If president-elect Joe Biden wants to make good on his promise to decarbonize the US electric grid by 2035, he’s going to have to deal with the power plants. Plants that run on natural gas, coal, and oil are the largest source of carbon emissions in the country, accounting for a quarter of its carbon footprint.
The industry has already started to shut down all those plants: 15% of the US fossil fuel power fleet shuttered between 2009 and 2018. But most of these plants are built to last 30 to 50 years, long enough to pay off the hundreds of millions of dollars it takes to build them. To meet Biden’s 2035 goal, many plants will inevitably have to be switched off before the end of their natural lifespan.
Emily Grubert, a professor of environmental engineering at Georgia Tech, wanted to get a ballpark picture of how many fossil power plants may be “stranded” by climate policy—that is, shuttered before they’ve recouped their costs. If most of the US power plant fleet is expected to live to a ripe old age in mid-century, she reasoned, the clean energy transition could be more expensive than climate hawks are betting on.
But in a paper published Thursday in Science, she found the opposite: Most of the fossil grid should be able to die a natural death on a climate-friendly schedule and leave investors whole.
Just 15% of “capacity-years” (the sum of all existing plants’ expected lifetimes) will have to be shut down before their lifespan is up in order to meet the 2035 deadline, according to her analysis of all 10,435 fossil-powered generators in the US. In other words, decarbonizing the grid by 2035 needn’t mean burning all the billions that have been sunk into fossil infrastructure.
“I was thinking that [the amount of stranded assets] was probably lower than people expect, but I didn’t think it would be as low as it is,” Grubert said. “These plants have relatively short lifespans, compared to the scale of action we’re talking about.”
Of course, Grubert’s projections are hypothetical. The US is continuing to build brand-new plants at a record rate, with at least 200 new gas plants in the works nationwide. And undoubtedly some will live longer than expected (although the rapidly falling costs of wind and solar power are tilting the scales more against fossil fuel plants all the time).
The degree to which the chart above will represent what actually happens will depend on the steps Biden and other leaders take to enforce a 2035 decarbonization target, said Melissa Lott, a senior utilities researcher at Columbia University’s Center on Global Energy Policy.
“If we establish the target now with 15 years of headway, then investments that would have gone to fossil plants will shift,” she said, because investors will realize the plant won’t be operational long enough to pay them back.
At the same time, for those plants that will still be alive and kicking past 2035, advance planning can help ward off the impacts of premature closures. Those plants are disproportionately concentrated in counties in the Midwest and Southeast with high poverty rates, Grubert found. If the costs of early closures get passed onto ratepayers, the government may need to subsidize rising electric bills in those places.
The counties that Grubert projects to have the highest fossil plant employment in 2035 also mostly have poverty rates above the national average, so layoffs there could be particularly devastating. Those communities should be especially targeted for job retraining and other transitional programs, starting now, Lott said. And those employers should start planning their finances accordingly: Just last week, Peabody Coal, which recently warned it’s poised to go bankrupt for the second time in five years, announced a plan to slash $174.5 million in healthcare benefits for retired miners.
“We have 15 years to make sure those communities have the time and resources to successfully adapt,” Lott said. Setting climate policy isn’t just about establishing carbon cutoffs: It’s about planning for how those policies will impact industries and communities.
“The policy question is to identify the kinds of deliberate steps that can be taken to align decarbonization targets with equitable economic goals at the outset,” said Seth Blumsack, a Penn State environmental economist, “as opposed to thinking about decarbonization first and equity later.”