Fifth National Climate Assessment
5. Energy Supply, Delivery, and Demand

Climate change affects all aspects of the energy system—supply, delivery, and demand (Figure 5.1)—through the increased frequency, intensity, and duration of extreme events and through changing climate trends (Ch. 2). Energy production and distribution are vulnerable to flooding, hurricanes, drought, wildfires, and permafrost thaw. Extreme temperatures increase energy demands and stress electricity operations, leading to outages that disrupt societal services. The magnitudes of climate threats vary temporally and spatially (e.g., droughts and wildfires in the Southwest, hurricanes and storm surge on the Gulf and East Coasts).

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All aspects of the US energy system are vulnerable to the effects of climate change.

Figure 5.1. Climate change impacts all components of the Nation’s energy system—resource extraction and processing, energy transport and storage, electricity generation, and energy end use. Adapted from DOE 2013.¹²

Energy Supply

Generation Systems

Sea-level rise, hurricane-force winds, and inland flooding impact coastal energy infrastructure and strategic national assets,^13,14 including the Nation’s Strategic Petroleum Reserve.¹⁵ The Gulf of Mexico region accounts for a significant portion of the Nation’s crude oil production, petroleum refining, and natural gas processing capacity.¹⁶ Coastal energy supply is especially affected by climate change and can disproportionately impact isolated and overburdened communities.^17,18

Storm events, extreme temperature, droughts, and wildfires damage inland energy generation systems and impact operations.^19,20 Solar and wind energy generation is affected by heat, smoke, soot, and hail.^21,22,23 Flooding and freezing of extraction, storage, and distribution equipment impact natural gas production and power generation and cause power outages.²⁴ Extreme heat reduces the capacity and efficiency of natural gas and steam turbines.^25,26 More intense hurricanes have increased disruptions to nuclear power.²⁷ Drought and extreme weather can limit biofuel feedstock supplies.²⁸ Renewable energy will be affected by changes in wind and solar resources, although the magnitudes and locations of these effects are uncertain.^{29,30,31,32,33,34} Uncertainty regarding climate impacts on wind and solar resources remains, but downscaled climate model data coupled with energy sector models are advancing.

Electricity Generation and Water Availability

Water is used in electricity generation, including in producing hydropower and hydrogen, cooling thermoelectric generators, maintaining solar photovoltaic (PV) installations,³⁵ and producing feedstocks for bioenergy. Water-dependent generation is stressed by droughts,^36,37,38 snowpack depletion,³⁷ increases in stream temperature,³⁹ reservoir evaporation,⁴⁰ dam removal to restore rivers and their societal and ecological roles,⁴¹ increasing demands for other water uses, and pumping limits that increase cost.⁴²

Most of the western United States is experiencing a megadrought, disrupting water supply and hydropower generation (Ch. 2).^37,43,44 Increasing energy demand due to higher summer temperatures, coupled with a projected decrease in summer hydropower generation, will magnify the potential for energy shortfalls.^45,46

Thermoelectric generators provide most of the Nation’s electricity and rely on significant volumes of water.^47,48,49 Deployment of some low-carbon technologies, such as carbon capture, utilization, and storage (CCUS), increases this water dependence.⁵⁰ New cooling technologies for small modular reactors provide options for addressing water availability constraints.⁵¹ The compounded impacts of decreasing summer river flows, increasing temperatures, and, in many regions, temperature limits on discharge water reduce the efficiency and generation capacity of thermoelectric generators,⁵² decreasing reliability during extreme conditions.^39,53,54 Operations relying on reservoir storage for cooling water face increasing vulnerability from storage levels dropping below critical thresholds, particularly in the Southwest.⁵⁵

Energy Delivery

Electricity Delivery

Power outages from extreme weather are increasing across the US. The average number of major power outages (exceeding 50,000 customers) increased by roughly 64% during 2011–2021, as compared to 2000–2010, with the most weather-related power outages attributed to extreme cold (22%), tropical cyclones (15%), and severe weather (58%).⁵⁶ Annual expenditures on electricity transmission and distribution infrastructure could rise up to 25% by 2090 under a very high scenario (RCP8.5) compared to a scenario without climate change.⁵⁷ Additional costs for power interruptions could reach $4.7 to $8.3 billion per year by 2090 (in 2022 dollars).⁵⁷

