Challenges and Opportunities Economy-Wide Decarbonization Pathways in California

Aiming to achieve a deep decarbonization target by mid-century, California has made continuous efforts in developing a portfolio of policy strategy that combines economy-wide targets with sector-specific requirements, and technology-specific mandates. The economy-wide emissions targets focus on the mid-term (2030) and mid-century (2050) goals thus provide flexibility in clean energy technology development pathways. The extent of the flexibility, however, is constrained by the complementary measures proposed to develop low-carbon solutions in certain sectors. Therefore, it is critical to evaluate different mitigation strategies to improve the understanding of challenges and opportunities for California. To capture the technology details while examining the economy-wide policy impact, we employ an integrated top-down bottom-up modeling framework (USREP-EleMod) that combines a recursive dynamic multi-sector computable general equilibrium model with an hourly dispatch and capacity expansion electricity model. Ongoing results show a substantial carbon price increase over the years as a consequence of the stringent economy-wide GHG emissions reductions of 40% by 2030 and 80% by 2050. By 2030, the expected price is close to $220 per tCO2 and rises above $400 per tCO2 by the end of the time horizon. Because of this, renewable natural gas (RNG) starts to become competitive against natural gas (NG), and gradually grows to meet carbon-free fuel demand from different sectors in particular the industrial sector. By 2050, total NG consumption falls by 2.8 Quads whereas total RNG increases by 1 Quad. In the electricity sector, we observe that the generation mix heavily relies on solar and wind resources to meet the carbon-free target by 2045. However, we also note that the electricity sector increases the use of RNG and CCS technologies as a substitute for conventional NG Combined Cycles and Combustion Turbines.