One of the biggest unanswered questions in the next decade is how quickly the United States can decarbonize the transportation sector, researchers from BloombergNEF say.
The market hasn’t driven a transition to low-carbon technologies in the transportation sector as quickly as it has for utilities, which have benefited from falling costs for natural gas and renewable energy over the last decade, according to data from BloombergNEF, which provides analysis and forecasts across the energy landscape for industry, financial professionals, and policymakers.
U.S. electric power emissions dropped by nearly a quarter between 2010 and 2019, whereas transportation emissions bumped up 5%, according to BloombergNEF’s new Sustainable Energy Factbook released Thursday. For the last few years, transportation has surpassed electric power as the largest-emitting sector of the U.S. economy.
The report, presented Feb. 13 with the Business Council for Sustainable Energy, takes stock of the biggest energy trends in 2019 and how the energy landscape has shifted over the last decade.
Transportation “is an area where policy really matters,” said Ethan Zindler, head of Americas at BloombergNEF.
Bloomberg NEF is “optimistic that EVs will become economically price competitive for middle-class consumers sometime in the next several years, but even once that happens, it will take time for these to become a really mass-market vehicle in a much bigger way than they are today,” Zindler added.
Consumers have been slow to buy electric cars, despite there being many more electrified options. The Sustainable Energy Factbook notes there are 44 pure battery-electric models and 35 plug-in hybrid models for sale in North America, compared with “virtually zero” choices at the beginning of the decade.
Businesses, though, are watching to see how specific policy debates play out this year, including whether Congress extends tax credits for electric vehicles, said Lisa Jacobson, president of the Business Council for Sustainable Energy. The council includes a number of utilities such as Pacific Gas and Electric and National Grid, manufacturers such as Ingersoll Rand and Johnson Controls, and various trade associations that represent the wind, solar, natural gas, and other industry sectors.
Congress last year failed to reach an agreement to extend the electric vehicle incentives, amid strong opposition from oil-state senators. President Trump has also rejected the tax credits.
“We’re hopeful that progress will be made in terms of creating incentives for consumers to more affordably purchase electric and other alternative fuel vehicles,” Jacobson said.
Another important consideration, Zindler said, is the response from automakers to the Trump administration’s proposed weakening of fuel economy limits. The White House is expected to finalize soon regulations requiring only a modest year-over-year improvement in fuel efficiency and reduction in greenhouse gas emissions from passenger cars.
A big determining factor for the trajectory of transportation emissions will be whether automakers still seek to comply with the more stringent Obama-era levels or assume the Trump administration’s rollback will be upheld in court, Zindler said.
“What will their product mix look like? Where will they make investments? How seriously will they think about efficiency?” he added. “These are really significant questions.”
Where there are fewer questions, however, is in the power sector. The U.S. is poised to build out its most renewable energy ever in 2020, due to groundwork laid by companies and technology innovations in the last decade.
In 2019, companies signed about 13.5 gigawatts of new renewable energy power purchase contracts, split roughly 60% solar and 40% wind, Zindler said. That’s roughly four times the level just two years prior, in 2017, he added.
That trend is also expanding beyond green-tinted technology companies such as Amazon and Google. Major oil companies have also started to purchase more wind and solar energy as they seek to reduce the emissions of their own operations, including powering the production of oil and gas, the factbook notes.
Renewable energy build-out has already had a noticeable effect on the grid. In April 2019, for the first time, renewable energy — including wind, solar, hydropower, biomass, and geothermal — produced more power than the U.S. existing coal fleet, according to the factbook.
To Jacobson, the data shows businesses are at the forefront of addressing climate change and reducing emissions.
“We need policies that leverage the private sector,” she said, adding businesses are likely to strengthen their own climate targets.
Ultimately, Jacobson added, the businesses she works with want to see a federal economy-wide, market-based climate policy, and she hopes lawmakers keep that in mind as they’re crafting comprehensive climate legislation this year.
“Carbon pricing is a key to this,” she said. “It’s the kind of broad-based market signal that the private sector will respond to.”
Thus far, none of the broad climate plans introduced by either party this year include a direct price on carbon.
The draft legislation unveiled last month by House Energy and Commerce Democrats opts for a clean electricity standard and a carbon price only as a federal backstop in a program where states would set their own plans to reach net-zero emissions. House Republicans on Wednesday released a suite of four bills focused on boosting carbon capture technologies, including through expanded tax incentives for projects that trap and store carbon from power plants and other industrial facilities but shied away from any sort of carbon pricing.