Extreme heat events are increasing in frequency and duration (KM 2.2).^58,59 High temperatures increase powerline sagging and reduce the efficiency of transmission and distribution, stressing the grid during periods of increased demand.^57,60 Electricity infrastructure, including transformers and transmission lines, deteriorate faster in extreme temperatures, and cables have reduced carrying capacity with rising air temperature.^25,57

Wildfires and extreme weather events pose challenges to electricity infrastructure.^61,62,63,64 Aboveground powerlines are susceptible to damage from high winds and falling vegetation.^65,66 Powerlines are also susceptible to damage and reduced efficiency from ice⁶⁷ and wildfires, including soot.^57,63,68 Flood scours, subsidence, and landslides, which increase with drought and increased groundwater pumping,⁶⁹ are damaging buried powerlines and natural gas pipelines. Coastal power substations are at risk from storm surges exacerbated by sea level rise.^70,71

Examples of extreme-events impacts on electricity delivery include substantial damage to Puerto Rico’s transmission and distribution lines after Hurricane Maria;⁷² hotter and drier conditions in the Southwest enabling stronger and longer-lasting wildfires,¹⁹ threatening the wildland–urban interface;²⁰ and risk of wildfires influencing utility-initiated power shutdowns in California during periods of high winds and dry conditions.^20,73,74

Oil and Gas Delivery

Climate change and extreme weather disrupt oil and gas supply chains.^75,76,77,78 Hurricanes, flooding, and sea level rise threaten onshore and offshore infrastructure and operations.⁷⁹ These threats would become more intense in a warming world (Ch. 2). Disruption of petroleum supplies has broader impacts on transportation, buildings, and industrial products.⁸⁰

In 2020, Hurricane Laura disrupted more Gulf of Mexico crude oil production than any other storm since 2008.⁸¹ Onshore processing facilities and power supplies were damaged, and industry response was limited by lack of resources, personnel, processing facilities, and power. Flooding from Hurricane Harvey in 2017 damaged large pipelines,⁸² and excessive precipitation damaged floating-roof storage tanks.⁸³ Hurricane Ida in 2021 disrupted up to 95% of the Gulf Coast’s crude oil and gas production.⁸⁴

Extreme cold events in areas inexperienced with such temperatures are impacting oil and gas equipment and operations.²⁴ In regions where natural gas is used for heating and power generation, cold events are challenging because of increased demand combined with the risk of infrastructure failure.^85,86

Although climate change often increases risks to energy production and delivery, warming temperatures have mixed effects on oil and gas production in cold regions. Warming benefits offshore production and shipping of petroleum products off the Alaska coast by decreasing sea ice and opening shipping routes. Average annual Arctic sea-ice extent during 2011–2020 reached its lowest level since at least 1850 (Ch. 2).⁸⁷ Ice-free summers are projected by 2050.^87,88 Warming temperatures in Alaska endanger inland oil and gas production and delivery as permafrost thawing compromises the structural integrity of wells, pipelines, storage tanks, railroads, and roads, impacting consumers and potentially contributing to methane leakage.⁸⁹ Fewer days for road travel on decreasing frozen tundra also has an impact on oil and gas exploration and production.^90,91

Energy Demand

Energy demand is projected to increase through 2050, driven by warming temperatures, increasing electrification, and economic growth.^3,92 Despite the increase, overall intensity of energy demand (energy consumed per household or per square foot of commercial floorspace) is expected to decrease.^3,92 Energy system modeling projects decreases in overall energy use relative to current levels if net-zero CO₂ emissions are achieved (KM 32.2).

Electricity demand is growing in many regions of the US, driven by population and economic growth; increased adoption of electric vehicles, heat pumps, and water heaters; and decarbonization goals, spurring additional electrification of transportation, industry, and buildings.⁹³ These trends also alter peak demand patterns.^94,95,96 Increased temperatures can further increase overall electricity demand, as illustrated in Figure 5.2.^97,98

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Due to climate change, electricity demand is projected to increase over this century.

