50% by 2035 National Renewable Electricity Standard Would Boost Economy and Cut Carbon Emissions

June 26, 2019 | 9:06 am
Photo: Omari Spears/UCS
Steve Clemmer
Director of Energy Research & Analysis

Today, Senator Tom Udall (D-NM) and several others introduced The Renewable Electricity Standard Act of 2019, a bill that would more than double the supply of renewable energy from 18% of US electricity generation in 2018 to at least 50% by 2035. It’s a strong proposal that builds on the recent clean energy momentum in the states and establishes a long-term national policy for renewable energy. A new UCS analysis shows that a national renewable electricity standard (RES) of 50% by 2035 would boost the economy, benefit consumers, and put the nation on a pathway to decarbonize the power sector by 2050.

A RES requires electric utilities to gradually increase the amount of renewable energy (wind, solar, geothermal, biomass and hydropower) in their power supplies over time. It uses a market-based approach that stimulates competition among multiple technologies, projects and companies to provide the greatest amount of clean power for the lowest price, and an ongoing incentive to drive down costs. Currently in place in 29 states and D.C., RESs have had a proven track record of success in deploying renewables, creating jobs, and reducing emissions for more than two decades. A national RES would ensure that the entire nation reaps the benefits from accelerating the clean energy transition.

Why a 50% national RES?

A 50% by 2035 RES is feasible and affordable and would help the US meet its climate goals. Over the past decade, the renewable energy share of US electricity sales has grown by nearly 1% per year, on average, according to Energy Information Administration (EIA) data. A 50% RES would more than double that rate through 2035—an aggressive but achievable level consistent with the commitments adopted by leading states and recent analyses showing we can ramp-up to renewables to 80% of US electricity by 2050 and meet mid-century decarbonization goals (see UCS, IPCC, and other studies).

While traditional RES policies establish the overall renewable energy target as a fraction of total retail electricity sales in the future, this proposal takes a novel approach by specifying the amount by which every retail provider in the United States must increase their share of renewable energy each year. This focus on new renewables would help level the playing field between leading clean energy states and states that have underinvested in renewables, regardless of where they are starting from.

Since most existing renewables would not be eligible for federal renewable energy credits (RECs) under the bill, there would be an incentive to build new renewables in-state instead of simply purchasing RECs from existing projects in other states. With the costs of renewables falling dramatically over the past decade, all states now have access to low cost clean energy. The bill would also provide extra credits to install renewable energy projects in economically distressed communities experiencing high levels of pollution or transitioning away from coal.

Key Findings

To understand the impacts of the proposal, we conducted an analysis of a 50% by 2035 RES and found that the policy delivers:

  • $374 billion in cumulative new capital investments from 2020-2035
  • $34 billion (0.6%) in cumulative net savings on consumer energy bills from 2020-2035
  • 46% reduction in power sector CO2 emissions in 2035

For this analysis, we used the National Renewable Energy Laboratory’s (NREL) Regional Energy Deployment System (ReEDS) model. We compared the RES policy case to a business as usual (BAU) scenario that assumed no new state or federal policies beyond those that existed at the end of May 2019.  See our slide deck and technical appendix for more details on the scenarios and assumptions.

Here are a few more details on what our analysis found:

Energy diversity

A 50% by 2035 national RES would diversify the nation’s electricity mix and reduce the risks of an overreliance on natural gas. Under a BAU scenario with continued low natural gas prices and no new policies, natural gas generation would see significant growth, increasing from 35% of the US electricity mix in 2018 to 58% by 2035 (Figure 1). Most of this new natural gas generation would replace retiring coal plants and a handful of existing nuclear reactors. This level of dependence on natural gas would pose significant risks to consumers and the US economy from potential supply shortages and price volatility.

In contrast, a 50% national RES would roughly double the share of renewables by 2035 compared to BAU, reducing natural gas generation by 38% and nearly phasing out the relatively small amount of remaining coal generation. It would also ensure that any nuclear retirements are replaced primarily with zero-carbon electricity instead of natural gas.

