Summary and Review of Rhodium Group’s Taking Stock 2024: US Energy and Emissions Outlook

 

     This report began 10 years ago to track U.S. emissions reduction progress compared to 2005 levels and later to Paris Accord trajectories. I have argued elsewhere that just because we are behind on some of these aggressive trajectories doesn’t mean we are in trouble. Predictions of warming and impacts could be overestimated. There is still much uncertainty in these predictions. New technology developments and adoption could speed up progress toward those goals in the future or allow us to catch up where we are behind.

     The report notes that through 2023 the U.S. has achieved 18% emissions reductions from 2005 levels and is behind the trajectory to achieve 50% emissions reductions from 2005 levels by 2030. The executive summary reports:

 

“The US is on track to reduce its GHG emissions by 38-56% below 2005 levels in 2035, representing at least a doubling—and potentially as much as a four-times increase—from the pace of annual emissions abatement from 2005 to 2023. On the way to 2035, we find the US could reduce its emissions by 32-43% below 2005 levels in 2030. These emissions reductions under current policy are a measurable acceleration in mitigation even compared to our Taking Stock 2022 edition from just before the passage of the IRA, in which we found the US on track for a 24-35% reduction below 2005 levels in 2030. But they are not enough for the US to achieve its 2030 climate commitment under the Paris Agreement of a 50-52% reduction by 2030, or deep decarbonization by mid-century.”

 

Thus, according to the report we are between 7% and 18% behind schedule. This is not bad news but good or neutral news depending on how one considers it. The ranges for different greenhouse gases at different years along the forecast trajectory are shown in the table below:

     Three forecast scenarios are given: low, medium, and high emissions, as shown below. Also noted on the graph are targets for 2030, 2035, and Paris Accord targets.

 

 

     They estimate that “generation from zero-emitting sources like wind, solar, and nuclear could account for 62-88% of total generation in 2035, with unabated coal generation falling to near zero that year, driven both by the IRA’s subsidies and EPA’s newly finalized GHG emissions limits for power plants.” I am skeptical but 11 years is a long time. Wind and solar deployment would have to nearly triple to meet the bottom end of that if my rough estimations from memory are correct. (On a quick lookup I see I was slightly off, 2.4 times vs. triple) Nuclear now makes up 18% and wind and solar combined make up 5 or 6%. That makes 24% now for those three sources. Nuclear is expected by some to grow a little during that time period so I add a few % there. That means in order to meet the lowest end of that schedule these three sources would have to get from 26% of power produced to 62% of power produced, or 2.4 times more. To get to the high end of 88% that would be 3.4 times. To get into the middle of the range would require a tripling. It would also require considerable grid upgrades, transmission upgrades, backup resources like gas-peaking plants or grid-scale batteries, and redundant generation. It should also perhaps be noted (yet again) that when you see headlines that say wind and solar make up 20% of U.S. generating capacity, that ends up being 5-6% of the actual power produced. This is because of lower capacity factors, or utilization rates for wind (34%) and solar (24%) and higher ones for natural gas (56%), nuclear (>70%) and coal (?41%).

 

     Which scenario turns out to be correct or whether we even meet the lowest improvement scenario depends on various factors including majority politics, results of potential court cases to test the recent Chevron decision, and energy demand wildcards like the speed of AI/machine learning development and energy prices. The report also notes that renewable energy investment reached 5.1% of nationwide private investments in the first fiscal quarter of this year. That is expected to continue regardless of political outcomes as the spending is already underway.

   

     The report predicts that emissions from oil and gas operations drop by 12-28% below 2023 levels in 2035, due in part to EPA requirements for reductions from the upstream and midstream sectors. Emissions from buildings are expected to drop by 9-12% as HFCs are phased out. EPA rules on methane emissions from the oil & gas sector, more stringent vehicle emissions standards and power plant emissions reductions are in play in 2023, though some are still being challenged or likely to be. The fate of greenhouse gas emissions rules has yet to be fully determined.

     Clean energy highlights for 2023 were noted in the report for solar, wind, and nuclear additions:

 

“The US added 19 GW of utility-scale solar and 6.6 GW of utility-scale storage to the grid in 2023—setting records for both resources as well as another annual record for total clean capacity additions, despite onshore wind additions of a relatively meager 6.4 GW, which is less than half its 2020 record installation year. Plant Vogtle Unit 3 also came online, adding another 1.1 GW of nuclear power to the grid.”

 

Thus, solar had a good year and onshore wind had a bad year.

     The Rhodium Group states that they use RHG-NEMS to quantify energy sector and emissions outcomes. RHG-NEMS is Rhodium Group’s modified version of the National Energy Modeling System (NEMS), a model developed by the US Energy Information Administration (EIA) to produce their Annual Energy Outlooks (AEOs). They use another tool for industrial sector emissions. They have forecasts for transport, industry, power, buildings, and agriculture to 2035. The biggest drop is expected from power, followed distantly by transport. Industry and buildings are forecasted to have slight drops and agricultural emissions are expected to grow very slightly. They have predictions for carbon removal of 1165 MMtons CO2 by 2035.

     Interestingly, they predict significant drops in consumer energy prices as fuel prices drop due to EV adoption lowering demand. They also expect overall home energy prices to drop a little, even though EVs and electrification are expected to increase electricity prices slightly. The forecast for electricity demand growth by 2035 by sector is shown in the first graph below. The 2nd graph below shows three scenarios for data center demand.

 

     I don’t know if I agree with their assessments, but I think we are on target to be at least close to the lowest reductions scenario. It should perhaps be noted that several ambitious emissions reduction pledges by states and corporations have gotten behind schedule very quickly and its not looking good for them. However, they are still reducing emissions. Meeting the Paris Accord schedule for 1.5 degrees C is very unlikely and 2.0 degrees C I would say is somewhat unlikely. This is mainly due to the need for energy access in energy-poor countries and the needed economic growth for lifestyle improvement in India and China.   

    

 

References:

 

Taking Stock 2024: US Energy and Emissions Outlook. Ben King, Hannah Kolus, Anna van Brummen, Michael Gaffney, Naveen Dasari, and John Larsen. Rhodium Group. July 23, 2024. Taking-Stock-2024_US-Energy-and-Emissions-Outlook.pdf