A new report from Bloomberg New Energy Finance (BNEF) has some good news for anyone who supports a greener American energy sector: 2015 will be a “transformative year” for U.S. power, as more natural gas and renewable energy will combine with fewer coal plants to create a 20-year low in U.S. power sector emissions.
“This should prove to be a watershed year for the ‘de-carbonization’ of the US power sector, with record volumes of coal-fired capacity to be shuttered, renewables capacity to be built, and natural gas to be consumed,” BNEF said in a press release, concluding that these three factors will combine to drive carbon emissions from the power sector to their lowest levels since 1994.
First, 2015 is expected to be a record-breaking year for the installation of renewable energy, with around 18 new gigawatts (GW) of power coming online from solar and wind. The previous record, set in 2012, was 17.1 GW, and most of that came from wind plants built ahead of tax credit expirations.
This year will be different, because experts think we’ll see an equal mix of solar and wind projects installed across the country. For years, wind has been leading solar, but solar has been exploding in growth recently thanks to the falling price of solar panels.
According to the report, solar will reach record installations in three areas: utility scale installations, like mega-projects in California, rooftop installations, and non-residential roof-space. This year and 2016 are important years for solar — especially for utility-scale solar — because the federal Investment Tax Credit, which offers a dollar-for-dollar reduction in federal income tax for those who invest in solar projects, is set to fall from 30 percent to 10 percent in 2017, a policy change that will make large-scale solar projects less appealing for investors.
But it’s not just a record number of renewables that BNEF thinks will drive power sector emissions to a 20-year low — it’s also the decline of coal, the most-carbon intensive type of fuel to burn.
“The US coal fleet is entering an unprecedented period of retirements,” the report states. “As the industry faces a three-pronged assault from low gas prices, an aging fleet, and stringent environmental compliance.”
Around 7 percent of U.S. coal plants are expected to be retired in 2015. Low gas prices and new EPA standards limiting the amount of mercury, acid gases, and toxic metals that can be emitted from coal plants encourage utilities to take old coal plants offline, rather than spend money trying to retrofit them.
As coal plants close, more utilities will switch to burning natural gas, a less-carbon intensive (though still not completely green) power source. Previously, natural gas use peaked in 2012, with 25 billion cubic feet burned per day. According to the BNEF report, 2015 is poised to eclipse — or at least tie — that record. This will be spurred not only by the closing of coal plants, but by the low cost of natural gas, which could help it undercut the cost of coal-fired electricity even in places where coal plants remain open.
Combined, these factors will push power sector emissions to 15.4 percent below their 2005 level, the BNEF report says. But it also warns that this might be the largest decrease we see in a while, because the chance of retiring such a large portion of the U.S. coal fleet seems unlikely to happen again, and key renewable tax credits are set to expire or take significant cuts in 2016. And, as the Washington Posts’ Chris Mooney points out, even a record-breaking year is still just a single year, not a long-term trend.
“In the grand scheme, we still will be getting more power from coal than from natural gas in 2015, more power from natural gas than from nuclear, more power from nuclear than from renewables,” he writes.
Still, a 15.4 percent drop in the power sector from 2005 is welcome news for the U.S., which has pledged to cut its total greenhouse gas emissions — from power, agriculture, transportation, industrial, and residential sectors — 28 percent from its 2005 baseline by 2025.