Insights from “Deep Decarbonization in a High Renewables Future” (CEC EPIC-14-069) and other recent E3 analysis CARB Public Workshop on Carbon Neutrality: Scenarios for Deep Decarbonization

August 15, 2019

California Scenarios to 80% Reductions in GHGs by 2050

Amber Mahone

Energy+Environmental Economics

2

2018 CEC study evaluated 10 scenarios to 80% GHG reductions by 2050 (“80x50”)

By 2020: return GHGs to 1990 levels (AB 32, 2006)

By 2030: 40% below 1990 levels (SB 32, 2015)

By 2050: 80% below 1990 levels (EO B-30-15 and EO S-3-05)

By 2045: Carbon neutrality (EO B-55-18) not evaluated in CEC analysis

Reference

Mitigation Scenarios

SB 350 Scenario

2030 goal: 40% below 1990

2050 goal: 80% below 1990

California Historical GHG Emissions and GHG Scenarios

Source: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

600

-G.I 500 N 0 ~ 400 ~ ~ 300 -u, C 0 ·v; u, ·-E

LI.I

200

100

0

1990

Energy+Environmental Economics

----·

2000 2010 2020 2030 2040 2050

3

Four “Pillars” to an 80% GHG reduction (Add negative emission technologies to hit carbon neutrality)

* Nuclear, Carbon Capture and Storage, CO2 removal technologies, and emissions from Land Use, Land-Use Change and Forestry (LULCF) and black carbon are not included in analysis.

Sequester carbon & reduce non-

combustion GHGs

Energy efficiency & conservation

Electrification Low-Carbon Fuels

Vehicle and freight

electrification

Industrial efficiency

Vehicle efficiency &

smart growth

Industrial electrification

Building electrification

Building efficiency & conservation

Nuclear, Carbon Capture & Storage*

Biofuels

Renewables and

hydroelectric

Soil & forest carbon, CO2 removal, black

carbon*

F-gases, N2O, CO2from cement

Methane (manure, dairy, gas leaks, etc.)

Energy+Environmental Economics

44

Ten Mitigation Scenarios Test Different GHG Reduction Strategies & Risks

Mitigation Scenarios Scenario description

High Electrification Electrification of buildings and transportation, high energy efficiency, renewables, limited biomethane

No Hydrogen No fuel cell vehicles or hydrogen fuel, includes industrial electrification

Reference Smart Growth Less reductions in vehicle miles traveled, additional GHG mitigation measures in other sectors

Reduced Methane Mitigation Higher fugitive methane leakage, additional GHG mitigation measures in other sectors

Reference Industry EE Less industrial efficiency, additional GHG mitigation measures in other sectors

In-State Biomass Less biofuels with no out-of-state biomass used, additional GHG mitigation measures in other sectors

Reference Building EE Less building efficiency, additional GHG mitigation measures in other sectors

No Building Electrification with Power-to-Gas

No heat pumps or building electrification, additional GHG mitigation measures in other sectors

High Biofuels Higher biofuels, including purpose grown crops, fewer GHG mitigation measures in other sectors

High Hydrogen More fuel cell trucks, fewer all-electric vehicles

The High Electrification Scenario is among the lower cost, lower-risk scenarios evaluated

Energy+Environmental Economics

5

Example timeline of GHG reduction measures in High Electrification Scenario

100% new car sales = ZEVs

96% zero-carbon electricity

33% renewable generation

building & industrial EE retrofits Begin installing electric heat pumps

74% zero-carbon generation 6 million ZEVs on the road50% heat pumps sales

100% heat pump sales12% reduction in per capita VMT relative to 2015

10% of remaining fossil fuels = advanced biofuels40% reduction in methane and F-gases

Nearly half of remaining fossil fuels = advanced biofuels

100% of truck sales are ZEVs, hybrid or CNG

30% of new car sales are ZEVsSignificant drop in per capita VMT

California Historical GHG Emissions and GHG Reduction Strategies in the High Electrification Scenario

Source: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

600

500

-C1)

8 400 u t-2 2 300 -V)

C: 0 -~ v, 200 E w

100

0

1990 2000

Energy+Environmental Economics

HI

2010 2020 2030 2040 2050

66

Buildings and vehicle sales shift to low emissions alternatives

Light Duty Vehicles% of new sales in High Electrification Scenario

BEV

Diesel

Hybrid Diesel

Hydrogen

CNG

Heavy Duty Vehicles% of new sales in High Electrification Scenario

Hybrid Diesel

Hydrogen

CNG

Gasoline

BEV

Medium Duty Vehicles% of new sales in High Electrification Scenario

Diesel

GasolinePHEV

BEV

Hydrogen

Natural gas High Efficiency Heat Pump

Space Heating (Residential, similar for Commercial)% of new sales in High Electrification Scenario

