Conclusions

The path to a low-carbon future for the electricity sector poses a range of challenges. As France has demonstrated, nuclear power is a known technology that could produce such a future, but nuclear power faces a number of major problems including high cost, low public acceptance, and risks of proliferation. Large-scale fuel switching to natural gas could lead to substantial reductions in CO2 emissions, though not their complete elimination, but it would be expensive and probably adversely impact the nation’s energy independence. Carbon capture and sequestration holds the promise that it could allow continued use of America’s enormous coal reserves. While likely affordable and technically feasible, it has yet to be demonstrated on a large scale and faces open questions of cost and reliability. Some forms of renewable energy can certainly play a role, but just how large that role can be depends on a range of uncertain issues in terms of cost, technical performance, and power system architecture. These issues will be resolved only through further research and expanded field experience. Conservation and load management hold great potential, but to date regulators and political decision makers have not advanced these solutions with the vigor that is needed. Clearly there are multiple paths to success, most involving some portfolio of these solutions. Today our best option is to work hard to advance the most promising, in the hopes that several ultimately prove to be technically, economically, and politically feasible.

The electricity industry’s investment decisions are unlikely to favor low-carbon options unless and until a clear regulatory timetable for limiting CO2 emissions is established. Absent such a timetable, aging pulverized coal units will likely be retrofitted with add-on controls for SO2, NOX, and mercury and could continue operating for decades with no provision for CO2 abatement. This could lead to a situation where more drastic CO2 reductions must be achieved over a shorter timeframe in the future, potentially at far higher cost.

Environmental issues generally, and global warming concerns in particular, have focused attention on a number of major challenges to the current U.S. electricity system. Industry restructuring, underinvestment in transmission infrastructure and other system assets, under-utilization of currently available low-carbon electricity generation sources, reliability and security issues, and insufficient R&D funding interact to cloud the future of this vital sector of the U.S. economy. Under any future scenario, this complex set of issues must be addressed in a manner that accounts for the hybrid—half restructured and half traditionally-regulated—nature of the industry. The elements that matter most now are:

• An end to regulatory uncertainty regarding future CO2 control. Establishing clear and consistent policy goals sooner rather than later and implementing these goals through mechanisms such as a cap-and-trade system with scheduled cap reductions will avoid very significant costs.

• Development efforts focusing on promising technologies that do not require fundamental breakthroughs, such as IGCC with carbon capture and sequestration for coal as well as natural gas.

• Adoption of best practices for promoting energy conservation and improved efficiency.

• A federal requirement that electricity industry companies spend at least one percent of their value added on research to develop critical enabling technologies and to address core questions that are likely to be crucial in determining which of several possible technology paths the industry should follow in the future. Examples include making carbon capture and sequestration feasible and determining whether cost-effective electricity storage options can be developed for intermittent resources like wind and solar.

Properly managed, it should be possible to accomplish the transition to a low-carbon electricity future at manageable cost and with little disruption to the U.S. economy. But the United States must initiate that transition now.