Deep Decarbonization Cost Assessment

The scope of costs in Meeting the Challenge of Our Time: Pathways to a Clean Energy Future in the Northwest is limited to energy system costs, which represent the annual cost of producing, distributing, and consuming energy.

This study considered the annualized capital costs of equipment (both supply and demand), fixed and variable operations and maintenance (O&M) costs, and fuel costs. (See Appendix C for details on the cost assumptions used in this study.) The study excludes costs outside of the energy system or benefits from avoiding climate change and air pollution.

The study compares the annual costs of the Business as Usual Case and the Central Case from 2020 to 2050. Net annual costs of the Central Case vary over the modeled period based on the timing of infrastructure investments, peaking at 16.1% ($9.8 billion) above the Business as Usual Case in 2038 and decreasing to 8.3% ($6.1 billion) higher than the Business as Usual Case in 2050.

The cumulative costs of decarbonizing the energy system in the Central Case are 9.5% higher than the capital and operating expenses of the Business as Usual Case’s energy system, roughly 1% of the region’s total GDP in 2017 of more than $870 billion as this figure shows:

Meeting the Challenge of Our Time, page 47

The increased costs in a decarbonized system consist primarily of biofuel feedstocks and infrastructure, demand- side electrification and efficiency investments, and renewable power plants and supporting electricity infrastructure. These increased costs are mitigated by the savings from decreased fossil fuel use, primarily expensive liquid petroleum products.

In the figure below, the black line shows the net annual energy system costs as the difference in cost between each of the cases (except the Increased Northwest-California Transmission Case) and the Business as Usual Case. The stacked areas show the differences in investment by category between each case and the Business as Usual Case. Investments in additional clean energy measures  (positive cost differences) are offset by avoided fuel purchases (negative cost differences).

The most impactful sensitivities in terms of net system costs include prohibiting new gas assets, not achieving demand-side transformation, and constrained biomass. Because 100% clean electricity has only a marginal change from the Central Case, it has minimal impact on costs.

Meeting the Challenge of Our Time, page 48

Increased gas in transportation allows access to a lower-emissions/lower-cost fossil fuel than diesel, but as previously noted, this result does not consider the carbon emissions of methane leakage, so its lower cost must be viewed in light of its uncounted higher carbon emissions. Further, there are technical challenges with using pipeline gas for heavy-duty trucks as the figure below shows:

Meeting the Challenge of Our Time, page 49

Most cases show a slight increase in household expenditures in the 2030 time frame—roughly $25 per month. But by 2050, most cases show small monthly savings, due to the increasing cost-effectiveness of electric vehicles and the elimination of gas costs.

The Limited Electrification and Efficiency Achieved Case has the lowest cost in the 2030 time frame as it does not have to incur as much in incremental costs for electric vehicles and other electrified appliances. But by 2050, limited electrification necessitates huge investments in electric sector infrastructure for electrolysis and direct air capture to produce electric fuels and biofuels to offset the increased fuel usage, driving up costs.

Meeting the Challenge of Our Time, page 50

In 2050, the average cost of avoided carbon in the Central Case is $48/tonne and declining. The model makes conservative assumptions about the costs and scalability trends of clean energy technologies. A future report will explore in greater depth details on costs and emissions reductions, the assumptions that returned these results, and what these results mean for how the Northwest should consider investing in transitioning the region to a low-carbon economy.

For additional information on the Northwest deep decarbonization pathways study, please see:

Eileen V. Quigley

Founder & Executive Director
Eileen V. Quigley is Founder and Executive Director of the Clean Energy Transition Institute. Eileen spent seven years at Climate Solutions identifying the transition pathways off oil and coal to a low-carbon future in Washington and Oregon. She built and led the New Energy Cities program, which partnered with 22 Northwest cities and counties to reduce carbon emissions. As Director of Strategic Innovations, she oversaw New Energy Cities, as well as Sustainable Advanced Fuels.
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