

tested

the

ability

of

RTOs

and

states

to

adequatelyplan

and

site

new

transmission

to

integrate

the

1,000

GW

of

clean

energy

resources

that

haveappliedto

interconnectto

the

grid.China’spowersystemhas

madeimpressivestridesinabsorbingfast-growingamounts

of

wind

andsolar

energy.

As

in

the

U.S.

and

other

countries,

however,

much

work

remains

to

be

done

to

ensurethat

the

grid

can

integrate

much

higher

shares

of

variable

renewable

generation.

Large

investmentsinthe

country’s

transmission

network

have

helped

link

largegeographic

areas

and

balance

variablesupply

and

demand

across

great

distances.

Policymakers

in

China

have

also

introduced

new

policiesincluding

markets

to

help

ensure

that

this

modern

grid

network

is

operated

efficiently.

The

January2022

policy

on

a

“National

Unified

Electricity

Market

System”

is

a

very

important

step

forward,although

opportunitiesremainto

improvethisvision

andensuresuccessful

implementation.System

flexibilityWith

growing

amounts

of

wind

and

solar

generation,

maintaining

reliability

requires

managingincreased

variability

at

various

time

scales.

Wind

and

solar

generation

increase

variability

due

todependence

on

weather

patterns,

and

they

need

resources

able

to

adjust

output

to

compensatefor

this

variability

–

a

trait

known

as

“flexibility.”

This

includes

short-term

(seconds,

minutes,

andhours)

to

long-term

(e.g.,

weeks)

fluctuations

in

supply

and

demand.

Managing

this

variabilityrequires

identifying,

constructing,

and

orchestrating

a

cost-effective

portfolio

of

resources

withthe

right

characteristics

tosupport

acleanenergygrid.

Inturn,

thisrequiresawell-designed

set

ofpolicies

–

and

associated

market

mechanisms,

planning

processes,

and

regulations.

(See

figure

2.)4Figure

2

|

Intervention

Policies

and

Relative

CostSource:EnergyInnovation,

adaptedfromNRELFlexibilityin21stCenturyPowerSystemsThe

U.S.

has

significantly

improved

grid

flexibility.

Economic

dispatch

and

improved

forecastinghave

become

widespread

best

practices,

with

more

opportunities

to

increase

interregionaltransmission

and

take

advantage

of

regional

diversity,

particularly

between

the

three

majorinterconnections

in

the

West,

East,

and

Texas

(ESIG

2022).

Demand

response

is

anothermajor

opportunity

for

improvement.

U.S.

demand

response

participation

has

remained

mostlystagnant

despite

widespread

advanced

meter

deployment,

widely

available

time-of-use

pricing,and

rulesallowingdemand

responseto

participatein

wholesale

generation

markets.Federal-statecoordination

remains

problematic.

Existing

gas

and

hydro

capacity

have

supported

renewableenergy

integration,

and

battery

storage

is

quickly

becoming

an

economic

option

to

increase

systemflexibility.

However,

much

workremains

to

unlockthe

fullpotential

of

variouslow-cost

sources

offlexibilityincluding

demand

response

(Dupuy

andLinvill2019).In

China,

the

power

system

has

become

increasingly

flexible

and

policymakers

have

been

layingthe

foundation

for

further

improvements,

but

implementation

challenges

remain.

The

effort

todesign

and

implement

spot

electricity

markets

will

be

very

important

for

flexibility.

If

designedwell,

these

markets

will

help

send

better

signals

on

the

supply-

and

demand-side

about

the

valueof

flexibility

across

time

and

location.

In

addition,

recent

national

policy

statements

regardingtime-of-use

pricing,

virtual

power

plants,

and

demand

response

open

the

possibility

for

greatlyimproved

power

system

flexibility,

if

implementation

of

these

broad

statements

proceeds

wellat

the

provincial

and

local

levels.

China

is

a

world-leader

in

uptake

of

electrification,

particularlyin

transportation

–

presenting

a

major

opportunity

to

unlock

the

flexibility

they

can

provide.

Inaddition,

the

Chinese

government

has

announced

ambitious

goals

for

pumpedhydroprojectsandretrofitofexistingcoal

plants

for

more

flexible

operation.End-use

energy

efficiencyImprovementsinconsumer

energyefficiency

(EE)isanother

important

ingredientforalow-cost,speedy,

and

reliable

energy

transition.