Water Heating (Residential, similar for Commercial)% of new sales in High Electrification Scenario

Natural gas High Efficiency Heat Pump

Electric resistance LPGReference electric heat pump Electric resistanceLPG

Source: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

100%

90%

80%

70%

] 60%

"' ~ 50%

'if/. 40%

2020

30%

20%

10%

0%

2015

202S

2020 2025 2030

2030 2035 2040 204S

Energy+Environmental Economics

20S0

2035

100%

90%

30%

20%

10%

0%

201S

2040 2045 2050

2020 202S 2030

100%

90%

80%

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2020

2045 2050

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100%

90%

30%

20%

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0% 2015

2030 2035 2040 2045 2050

2020 2025 2030 2035 2040 2045 2050

7

Maintaining electric reliability

…in a high renewables, low-carbon future will require some form of very long-duration storage or firm dispatchable capacity (e.g. gas generation running on biomethane)

Electric Resource Supply and Loads During a Multi-Day Low Renewable Generation Event with Zero Dispatchable Gas Capacity (2050)

Source: E3, “Long-Run Resource Adequacy under Deep Decarbonization Pathways for California,” June 2019

250

200

S ppl

lSO

so

Energy+Environmental Economics

Multi-day low renewable generation event

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Achieving carbon neutrality by 2045 will likely require going beyond “80x50”

Significant progress is needed across all four pillars, with fastest ramp -up between today and 2030

Reference

Bookend Ranges of Mitigation Cases

Reduce non-combustion emissions

Energy efficiency & conservation Electrification Low-Carbon Fuels

100% zero-carbon energy by 2045?

100% reduction in non-energy GHGs by 2045?

Source: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

Faster and broader electrification?

Faster and broader energy efficiency?

180

160

140

120

100

80

60

40

20

0

Primary Energy Efficiency (MMBtu/person-yr)

+

70%

60%

50%

4()%

30%

20%

10%

°"

Energy+Environmental Economics

Share of Electricity and Hydrogen (% of Total Energy)

.,, s N

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s N

.,, s N

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Zero Carbon Energy (% of Primary

Energy) ~,~

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200%

150%

100%

50%

Non-Combustion Emissions Relative to 1990 (%)

9

Remaining GHGs in 2050 point to mitigation needed for carbon neutrality

California 2050 GHGs High Electrification Scenario (86 MMT)

= 2015 emissions

Remaining 2050 emissions are mostly from industry, trucking, aviation, cement, and waste, dairy & agricultural methane

Source: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

120 X

X 100

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Energy+Environmental Economics

10

High priority GHG mitigation strategies & key challenges to achieve ‘80x50’

Scale Up & Deploy Key Challenges

Energy efficiency in buildings & industry Consumer decisions and market failures

Renewable electricity Implementation of integration solutions

Smart growth Consumer decisions and legacy development

Market Transformation Key Challenges

Zero-emission light-duty vehicles Consumer decisions and cost

Advanced efficiency/ building electrification

Consumer decisions, equity of cost impacts, cost and retrofits of existing buildings

F-gas replacement Standards needed to require alternatives

Methane capture Small and diffuse point sources

Reach technologies Key Challenges

Advanced sustainable biofuels Cost and sustainability challenges

Zero-emissions heavy-duty trucks Cost

Industrial electrification Cost & technical implementation challenges

Electrolysis hydrogen production CostSource: Mahone et al, (2018) “Deep Decarbonization in a High Renewables Future”, California Energy Commission CEC-500-2018-012

Energy+Environmental Economics

11

Key Conclusions

Consumer decisions are the lynchpin to meeting 2030 GHG target • Investing in energy efficiency improvements in existing buildings• Purchasing and driving zero-emission vehicles• Installing electric heat pumps for HVAC and water heating• Carbon pricing, incentives, and business and policy innovations could all

drive the needed market transformation to reduce costs, improve performance and increase choices for these key consumer-facing strategies

85% - 95% zero-carbon electricity is needed by 2050• Renewable diversity and integration solutions are needed to reduce costs

At least one “reach technology” that has not been commercially proven is needed to help meet the longer-term 2050 GHG goal, and to mitigate risk of other solutions falling short• A “reach technology” should address difficult to electrify end-uses

(e.g. heavy-duty trucking, industry)

Energy+Environmental Economics