Emily Grubert. Fossil electricity retirement deadlines for a just transition. Science, 2020 DOI: 10.1126/science.abe0375
Georgia Institute of Technology. “Shuttering fossil fuel power plants may cost less than expected.” ScienceDaily. ScienceDaily, 3 December 2020. <www.sciencedaily.com/releases/2020/12/201203144224.htm>.
This map shows the locations of electricity-generating facilities with projected lifespans that extend beyond 2035.
Most of the United States’ existing fossil fuel power plant capacity will reach the end of its typical lifespan by 2035, according to new research published this week in Science.
Findings of the Dec. 4 study suggest that a deadline to decarbonize electricity by then will cost less than previously expected. The study follows on the heels of an October report from the Applied Economics Clinic and the Institute for Energy Economics and Financial Analysis that found the risks of investing in natural gas plants in the PJM grid region likely outweigh the financial rewards.
“What this work shows is that it’s probably not going to be a massive problem” to shut down remaining fossil fuel-fired electricity generation, said Emily Grubert, a civil engineer at Georgia Tech and author of the study in Science. Her work focuses on infrastructure engineering and sustainable communities. “Basically, the plants are already pretty old and this gives us a huge leg up in trying to retire carbon-based infrastructure.”
By 2035, her calculations show that only about 15% of capacity-years would remain for power plants powered by fossil fuels. In other words, if you added up all the years of capacity left for all fossil fuel power plants running in 2018, less than one-sixth of the total years would remain.
From a planning perspective, that means states and utilities can probably worry less about the economics of closing down plants early, Grubert said.
Compensation for stranded assets can come into play when “somebody builds something in good faith and then policy or some other occurrence forces it to shut down much, much earlier than expected,” Grubert said. Some plant owners might argue that they would still have outstanding debts or lose income they had reasonably expected.
“There’s a lot of arguments that maybe the newer fossil fuel assets should never be considered stranded assets, because it’s been fairly clear that there’s going to be climate action at some point,” Grubert said.
Ohio stands out among Midwestern states with a significant number of fossil fuel plants with lifespans past 2035 and even 2040. A significant number of those plants may be due to fracking and horizontal drilling in the Marcellus and Utica shale plays. Significant numbers of fossil fuel plants also have expected lifespans past 2035 along parts of the Mid-Atlantic seaboard and in Texas, Colorado and California. Many of the plants are in communities with struggling economies.
“There’s quite a bit of both existing and proposed fossil generation by utilities in poorer states,” Grubert noted.
In Grubert’s view, long-range policy planning should begin now to support people who will eventually lose their jobs, as well as communities that may have relied on revenues from fossil fuel power plants. At the same time, other people and other businesses are also affected by climate change impacts, she noted. They include communities affected by sea-level rise, shifts in extreme weather, disproportionate health impacts, and so on.
In light of that, she personally favors universal programs to benefit large numbers of people. “I think you’d be likely to garner a lot more political support for something that helps everyone,” Grubert said.
Institute for Energy Economics and Financial Analysis energy analyst Dennis Wamsted, who co-authored the IEEFA-Applied Economics Report from October, said Grubert’s study in Science is an important analysis.
“This is a powerful result showing that a rapid fossil fuel phase-out is possible without undue financial implications,” Wamsted said.
One potential weakness, he said, is that the study assumed a high degree of national planning. “Given the incredibly disparate nature of the electricity sector in the U.S., this may be difficult to accomplish.” Policies and regulation take place at both the federal and state level, and there is wide variation among the states. There are also different market structures and regional grids with different market rules as well.
Some companies and states are almost certain to shut down fossil fuel plants faster than others, Wamsted added. For example, Vistra announced in September that it plans to retire 6.8 gigawatts of coal capacity by 2027, so it could better participate in the shift to renewables and battery storage. Its planned coal plant closures in Ohio include the Miami Fort Power Plant in North Bend and the Zimmer Power plant in Moscow.