Figure 5.2. Global change intersectoral modeling forecasts⁹⁷ that do not reflect the provisions of the Inflation Reduction Act project a potential increase in annual electricity demand of 25% to 70% from 2020 to 2050 (a) and 96% to over 215% from 2020 to 2100 (b) across much of the country, driven in part by increased ambient temperatures. Alaska, Hawaiʻi and US-Affiliated Pacific Islands, and the US Caribbean are not included due to the lack of high-resolution climate data informing those projections, but similar trends are expected. Increasing electricity demand is expected based on socioeconomic scenarios and adaptation approaches for the grid (KM 23.4). Changes are based on a very high scenario (SSP5-8.5). Figure credit: Pacific Northwest National Laboratory.

Peak Power Demand

Temperature changes and extreme events alter peak power demands, driving the need for additional investment in energy infrastructure of 3%–22% by 2100.⁹⁹ Electricity needs for cooling buildings are projected to increase energy demands through 2050.^100,101,102 By 2050, warming summer temperatures are expected to increase residential electricity demand greatest in the South and Midwest, whereas warmer winter temperatures will reduce residential natural gas demand most in the South.^102,103 By the end of this century, the maximum summer cooling energy demand in the US could increase by 27% under a very high scenario (RCP8.5).¹⁰⁴

Extreme events are expected to increase residential and commercial cooling demands,¹⁰⁰ placing additional stress on the power grid. Cooling demand in summer accounts for 30%–50% of the total daily electricity usage for the metropolitan areas of Sacramento, Los Angeles, and New York City. For every 1.8^°F (1^°C) of ambient temperature increase, daily electricity usage increases 6.2% in Sacramento, 4.7% in Los Angeles, and 5.1% in New York City.¹⁰⁵ During the 2021 heatwave in the Pacific Northwest, inland temperatures reached 120^°F.¹⁰⁶ In Portland, Oregon, peak electricity demand was one-third higher in 2021 than in either of the prior two years.¹⁰⁷ Heatwaves will increase summer electricity demands if they lead to adoption and use of air-conditioning.¹⁰⁸

Oil and Gas Demand

Demand for oil and gas is projected to remain stable in the US through 2050, with technological advances including electrification and electric vehicles reducing potential consumption.³ However, with high international demand for liquified natural gas, US production may rise, and the US will remain a net exporter of natural gas. Methane emissions associated with increased natural gas production will need to be addressed (Ch. 32).

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Decarbonization

Climate change is driving decarbonization efforts across the Nation, transforming the energy system through increased electrification and applications of wind and solar, hydrogen, bioenergy, modular nuclear, geothermal, hydropower, other long-term storage, and CCUS. Innovative energy market designs are being advanced to accelerate decarbonization. Under decarbonization scenarios that reduce economy-wide carbon emissions by at least 50% by 2030, electricity demand is expected to increase, led by transportation electrification. Demand increases vary across models from 2%–56% higher in 2030, compared to 2019 levels.¹⁰⁹ Projections of growing electricity demand in transportation vary from less than 10% to nearly 100% of sales by 2050,^{95,96,110,111} depending on future regulations, incentives, and market acceptance. Additional electrification opportunities exist in buildings, including space and water heating, and in industry, including heat pumps and waste-heat recovery.^112,113 Replacing older air-conditioning equipment with heat pumps can improve energy efficiency for space cooling and heating, and demand-side management can reduce GHG emissions by shifting loads strategically in time.¹¹⁴

Clean hydrogen, produced with low-carbon energy, including renewable and nuclear, can help decarbonize transportation and industry (Ch. 32).^{115,116,117,118,119} CCUS can reduce the carbon intensity of electricity production and combustion in industry and can be paired with bioenergy to yield additional carbon reductions.^120,121

Rapid deployment of decarbonization technologies will create additional challenges (KM 32.2).^122,123,124 For example, vehicle electrification requires expansion of electric vehicle and battery manufacturing capacity, development of charging infrastructure, expansion of transmission, adaptation of refining operations to reflect lower demand for gasoline and diesel, and emergence of industries for recycling, repurposing, or disposing of end-of-life batteries (KM 13.4).^125,126 Vulnerabilities to climate change may increase with decarbonization; for example, a greater reliance on electricity and bioenergy could exacerbate the impacts of power outages and droughts.^85,127

