Benchmarking 2021: Still Big Opportunities for Cleaner Power

Workers carry solar panel modules during the construction of a Silicon Ranch Corporation facility in Milligan, Tennessee.

Daniel Acker/Bloomberg via Getty Images

Climate pollution fell an unprecedented 10 percent between 2019 and 2020, continuing a sustained trend of declining climate and air pollution from the sector that generates electricity to power our homes and businesses. Last year’s decline was the sharpest single year decline over the last quarter century.

This year’s 17th benchmarking analysis by M.J. Bradley & Associates examines and compares key air pollutant emissions from the 100 largest U.S. power producers, including nitrogen oxide (NOx), sulfur dioxide (SO2), carbon dioxide (CO2), and mercury. Based on publicly reported generation and emissions data from the U.S. Energy Information Administration and the U.S. Environmental Protection Agency, the benchmarking analysis has become the standard of environmental performance reporting for the power sector.

Emissions last year were affected by a range of factors, including the global pandemic

The global coronavirus pandemic caused a sharp drop in demand for electricity in 2020, contributing significantly to this decline, particularly during the early periods of lockdown in the second quarter of 2020. Resource shifts in the generation mix were a second contributing factor. Additionally, another primary driver was the increased share of electricity produced by non-hydro renewables to a level 20 percent above the previous year, while the share of coal generation, the highest-polluting form of generation, fell by about 17 percent.

However, there are indications that last year’s drop in emissions could reverse as soon as this year.

Expectations for 2021 power sector emissions include a rebound in demand for power and rising gas prices as the U.S. (and global) economy recover. As a consequence, coal generation is widely expected to bounce back to 2019 levels. The extreme heat and cold events that we have observed already this year are also drivers of additional fossil demand. The EIA’s latest forecast of the generation mix in its Short Term Energy Outlook (STEO) includes a 21 percent increase in coal generation year-on-year in 2021, and a decrease in gas generation of 7.5 percent over the same period.

EIA Short Term Energy Outlook, July 7, 2021.

While there may be some emissions increases associated with economic recovery, it will be critical to ensure that sector emissions continue to trend downward with momentum through the remainder of this decade. This is vital to position the power sector to meet the Biden administration’s stated goals and support the decarbonization goals of the transportation, buildings and industrial sectors.

Decarbonizing electricity is the backbone of reducing emissions throughout the economy.

The Biden administration has committed the United States to delivering 50-52 percent economy-wide GHG emission reductions by 2030 through its Nationally Determined Contribution (NDC), setting the stage for strong global action on climate. NRDC has shown that reducing emissions is achievable and technologically feasible at modest costs with smart planning and policymaking. While achievable, reaching this goal is no small feat, and significant shifts towards clean alternatives to fossil-based energy must continue throughout the economy, beginning with the power sector.

The power sector is currently the second-highest emitting sector in the U.S. economy. It makes up 28 percent of net U.S. GHG emissions, lagging the transportation sector. It is foundational to decarbonization for two reasons: first, the most cost-effective opportunities and technology components of a clean energy future are within the power sector; and second, electrification of vehicles, buildings, and industry depend on a clean power sector in order to reduce emissions.

As the benchmarking report demonstrates, the portion of non-emitting generation in the power sector continues to climb, contributing to the decrease in emissions. In 2020, non-emitting resources produced 38 percent of the electricity generated, not only continuing the upward trend but also marking the highest share of clean electricity to date. The share of non-emitting sources was exceeded only by gas generation.

While the power sector continues its march away from fossil fuels and replaces them with clean sources like wind and solar, there is still a lot of room for improvement, particularly if we expect to stay on track for the Biden administration’s goals. The share of clean generation must at least double by the end of this decade in order to reach 80 percent clean by 2030 and be on track for 100 percent clean by 2035.

Now is the time to prioritize the federal policy opportunities

The Biden administration must set strong performance standards for the power sector in order to achieve its goals. It can accelerate the progress the power sector has made while catalyzing economic growth and improving public and community health by putting in place an ambitious performance standard—either via new legislation or EPA action.

Over the past four years, clean energy progress has depended largely on energy efficiency improvements, market dynamics. A number of states, cities and companies with renewable energy or clean energy standards also played an important role in advancing clean energy. These can form a solid basis for momentum. But now, there is a key federal policy opportunity to accelerate the growth of clean energy faster and farther than ever before.

The federal government can accelerate power sector progress with performance standards.

An ambitious clean energy standard, expanded tax incentives supporting clean energy and supporting technologies like energy storage, and federal funding for the build-out of interstate electricity transmission infrastructure are all key legislative policy components to executing on the 80 percent clean electricity sector goal by the end of this decade. Similarly, EPA could act to set pollution standards according to existing administrative authorities on emissions of CO2 as well as hazardous air pollutants from fossil generation. These policies would put millions of Americans to work every year, deliver hundreds of billions in public health and climate benefits, and avoid tens of thousands of premature deaths by 2030.

In this decade, as multiple studies confirm, the electricity sector must aim for 80% clean energy, achieving around 85 percent reductions in CO2 below 2005 levels by 2030 in order to stay on track towards executing on the administration’s goal of reaching an 80 percent clean power sector by 2030, as well as net-zero economy-wide by midcentury.

As the latest edition of the benchmarking report demonstrates, it is encouraging that momentum towards reducing emissions in the power sector continues. It’s nowhere near the pace that would accomplish the administration’s goal of 80% clean by the end of this decade, and 100% clean by 2035. That’s why it must act now to establish the policies to get there while supporting the economic recovery with newly created jobs and public health benefits that will make for healthier people and communities throughout the nation.

About the Authors

Starla Yeh

Director, Policy Analysis Group, Climate & Clean Energy Program

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