Ahead of the North American Leaders’ Summit in Ottawa tomorrow, the White House has announced that President Obama, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto will jointly commit to generating 50 percent of the continent’s power from clean energy sources by 2025. Mexico will also join Canada and the US in their previously announced goal of reducing methane emissions from the oil and gas sector by 40 to 45 percent below 2012 levels by 2025.
Building on momentum from the Paris Agreement
Tomorrow’s agreement (full details yet to be released) between Canada, Mexico and the US shows the type of leadership we need to build on the momentum created by the Paris Agreement. The goal of getting half the continent’s electricity from “clean energy” by 2025 is well within reach—and eminently affordable given the sharply falling costs of solar and wind energy and projections for continued price declines. In addition, smart investments in transmission can help integrate the continent’s electricity markets more closely while helping to bring on line even more clean, reliable and affordable energy.
For the purposes of this announcement, “clean energy” sources include wind, solar, hydro and other types of renewable energy; nuclear power; fossil fuels with carbon capture and storage; and energy efficiency. It is more apt to call nuclear power and coal and natural gas with CCS low-carbon or zero-carbon energy sources. Nuclear power comes with issues related to safety, radioactive waste disposal and uranium mining wastes, and there is pollution associated with production, transportation and use of coal and natural gas with CCS.
Clean energy status and projections for the US, Canada and Mexico
The US, Canada and Mexico are well-positioned to meet the 50 percent clean energy goal by 2025, but it will require robust implementation of current policies and some new ones.
According to EIA data, in 2015 renewable energy (including hydropower) accounted for 13 percent of US power generation, and carbon-free sources provided about 33 percent of US electricity generation. As the largest economy and biggest consumer of electricity among the three countries, progress on renewable energy in the US can go a long way toward meeting the continent-wide goals.
A recent UCS analysis shows that, with the Clean Power Plan and the recent extensions of the federal renewable energy tax credits, the US can get 25 percent of its electricity from renewable energy (hydro plus non-hydro) by 2025. Adding nuclear power would bring the US total for carbon-free electricity to nearly 46 percent by 2025. In our analysis of the Clean Power Plan, we assumed all states adopt the EPA’s mass-based targets with a “new source complement” and achieve compliance via a nationwide carbon trading program. We also assumed that all states, as part of their compliance strategy, invest in energy efficiency at a level that achieves a reduction in electricity sales of at least 1 percent per year from 2022 to 2030.
For comparison, EIA’s examination of the Clean Power Plan and federal tax credits (the AEO 2016 reference case) estimates that the US would reach 41 percent clean energy by 2025. Depending on how energy efficiency is credited under the proposal to be announced tomorrow the “clean energy” share from the UCS and EIA analyses could be even higher.
Meanwhile, Canada already gets about 80 percent of its power from carbon-free sources, including approximately 60 percent from hydropower and 16 percent from nuclear power. The province of Ontario is the first jurisdiction in North America to completely eliminate coal-fired generation.
Mexico currently gets about a quarter of its electricity from clean generation. The 2015 Ley de Transición Energética (or Energy Transition Law) sets a goal of generating 35 percent of Mexico’s electricity from clean energy sources by 2024.
New North American goal of 50 percent clean energy by 2025 is not a big stretch
Together, the US, Canada and Mexico currently get approximately 37 percent of their generation from clean energy sources. With current policies in place, the three countries are projected to get 45 to 49 percent clean energy by 2025, depending on whether the UCS or EIA reference case projections are used for the US. Clearly, some additional policy action will be required—for example through new sub-national or national policies—but it is not a big stretch. With the costs of renewable energy falling rapidly, there’s no reason to shortchange the opportunity to go further.
Canada, Mexico and the US are also members of Mission Innovation, an international initiative of countries that have all committed to doubling their public investments in clean energy research and development over five years. Together with business initiatives, such as the Breakthrough Energy Coalition, the landscape for clean energy R&D is only getting brighter.
Nevertheless, we can’t take this progress for granted. For example, delivering on the US commitments will require that the Clean Power Plan, which is currently under a legal stay, moves ahead in a robust way, prioritizing renewable energy and energy efficiency as compliance options. Low natural gas prices could also thwart progress on renewable energy. Any erosion of state and federal policy incentives could also deal a blow to meeting those targets.
Enacting new or additional federal and state clean energy policies could help us greatly exceed these targets, and do so cost effectively, but we need Congress and state governments to act!
Cutting methane emissions
The commitment to cut methane emissions from the oil and gas sector is also critical as these emissions are on the rise globally. Methane is a much more potent greenhouse gas than carbon dioxide, although it is shorter-lived in the atmosphere. In the US, these emissions are increasing as natural gas production reaches all-time highs (mainly due to increased reliance on natural gas for power generation) and extraction of tight oil increases. Mexico and Canada also have significant methane emissions from their oil and gas operations.
Research shows that cost-effective opportunities to cut these emissions exist in all three countries. By taking steps jointly, they can help ensure that standards and best practices are harmonized across the North American continent.
Need for continued climate leadership
The next US administration and the new Congress will play a critical role in delivering on the clean energy goals announced today, as well as more ambitious commitments in the years to come. The world and our North American neighbors will be counting on our continued climate leadership.
And while we’re thinking big, here’s to hoping that one of the next breakthrough moments for climate action is a North American carbon pricing initiative, building on the success of existing state and provincial programs in the US and Canada and Mexico’s carbon tax.
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