Consumer behaviors and social norms influence the adoption and actual performance of decarbonization technologies, such as home energy management systems and rooftop solar.^{128,129,130,131} More efficient technologies can decrease costs to consumers, increasing activities such as driving and space heating.¹³²

Resource Constraints

Global disruptions, such as the COVID-19 pandemic,^133,134 cause shortages of materials and available workforce, limiting the transition to energy system decarbonization. Some energy technology supply chains, particularly solar PV and electric vehicle batteries, are more susceptible than others to resource constraints (KM 13.4).^135,136 Island communities are especially vulnerable and slow to recover when supply chains are severed by extreme events (Ch. 23).¹³⁷

Critical materials, such as rare-earth minerals used in batteries and electric motors, are predominantly extracted and produced outside the US (Figure 17.2; Ch. 32). Geopolitical and environmental factors influence how these materials are extracted, used, and recycled (Focus on Risks to Supply Chains).¹³⁸ Securing reliable, environmentally sustainable domestic sources of critical minerals is a national priority given the growing demand for low-carbon energy technologies.¹³⁹

Energy system expansion to meet future demands requires suitable land, which may be limited by climate change.¹⁴⁰ As demand for new generation and transmission grows, integrated land-use strategies are emerging to support multiple objectives, including increases in food security, local manufacturing, and energy system resilience, as well as land and water conservation. Examples include combining solar energy with agriculture or mounting solar panels on floating structures.

Vulnerable Communities and Equity

Overburdened communities are disproportionately affected by climate impacts and energy injustice. These populations suffer more from power outages,¹⁴¹ high energy prices, and health concerns from pollutants and wastes produced by fossil fuel power plants and refineries.^{142,143,144,145} After Hurricane Ida (2021), areas with high proportions of Black residents had longer waiting times for power to be restored.⁶¹ Indoor CO₂ levels associated with fossil fuel combustion have been linked to reduced human cognition (Ch. 15).¹⁴⁶ Overburdened communities may benefit most from decarbonization and increased energy system resilience.^{147,148,149,150,151}

Extreme heat disproportionately impacts overburdened communities,^149,152 especially in urban locations where asphalt is plentiful and trees are rare.^108,153 Lower-income households that do not have or use air-conditioning are at higher health risk, such as witnessed during the unprecedented heatwaves in the Pacific Northwest (Ch. 15).^108,154

Communities without access to reliable power are more susceptible to hazards from extreme weather events. Following Hurricanes Irma and Maria (2017), rural areas in Puerto Rico and Florida had longer power outages and slower restoration times.^141,155,156 A lack of adequate insulation accentuated effects of the 2021 winter storm in Texas on Black communities of low socioeconomic status.¹⁵⁷ Power outages can increase injuries and deaths from carbon monoxide poisoning through use of gasoline-powered generators, charcoal grills, and kerosene and propane heaters inside homes lacking proper ventilation.^158,159

Energy burden (energy cost as a percentage of household income) is an indicator of community and household vulnerability.^{143,160,161,162} Nationally, rural low-income households experience the highest median energy burden at 9% (with some regions as high as 15%), compared to 3% for rural middle- and high-income households and compared to lower values for metropolitan households.¹⁶³

Energy inequities can be associated with lower-carbon energy sources. While the energy transition will create new economic opportunities, communities and individuals relying on employment and tax revenues from coal, oil, or natural gas can become more economically vulnerable. Individuals who held fossil fuel jobs may have difficulty finding a new job because of skills gaps, wage loss, long-distance commutes, or the need to relocate.^164,165 The number of solar and wind energy construction jobs in former coal communities may not be sufficient to replace the supply of former coal jobs.¹⁶⁶ Reuse of existing fossil fuel infrastructure to transition to clean energy sources may allow economically vulnerable communities to transition in place.¹⁶⁷ Employment and wage losses in fossil fuel sectors could be offset by increases in low-carbon resource industries,^168,169,170 although counties in Appalachia, the Gulf Coast region, and the intermountain West are expected to experience the most significant impacts, including to local services, as the tax base diminishes.^105,171,172