“Similarly, other companies that see the writing on the wall and want to get ahead of the transition instead of sitting around waiting could also decide to move early,” Wamsted said.
The takeaway from IEEFA and the Applied Economics Clinic’s report is that investors putting money into a new fossil fuel project in the PJM market today “must understand that their investment is likely to end up stranded well before the end of that asset’s expected economic lifetime,” Wamsted said.
“Further, we would not expect investors in these plants to be compensated if indeed these new plants are forced to close early,” he continued. “Since the transition away from fossil fuels is well underway already, investor claims for compensation due to charged circumstances or policy clearly would not be justified.”
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December 3, 2020, Georgia Institute of Technology, in the December 4 issue of the journal Science, Emily Grubert, 404.894.3055. gruberte@gatech.edu
Decarbonizing US electricity production will require both construction of renewable energy sources and retirement of power plants now operated by fossil fuels. A generator-level model suggests that most fossil fuel power plants could complete normal lifespans and still close by 2035 because so many facilities are nearing the end of their operational lives.
Decarbonizing U.S. electricity production will require both construction of renewable energy sources and retirement of power plants now operated by fossil fuels. A generator-level model described in the December 4 issue of the journal Science suggests that most fossil fuel power plants could complete normal lifespans and still close by 2035 because so many facilities are nearing the end of their operational lives.
Meeting a 2035 deadline for decarbonizing U.S. electricity production, as proposed by the incoming U.S. presidential administration, would eliminate just 15% of the capacity-years left in plants powered by fossil fuels, says the article by Emily Grubert, a Georgia Institute of Technology researcher. Plant retirements are already underway, with 126 gigawatts of fossil generator capacity taken out of production between 2009 and 2018, including 33 gigawatts in 2017 and 2018 alone.
“Creating an electricity system that does not contribute to climate change is actually two processes — building carbon-free infrastructure like solar plants, and closing carbon-based infrastructure like coal plants,” said Grubert, an assistant professor in Georgia Tech’s School of Civil and Environmental Engineering. “My work shows that because a lot of U.S. fossil fuel plants are already pretty old, the target of decarbonization by 2035 would not require us to shut most of these plants down earlier than their typical lifespans.”
Of U.S. fossil fuel-fired generation capacity, 73% (630 out of 840 gigawatts) will reach the end of its typical lifespan by 2035; that percentage would reach 96% by 2050, she says in the Policy Forum article. About 13% of U.S. fossil fuel-fired generation capacity (110 GW) operating in 2018 had already exceeded its typical lifespan.
Because typical lifespans are averages, some generators operate for longer than expected. Allowing facilities to run until they retire is thus likely insufficient for a 2035 decarbonization deadline, the article notes. Closure deadlines that strand assets relative to reasonable lifespan expectations, however, could create financial liability for debts and other costs. The research found that a 2035 deadline for completely retiring fossil-based electricity generators would only strand about 15% (1700 gigawatt-years) of fossil fuel-fired capacity life, along with about 20% (380,000 job-years) of direct power plant and fuel extraction jobs that existed in 2018.
In 2018, fossil fuel facilities operated in 1,248 of 3,141 counties, directly employing about 157,000 people at generators and fuel-extraction facilities. Plant closure deadlines can improve outcomes for workers and host communities by providing additional certainty, for example, by enabling specific advance planning for things like remediation, retraining for displaced workers, and revenue replacements.
“Closing large industrial facilities like power plants can be really disruptive for the people that work there and live in the surrounding communities,” Grubert said. “We don’t want to repeat the damage we saw with the collapse of the steel industry in the 70s and 80s, where people lost jobs, pensions, and stability without warning. We already know where the plants are, and who might be affected: using the 2035 decarbonization deadline to guide explicit, community grounded planning for what to do next can help, even without a lot of financial support.”
Planning ahead will also help avoid creating new capital investment where that may not be needed long-term. “We shouldn’t build new fossil fuel power plants that would still be young in 2035, and we need to have explicit plans for closures both to ensure the system keeps working and to limit disruption for host communities,” she said.