Figure 1. US Electricity Generation under Business as Usual and a 50% by 2035 National RES

Most of the new renewable energy development would come from wind and solar under the 50% RES. Wind capacity would more than double from around 100 gigawatts (GW) today to more than 250 GW by 2035. Solar photovoltaic capacity would increase by a factor of nearly 8 over current levels, reaching 505 GW by 2035, and 332 GW more than BAU.

To help integrate increasing levels of variable wind and solar generation, energy storage capacity would nearly triple to 64 GW by 2035, 32 GW more than BAU. In addition, US transmission capacity would increase by 4% for AC lines and 21% for DC lines, for a combined increase of 4.2 million MW-miles, compared to BAU.

Economic development

The renewable energy deployment under a 50% RES would help make the US a leader in the global clean energy race. It would build on the recent growth in renewable energy jobs in manufacturing, construction, operation, maintenance, and many other industries and would drive significant investment across the economy. A 50% RES would deliver the following economic benefits:

  • $374 billion in cumulative new capital investment from 2020-2035; $244 billion more than BAU
  • $12 billion in annual operation and maintenance payments in 2035
  • $5.6 billion in cumulative property tax payments to local governments from 2020-2035
  • $1.4 billion in cumulative wind power land lease payments to rural landowners from 2020-2035

Consumer benefits

Increasing renewable energy use can provide important benefits for consumers. The cost of wind and solar has fallen by more than 70% over the past decade, making renewable energy more affordable for consumers. By increasing competition and diversifying power supplies, renewable energy reduces the demand for fossil fuels, leading to lower and more stable natural gas prices for all consumers.

Under a 50% national RES, power sector natural gas prices are 35% lower than BAU in 2035. The significant reduction in power sector natural gas use would also result in lower costs for homes and businesses that use natural gas for heating, manufacturing, and other purposes.

By 2035, average retail electricity prices are 6.7% higher under the 50% RES compared to BAU, but only 0.2% higher than current levels (Figure 2). However, the reduction in natural gas prices more than offsets the increase in electricity prices, resulting in $34 billion (0.6%) in cumulative net savings on combined consumer natural gas and electricity bills from 2020-2035.

Figure 2. US Average Retail Electricity Prices

A typical household using 600 kWh per month would pay $18 per year in higher electricity bills in 2030, and $51 more in 2035 compared to BAU. However, for the nearly half of U.S. homes that heat with natural gas, typical annual natural gas bills would be $43 lower in 2025, and $94 lower in 2035. Lower natural gas bills for industrial and commercial consumers would also offset slightly higher electricity bills.

A smart climate solution

Increasing renewable energy use is a smart, cost-effective way to reduce carbon dioxide (CO2) emissions. A national RES is key strategy that would put the US on course to decarbonize the power sector and meet the Paris Climate Agreement.

Under BAU, U.S. power sector CO2 emissions flatten out and then increase after 2030 due to the increase in natural gas generation. In contrast, CO2 emissions would be 46% below BAU levels in 2035 under a 50% national RES (Figure 3). Cumulatively, the 50% RES would reduce CO2 reductions by 4.2 billion metric tons from 2020-2035. These reductions, combined with reductions in other air pollutants, would result in $140 billion in cumulative climate and public health benefits by 2035 based on the U.S. government’s 2016 estimates for the social cost of carbon.

Figure 3. US Power Sector CO2 Emissions

Udall bill offers a pathway to US leadership on clean energy

From our analysis, we can see that Senator Udall’s proposal would put the U.S. on course for decarbonizing the power sector by mid-century. Additional climate and clean energy policies will be needed to meet US climate goals. This includes policies like a carbon price or cap, stronger energy efficiency standards, increased funding for clean energy R&D and infrastructure investments, and incentives for greater electrification of transportation, buildings and industry. Considering the significant economic, consumer, and climate benefits, a strong national RES should be a top priority as Congress considers new policies to transition America to a low-carbon energy future.