Compound and Cascading Hazards

Climate change poses acute and chronic hazards to the energy system and communities from coinciding or sequential trends and extreme events (Figure 5.3; Ch. 18). Climate projections for 2041–2050 show increased power demand in Texas at the same time power supply may decrease, due in part to potential decreases in renewable resources such as wind, as well as reductions in output power from thermoelectric power plants due to warmer ambient temperatures.¹⁷³ Sequential events can compound impacts if recovery has not occurred before the next event or hazard.^174,175 Vulnerable communities near Houston, Texas, were adversely affected by the 2021 winter storm before they had recovered from Hurricane Harvey in 2017.¹⁵⁷ Some areas may be more vulnerable to compound hazards; for example, urbanization exacerbates or combines with flooding to compound effects on coastal infrastructure.¹⁷⁶

Cyber and physical risks can add to the vulnerability of the power grid to climate change and extreme weather, especially if these events coincide.^177,178 Cyber and physical attacks are sometimes intended to compound damage to the power grid caused by extreme events.¹⁷⁹ Multidirectional flows of data, fuels, and electricity increase vulnerabilities. Furthermore, increased renewable energy penetration and distributed energy systems (technologies that generate electricity at or near point of use) are new variables affecting risk of power outages during extreme events.^177,178 New methods are available to assess power system vulnerability to these stressors and to quantify resilience.¹⁸⁰

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Sequential and concurrent climate impacts have near-term and long-term effects on electricity generation and distribution.

Figure 5.3. Drought and heatwaves can reduce electricity generation and delivery through cascading mechanisms. Droughts reduce water availability and electricity generation. Stressed vegetation, including tree mortality following insect outbreaks, fuels wildfires. Concurrently, heatwaves increase electricity demand and reliance on transmission, which can also trigger wildfires. Wildfires damage electricity infrastructure, disrupting power and associated services. Reduced vegetation increases runoff, resulting in floods and landslides and increased risk of wildfires. The cycle of events can accelerate, as new vegetation is more sensitive to droughts and heatwaves. Figure credit: Oak Ridge National Laboratory, National Renewable Energy Laboratory, and Pacific Northwest National Laboratory.

Cascading hazards can cause additional burdens to the energy system. For example, intense rains over areas burned by wildfire are projected to increase in California, intensifying flooding challenges for energy infrastructure.¹⁸¹ Summer cooling demand resulting from warmer temperatures sometimes coincides with reduced hydropower due to alterations in timing of peak streamflow.¹⁸² Additionally, flooding followed by high temperatures that increase cooling demands can overwhelm the power grid.¹⁸³

During the 2021 winter storm in Texas, extreme low temperatures caused high demand for electricity and fuels, equipment failures in fossil and renewable generation, and supply chain disruptions (Box 26.2).^24,85 Natural gas wells and gathering lines froze, compressor stations experienced power outages, and power plant equipment malfunctioned.²⁴ Disruptions to power supply and delivery triggered cascading failures in other critical sectors, including municipal water supply and medical services.^24,184 At least 210 deaths resulted from the outages and cold weather.¹⁸⁵

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Activities to increase energy system resilience include upgraded grid design, hardening of energy infrastructure, vegetation management to reduce wildfire^186,187 and trees falling on powerlines,¹⁸⁸ and clean energy microgrids for communities vulnerable to power outages.¹⁸⁹ Battery storage combined with solar PV can improve building resilience during power outages.¹⁹⁰ Strengthening natural gas pipelines, as well as conducting periodic stress evaluation and maintenance, reduces risk from subsidence.⁶⁹ Options for oil production include providing heated water systems at drill sites to prevent freezing and upgrading platform rigs to be resilient to hurricanes.¹⁹¹ Multiple opportunities are available for climate risk management in the electric utility industry,^192,193,194 with some states (e.g., California, Oregon, and New York) requiring electric utilities to conduct climate vulnerability assessments (KMs 21.4, 32.5).

