Preferences, strategies, and policies for net zero carbon electricity products

Missouri University Of Science And Technology, Rolla MO

Investigators

Abstract

Preferences, strategies, and policies for net-zero carbon electricity products A growing number of jurisdictions are improving legislative frameworks and designing financial incentives to encourage multiple net-zero emission technologies in order to reduce the environmental impact of electricity generation. However, electricity generation remains a significant contributor to greenhouse gas (GHG) emissions. For example, 60% of electricity is still produced from burning fossil fuels. Carbon capture technologies have the potential to enable a sustainable electricity system, by capturing large quantities of carbon dioxide for permanent geological storage or utilization in industrial processes. Even if this technology is fast improving, only a handful of power generators have invested in carbon capture, utilization, and storage (CCUS) at a commercial scale. This is due to uncertainties in investment rate of return and other types of barriers (e.g., regulatory, institutional, public opposition, etc.). Moreover, carbon capture is not a stand-alone solution to achieving a net-zero electricity product. Producing net-zero electricity also requires a substantial shift away from fossil to renewable energy sources to produce carbon-free energy, in part due to consumer preferences for cleaner and greener sources of electricity. Recent studies also suggest that the rising competition from renewable energy technologies could create obstacles for the large-scale deployment of CCUS technologies. The degree of strategic relationship between investments in CCUS technologies versus renewable energy technologies is poorly understood. It is not yet known what combinations of these two technologies would help the nation achieve climate change goals cost-effectively. Most importantly, while consumer preference for greener energy is fairly understood, it is not well known to what extent energy consumers value the net-zero attribute of electricity achieved via CCUS technologies rather than through cleaner production. Moreover, policies designed to incentivize one investment could potentially alter incentives in the other market. This research advances our understanding of what factors are likely to have a significant impact on investment decisions regarding the adoption of one or multiple carbon mitigation technologies among power generators. This research also provides insights into the public’s preference for CCUS over renewable energy to achieve climate change goals in the energy industry. Policymakers will benefit from understanding potential trade-offs or synergies resulting from incentivizing multiple technologies at different levels. The research develops a conceptual framework where net-zero electricity can be achieved through cleaner production, CCUS, or a combination of both, and this product/service is differentiated from a traditional electricity product. Under this framework, the research team examines individual preferences for net-zero electricity products and the means of achieving it; uses economic efficiency criteria to evaluate alternative policy approaches that incentivize investments in multiple carbon mitigation strategies; and studies the strategic behavior of power generators when comparing the option to invest in cleaner production versus carbon capture technologies. Research objectives are achieved by administering surveys and developing economic models of optimization. Surveys are used to understand the public’s preference for carbon mitigation technologies (carbon capture, renewable production) and the means of achieving net-zero energy goals. The economic model features power generators and their investment decisions given market, technical, and policy parameters. The model predicts how generators are expected to respond to changes in climate policies and changes in investment costs. The research provides a theoretical foundation and an evidence-based solution that can be used by power generators to make investment decisions that are consistent with consumer preferences. The study also informs policymaking by identifying approaches that are likely to be cost-effective in addressing broader decarbonization and energy transition goals. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.