Underlying policies governing the retirement of fossil fuel-powered facilities is the concept of a “just transition” that ensures material well-being and distributional justice for individuals and communities affected by a transition from fossil to non-fossil electricity systems. Determining which assets are “stranded,” or required to close earlier than expected absent policy, is vital for managing compensation for remaining debt and/or lost revenue, Grubert said in the article.
Emily Grubert. Fossil electricity retirement deadlines for a just transition. Science, 2020 DOI: 10.1126/science.abe0375
Georgia Institute of Technology. “Shuttering fossil fuel power plants may cost less than expected.” ScienceDaily. ScienceDaily, 3 December 2020. <www.sciencedaily.com/releases/2020/12/201203144224.htm>.
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Excerpt from Wenonah Hauter, In These Times, Dec 2020
Joe Biden announced a $2 trillion package that sought to achieve carbon-free electricity by 2035 and “net zero” carbon emissions overall by 2050. While he should push those timelines faster, we cannot realistically hit those goals if we continue to extract fossil fuels from the ground and burn them. That approach is like adding fuel to a fire while dripping a little water on it at the same time. Biden’s administration must work with the next Congress to stop the supply of fossil fuels: No more drilling and fracked gas pipelines, and no new fossil fuel power plants. This, in essence, is what it means to ban fracking.
Now there are some who argue that this is a distraction. For them, Biden’s climate plan will in effect make drilling more or less obsolete, since the clean energy targets will prove incompatible with new oil and gas drilling, and the industry will, for lack of a better word, ban itself.
This is dangerously naïve. For starters, most gas drilling in the United States does not go to generating electricity; as the fossil fuel industry has desperately searched for ways to prop up the status quo, it has shifted its focus to supplying the plastics and petrochemicals industries, or even shipping fracked gas overseas (what Trump officials termed ‘freedom gas’). Domestic clean electricity targets are necessary, but they would not affect any of this drilling.
Furthermore, there are ways that fossil fuel drilling could be essentially re-branded as climate action. Take carbon capture, which enjoys bipartisan political support and the backing of corporate polluters. The industry spins out scenarios that are literally too good to be true, imagining that emissions from coal mining and fossil fuel power plants can be caught prior to entering the atmosphere, minimizing or even eliminating their climate impact. Yet despite being heavily subsidized by the federal government for decades, there is no evidence that carbon capture actually works; most of the active projects simply re-use captured carbon dioxide to get more oil out of existing wells.
Unfortunately, many of Biden’s top climate advisers — the very people who will help shape the country’s climate policy — have long careers promoting fossil fuel interests, and have championed fracking, carbon capture and exporting fracked gas. Ernest Moniz, a close adviser to Biden on climate policy who could be the next Energy Secretary, literally wrote the playbook on promoting fracking as a climate-friendly bridge to a clean energy future. The announcement that Biden had tapped Rep. Cedric Richmond to play a leading role on the administration’s climate agenda elicited strong criticism from all corners of the climate movement, and for good reason: Richmond has constantly sided with the fossil fuel industries — pushing for more pipelines and fracked gas exports — while those companies have showered him with campaign donations.
Unfortunately, many Democratic lawmakers who are relying on carbon capture to meet ‘net zero’ promises. In contrast with carbon accounting gimmicks and similar offset schemes, the most effective policies are the ones that mark a clear break with fossil fuels. During the campaign, Biden clarified that while he did not support a fracking ban, he would phase out oil and gas drilling on public lands. While this is an absolutely necessary first step, it represents just a fraction of the drilling happening in the United States right now.
The fact that Trump tried — and failed — to ride fears about a fracking ban to a second term should be encouraging to those of us who want to see real climate action before it’s too late. Now Trump’s obstinacy and ignorance is no longer an obstacle; it is time for Democratic leaders to fight for the kind of bold climate policies the world needs right now.