Improved Climate Modeling to Inform Planning for Energy System Resilience

Improved accuracy, detail, and modeling capabilities are allowing high-resolution Earth system models and human–Earth system models to help decision-makers reduce vulnerabilities to climate change and inform energy system plans and operational strategies across spatial scales.^{14,45,195,196,197,198} For example, identifying where storm surge may threaten energy infrastructure could lead to fortifying or moving that infrastructure.¹⁹⁹ Projections of the severity and duration of future droughts could guide decisions to reduce water demand for energy supply.^200,201

Modeling advances are improving understanding of climate impacts and wildfires on transmission lines^165,202 and solar PV,²¹ stream temperature for thermoelectric power plants,⁵² and water availability for the production of hydropower⁴⁵ and hydrogen.²⁰³ Model applications include estimating lost power and restoration costs from hurricane damage.²⁰⁴ Studies have investigated integration of climate-related impacts into long-term planning to achieve resilience to future extreme events.^{39,205,206,207,208}

Efforts are underway to understand the range of climate impacts on interconnected energy systems, including improvements to multisector models,^209,210 observations⁴⁸ and analytics,^182,211,212 and development of Earth system models with advanced climate–human feedbacks.²¹³ Analyses of extreme events such as the 2021 extreme cold event in Texas,⁸⁵ the cascading power outages in California in 2020, and Hurricane Maria in Puerto Rico in 2017²¹⁴ can be used to plan and design for cross-sector resilience.

Addressing Compound Threats

Progress is underway to develop and implement solutions addressing energy system risks from compounding impacts of climate change and threats from pandemics (COVID-19), cyberattacks,^177,215,216 electromagnetic pulse events,^{85,174,176,180,217} market shocks,²¹⁸ and supply chain disruptions (KM 5.2). Examples include holistic modeling and analyses that reflect the interconnectedness of energy and water systems and the design and operation of energy systems that account for combined effects of climate trends and extreme weather events.^205,219

Hardening Energy Systems to Reduce Vulnerabilities to Climate Change

Energy system design and operations are being hardened to reduce vulnerabilities to climate change (Figure 5.4). Examples include elevating or moving equipment to avoid floods, strengthening pipelines and powerlines or moving them underground to reduce wind or ice damage and risk from wildfire, and recycling cooling water and deploying dry cooling technologies to reduce power plant susceptibility to drought.²²⁰ Improving building codes can bring changes (e.g., grid-interactive efficient buildings, cool roofs, resilient construction materials) to the built environment (Ch. 12), enabling energy and emissions reductions (Ch. 32) and technologies (e.g., adaptive buildings, PV-ready buildings; Ch. 31) to advance resilience to climate change. Drones and sensors identify wildfire risks in real time, allowing protective actions to be taken.²²¹

New tools and models are available for identifying infrastructure vulnerabilities and storm probabilities and for identifying effective hardening approaches,^214,222,223 including accelerated infrastructure investments to improve resilience of coastal systems to storm events.²²⁴

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Many strategies are available to increase energy system resilience to climate change.

Figure 5.4. While climate change results in risks to the energy system, many approaches for enhancing energy system resilience are available. Resilience options include burying powerlines, elevating critical infrastructure, Introducing microgrids and distributed generation, and improved monitoring. Figure credit: EPA, FEMA, and DOE.

Automation, Information Technologies, and Grid-Interactive Efficient Buildings

Advances in sensing, smart metering, and internet-connected appliances have enabled real-time monitoring of energy systems. Machine-learning algorithms are facilitating insights into energy supply, demand, and operations.²²⁵ The electric grid can be more resilient to climate stressors if future renewable energy generation is better forecasted, operational faults are detected and diagnosed, supply and demand are balanced to account for variable generation and vehicle charging, and cyberattacks are detected.²²⁶

Grid-interactive efficient buildings (Figure 5.5) apply energy efficiency, smart technologies, and flexible load management.²²⁷ Advanced control systems^228,229 predict energy demand in real time and maximize efficiency, minimize cost, and lower carbon emissions of HVAC systems. Application of natural gas demand response to residential heating during extreme cold conditions is projected to reduce demand by up to 29%.⁸⁶ By reducing and shifting the timing of electricity consumption, grid-interactive efficient buildings could decrease carbon emissions by 80 million metric tons per year by 2030, or 6% of total power sector carbon emissions.²²⁷

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A reimagination of building design and operation is being driven by decarbonization goals.

