from Energy, Security, and Climate and Energy Security and Climate Change Program

Obama Wants 80% Clean Energy By 2035. What Does That Mean?

January 25, 2011

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

[UPDATE: I’ve updated these numbers, based on a 50% credit for gas, here.]

President Obama announced a big new energy goal in his State of the Union address tonight: generating 80% of America’s electricity from clean sources by 2035. In the interest of helping people get a sense of what that means, here’s my quick analysis of how that compares to past climate proposals. The bottom line is that this looks more ambitious, at least for the electricity sector, than the climate bills that failed last year.

My reference point is the ill-fated Kerry-Graham-Lieberman (KGL) cap-and-trade bill. You can find the EIA analysis of that bill here. (That’s where I’m getting my raw numbers.)

Under “business-as-usual”, 55% of U.S. electricity in 2035 comes from “clean” sources. (Obama appears to define “clean” to include natural gas, so I follow the same convention here.) Under the main KGL scenario, that increases to 74%. The goal that Obama proposed tonight is considerably more ambitious.

How about electricity sector greenhouse gas emissions? The comparison is tricky. Cap-and-trade would have cut emissions both by reducing overall electricity use and by shifting the mix of generating sources. Obama’s announcement tonight focused only on the latter. The inclusion of natural gas in Obama’s announcement on the same footing as zero-carbon sources muddies up the accounting even more.

Nonetheless, here’s a crude calculation that should provide some insight. Assume, pessimistically, that total electricity consumption with the new Obama goal remains as in business-as-usual. Assume further that the share of electricity generated from natural gas increases to a whopping 33%. (It is projected to be 21% under business-as-usual, and was projected to be 20% with KGL.) My back-of-the-envelope estimate says that electricity-sector greenhouse gas emissions in this scenario would be the same as they would have been under Kerry-Graham-Lieberman. The reason for this is that coal use in the new 80% clean energy scenario would be substantially lower than under KGL – 19-20% vs. 25%. That offsets the increased emissions from natural gas.

One last point of comparison: The amount of clean energy deployed to meet the Obama goal would be far greater than it would have been under the sort of utility-only cap-and-trade scheme that was being bandied about last spring. This is not trivial.

A couple notable differences from last year’s legislation: KGL (and other economy-wide cap-and-trade schemes) would have cut emissions beyond the electricity sector. They would also have incentivized emissions cuts abroad through offsets.

The big question, of course, is whether this Congress is willing to put in place the incentives that will be needed to meet this objective. I very strongly doubt it. But that does not make it unwise to start having a conversation about how to reach this goal.

I’ll have more thoughts on the extensive energy and climate remarks in the SOTU later.

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