Both

the

U.S.

and

China

have

decades

of

experience

in

thisarea.

There

is

overlap

with

several

other

papers

in

this

series,

including

those

on

transportation,buildings,

and

industry.

We

echo

the

EE

discussion

in

this

paper

because

international

experience5demonstrates

the

importance

of

integrating

EE

policy

with

power

sector

policy

in

order

to

identifyand

exploit

ways

in

which

EE

can

displace

expensive

and

dirty

power

resources

and

mitigate

thegrid

impacts

ofrapidelectrification

(Crossley

2014).Inthe

U.S.,energy

efficiency

policy

ismostly

a

state

and

local

issue,

although

federal

policies

providesome

financial

support.

Local

building

codes

drive

efficiency

in

new

buildings,

while

a

mix

of

federaland

state

policy

dictates

appliance

efficiency

standards.

Public

investment

in

efficiency

partly

takesplacethroughstate-regulatedelectricutilityprograms,but

stateexperienceinthisregardismixed.Leading

states

like

California

and

Massachusetts

have

implemented

energy

efficiency

resourcestandards

and

utility

incentives,

which

use

financial

incentives

and

consumer

education

programsto

drive

measurable

savings

(Berg,

Cooper,

and

DiMascio

2022).

These

programs

are

typicallyaccompanied

by

revenue

decoupling,

a

practice

to

reduce

the

negative

impact

of

energy

savings

onutilities’

financial

health

(Lazar

2016).

Some

states

require

integrated

planning

practices

in

whichtraditional

power

sector

resource

investments

are

compared

against

alternative

energy

efficiencyinvestments.

In

other

states,

little

policy

exists

to

support

efficiency

investments.

There

are

hugeopportunities

for

state

public

utility

regulators,

state

legislators,

and

federal

funding

to

unlockgreaterefficiency

at

thestateand

local

level

andensurethat

efficiency

investmentsareintegratedwith

power

sectorplanning.In

China,

the

2021

carbon

action

plan

committed

to

“give

first

priority

to

the

conservation

ofenergy.”

This

is

a

very

important

pledge

with

potential

to

boost

reliability

by

managing

demandgrowth,

improve

energy

security

by

reducing

energy

imports,

and

reduce

system

costs

andemissions.

However,

the

policy

is

largely

silent

on

how

to

integrate

this

conservation

pledge

withongoing

power

sector

reform

efforts.

China

also

has

a

significant

demand-side

management

policythat

requires

gridcompanies

tomeet

targets

for

investing

inend-use

energy

savings.

Although

thetargetsunderthispolicyare

small

asa

percentageofelectricitysales(0.3%),

thegreatsizeof

theChinese

power

sector

means

that

this

is

likely

the

largest

utility

energy

savings

obligation

in

theworldin

terms

of

volume

of

annualenergysavings.RECOMMENDATIONS

FOR

THE

U.S.The

U.S.

federal-state

legal

system

splits

authority

to

regulate

the

electricity

sector

between

thefederal

and

state

government.

Federal

policy

is

a

key

lever,

and

recent

progress

on

federal

spendingpriorities

will

significantly

bolster

the

economics

of

clean

energy,

invest

in

emerging

clean

energytechnologies,

and

increase

the

pace

of

deployment.

Further

action

from

states

implementingthese

policies,

as

well

as

federal

agencies,

will

be

crucial

to

realizing

the

potential

of

federal

cleanenergysubsidiesto

reduceemissions

and

meetU.S.

climategoals.Accelerate

transmission

capacity

expansionThe

U.S.currently

has

more

than

1,000

GW

of

proposed

clean

energy

projects

which

have

appliedto

interconnectto

the

grid,roughlyenoughto

meetits2030

decarbonization

goals.

Thisnumber,which

has

skyrocketed

in

recent

years,

is

driven

by

economics

and

consumer

interest

in

wind,solar,

and

batteries.

As

this

interconnection

queue

grew,

transmission

interconnection

processeshave

become

more

complex,

and

now

take

four

years

on

average.

U.S.

grid

operators

must

finda

way

to

sort

through

the

queue

to

prioritize

the

most

viable

projects,

while

reforming

planningprocesses

to

increase

needed

transmission

capacity.

This

profoundly

includes

offshore

wind,

anewly

economic

resource

for

the

U.S.

The

Federal

Ener