Summary: This study shows that the U.S. electricity sector can meet projected electricity demand while reducing CO₂ emissions by 90% from 2005 levels. If nuclear generation costs remain at current levels as estimated by the U.S. Energy Information Administration, and renewable costs fall substantially, so that levelized cost of energy (LCOE) costs are well below natural gas generation costs, the authors project a considerable expansion, especially of wind, even without a CO₂ price. Given the low LCOE, one might expect a complete phase-out of carbon fuel-based electricity without a carbon price. However, the study finds that it takes a substantial carbon price to achieve deep decarbonization. Moreover, modest advances in lowering the cost of nuclear by about 2.5 cents per kilowatt hour create a substantial role for nuclear, and reduce the needed carbon price by two-thirds. Continued focus on lowering the cost of baseload generation from low-carbon sources such as nuclear would make achieving deep reductions in carbon emissions much less costly. 

Abstract: Continued improvements in wind turbine and solar PV technologies have reduced their costs to the point that they are nearly competitive with natural gas generation. This would seem to suggest there is little reason to look at other low carbon power sources such as nuclear, considering that the cost of building nuclear power plants, one of the main low carbon alternatives in the power sector, has remained high. However, simple costs metrics such as levelized cost of electricity are poor indicators of the full system cost and the competiveness of different technologies. We use then an hourly electricity dispatch and capacity investment model, EleMod, to investigate whether nuclear power has a potential role in decarbonizing the US power sector, assuming that the cost of wind and solar continue to decline such that they become the least expensive of any generation option in terms of levelized cost.

We find that solar and wind expand to about 40% of generation even in a scenario without any carbon policy. Under an electricity-sector policy to reduce CO2 emissions by 90%, we find that existing nuclear is almost phased out, and no advanced nuclear, at a cost of $0.076/kWh (2006$), is built while solar and wind expand to provide over 60% of power generation in 2050, with most of the rest coming from gas, hydro and some still operating existing nuclear plants. However, if the cost of advanced nuclear is reduced to $0.05/kWh (2006$), in the emissions reduction policy case wind and solar expand until they reach about 40% of generation, as they did in the no policy scenario, and then nuclear expands to meet the remaining low carbon power supply. Our simulations show that the availability of nuclear reduces the needed carbon price in the power sector to meet the 90% reduction target from near $120/ton (2006$) of CO2 to under $40/ton (2006$) by 2050. From these results, we can conclude that the additional system costs of wind and solar are minimal until they reach about 40% of power supply, but after that level these extra costs rise, making room for other power technologies such as nuclear, which can significantly reduce the carbon price needed to achieve deep decarbonization in the US.

Summary: Carbon dioxide emissions from aircraft are projected to triple between now and mid-century, even if substantial technology and operational improvements are implemented to make flying more energy efficient. Absent policy constraints, this explosive growth rate will use up a significant proportion of the Earth’s CO₂ emissions budget if global warming is to be capped at 2°C. To help address the problem, the International Air Transport Association in 2009 set goals to achieve carbon-neutral growth after 2020, and to reduce aviation emissions in 2050 by 50 percent relative to the 2005 level. Toward that end, the industry agreed in 2016 to a market-based measure called the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Under the measure’s provisions, airlines are required during the 2021-2035 period to fund reductions in CO₂ emissions in other sectors to compensate for aviation CO₂ emissions exceeding the 2020 level through the purchase of carbon offsets. 

While well-intentioned, the CORSIA is an inefficient measure for incenting the aviation industry to abate emissions in a timely manner, That’s because (1) under CORSIA’s offset obligation rules, airlines will derive limited cost savings from implementing abatement options that cost less than price of an offset; and (2) the offset price is likely to be significantly lower than the social cost of carbon (SCC), the dollar value of the total damages to society from emitting one ton of CO₂ into the atmosphere, which further reduces incentives to abate emissions. This study advances its own solution: a carbon pricing system for international aviation that incents airlines to implement all CO₂ abatement options that cost less per ton of CO₂ emissions abated than the SCC. This would result in a “socially efficient” level of emissions abatement at which net social benefits—gains from avoided climate damages minus total abatement costs—are maximized, thus delivering a “win-win” for the aviation industry and the planet.