Electricity still accounts for about 20 million metric tons of CO2, or 20 percent of the statewide total.

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Washington state has proposed an ambitious goal to reduce its carbon emissions to 80 percent below 1990 levels by 2050. Because of abundant clean energy resources, such as hydro, nuclear and wind, the transportation sector is the largest source of carbon emissions in Washington. But electricity still accounts for about 20 million metric tons of CO2, or 20 percent of the statewide total.

The reasons to reduce CO2 output are many – and important. Reduced snowpack, increased forest fires, higher river and ocean temperatures, agricultural impacts and sea-level rise all are identified by the state Department of Ecology as potential effects from rising temperatures caused by too much carbon dioxide.

The question is how we meet carbon-reduction goals in balance with affordable energy and quality of life. For the electric utility sector, add keeping the lights on and the power flowing. A new study by San Francisco-based Energy and Environmental Economics (E3) looks at how climate goals can be reached in the Pacific Northwest, with an eye toward policies that keep costs down while still clearing the air of carbon. The study is sponsored by the utility members of the Public Generating Pool, Benton County Public Utility District and Energy Northwest.

The study maintains its eye on the prize throughout – carbon reduction. It does so by looking at different scenarios that each use a range of tools, such as higher renewable portfolio standards or carbon pricing. One scenario excludes any new natural gas plants from being built in the region.

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“The study finds a technology-neutral policy has the best chance at achieving the reductions at the lowest cost,” said Arne Olson, E3 partner.

In the beginning

Initiative-937, passed by Washington voters in 2006, helped to kick-start the wind energy industry in the state through a renewable portfolio standard, which requires large utilities to meet 15 percent of energy needs with qualifying new renewable resources such as wind and solar (existing hydro was excluded). Washington state is now home to thousands of megawatts of wind power, which are helping to reduce carbon emissions from fossil power plants across the region. But would simply bumping the RPS to 50 percent be the least-cost option for achieving future carbon goals? The study says no.

“As we shift our focus to carbon emissions, those policies (a RPS) have some unintended consequences,” according to Olson.  A big one is oversupply, which occurs when there is more renewable energy production than the grid can absorb. When that happens, renewable generators sometimes have to pay customers to take their electricity. This happened frequently in California last year due to solar generation coming online combined with very high hydropower production.

The E3 study found the most cost-effective strategy is one that involves eliminating all coal generation (coal accounts for 80 percent of electricity sector emissions for Washington and Oregon) and replacing it with a combination of energy efficiency, renewables (about 11,000 megawatts) and natural gas generation (about 7,000 megawatts). (Note: These numbers are for the Pacific Northwest region, not just Washington state). This scenario uses market-based policies to achieve 21 million metric tons of emission reductions, an 80 percent reduction below 1990 levels. The cost?  About $1 billion per year, or 6 percent more than a base scenario which does not include any new policy initiatives.

Compare that to the 50 percent renewable portfolio standard scenario which would cost more than twice as much, $2.1 billion per year, but yield only about half the carbon reduction results, just 11 million metric tons of emissions reductions. The study shows that new wind and solar tend to reduce gas generation instead of coal, and more than 60 percent of the renewable energy is either exported or curtailed.  As states such as California race to increase their RPS mandates, the study’s results are a reason to pause and re-evaluate the path forward.

Prohibiting the construction of new natural gas plants is even less effective. This scenario adds $1.2 billion per year of costs, but carbon emissions are largely unchanged because older, less efficient gas plants simply run more. Some amount of new gas generation is needed to ensure that power is available when we need it most, and can be accommodated without increasing overall emissions.

Equally important to sound carbon reduction policy is maintaining existing zero-carbon generation resources. The study found these resources, such as the Columbia Generating Station nuclear energy facility and large hydro dams, provide significant benefits under a carbon cap scenario. Replacing only 2,000 MW of these resources with carbon-free electricity would require 5,500 MW of renewable energy capacity along with “2,000 MW of new natural gas capacity to meet peak load needs,” the study said, at an additional cost of $1.6 billion per year.

Going forward

Efforts to limit or remove fossil fuel generation from the Northwest energy mix have been largely successful: 73 percent of the Washington/Oregon electricity mix is already carbon-free. The E3 study highlights the plusses and minuses involved in future policy decisions that could result in cleaner air for less cost.

“These issues of how to do decarbonization in the least-cost way and manage larger amounts of wind and solar on power grids are really global issues. So the learning that we’re doing here will be able to help other people across the U.S. and around the world,” Olson said. “It’s probably time to focus on policy that really gets to the bottom line goal which is carbon reduction.”

Energy Northwest develops, owns and operates a diverse mix of electricity generating resources, including hydro, solar and wind projects – and the Northwest’s only nuclear energy facility. These projects provide enough reliable, affordable and carbon-free energy to power more than a million homes.