Figure 5.5. Grid-interactive efficient buildings (GEBs) integrate energy efficiency technologies (HVAC, plug loads, lighting), on-site renewable energy (photovoltaics), electric vehicles, and electric storage with smart sensing (HVAC, lighting, and occupancy) and control optimization to enable demand flexibility and provide excess electricity to the power grid through the smart meter when demand exceeds supply or when supply from the grid is constrained. The building automation systems can import the grid electricity pricing and carbon-intensity factor in real time and communicate the potential to reduce demand to the grid through the two-way sensor and communication protocol. Adapted from Nubbe and Yamada 2019,²³⁰ © 2019 Guidehouse Inc.

Technology Development and Deployment to Decarbonize the Energy System

A major transition is underway to decarbonize major economic sectors (Figure 5.6),^231,232,233 supported by policies (e.g., mandates to reduce fossil fuel use, tax incentives), falling costs, and technology innovations. Significant advancements in low-carbon energy technologies have been made in the electricity sector.

Growth in electric power demand is projected due to increasing electrification and ongoing economic growth. Declining capital costs and government subsidies, including IRA initiatives, are projected to drive increasing renewable energy generation from solar and wind by about 325% and 138% respectively, by 2050 as compared to 2022.³ Increased electrification of end-use sectors is projected with the adoption of more heat pumps and electric vehicles, as well as electric arc furnaces in the iron and steel industry.

Some technologies can provide energy benefits to other sectors. For example, nuclear power produces thermal energy that can be used in industrial applications, substituting for fossil fuels. In addition to reducing energy-related emissions, electricity may be more reliable, efficient, and economical compared to other energy sources.⁹⁵ High electrification rates could be supported by greater integration of renewables.^93,234

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Decarbonization will require innovative solutions across multiple sectors.

Figure 5.6. Energy system decarbonization will rely on increased innovation, deployment of clean energy technologies including carbon capture, small modular nuclear reactors, hydrogen, and further integration and electrification of residential and commercial buildings, industry, and transportation. Figure credit: DOE, Idaho National Laboratory, NOAA NCEI, and CISESS NC.

With wind and solar costs dropping 70% and 90%, respectively, over the last decade, capacity additions are reaching historic levels²³⁵ and are projected to increase (Figure 5.7).^3,112,236 Advances contributing to cost reduction include technological advances, improved efficiency in energy generation and manufacturing, reduced capital costs, and accumulation of operational experience. However, greater transformation is needed to meet goals of 100% clean electricity in 2035 and net-zero GHG emissions by 2050.²³⁷ Meeting both goals requires electrification of transportation, buildings, and industry and production of low-carbon electricity from renewable, nuclear, and fossil fuel energy with carbon capture.^112,123,238 The rate of decarbonization will be determined, in part, by public acceptance of new energy technologies and infrastructure.²³⁹

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The Nation’s electricity grid continues to expand use of clean energy technologies.

Figure 5.7. Most electricity generation projections see significant growth for renewable sources. Recently enacted legislation is anticipated to increase deployment rates for low-carbon technology. Adapted from EIA 2023.³

Advances are being made in performance and cost for other energy technologies. Over the last decade, costs of lithium-ion batteries for electric vehicles have dropped 85%,²⁴⁰ and progress is being made to recycle batteries and develop alternative materials beyond lithium. Efforts to lower production costs for clean hydrogen by 80% to $1 per kilogram could unlock new markets and create jobs in industries such as steel manufacturing, clean ammonia production, energy storage, and heavy-duty trucks.²⁴¹

Demonstrations for advanced small modular nuclear reactors have begun with design approval from the US Nuclear Regulatory Commission,²⁴² as well as efforts to use existing nuclear power plants and fossil-fueled power plants with carbon capture to generate clean hydrogen and purify water in addition to producing electricity.

Solutions for Vulnerable Communities and Energy Justice

Policies related to energy system decarbonization can promote energy equity. Procedural justice, which relates to equitable participation in and influence on energy decisions,²⁴³ is key to equitable energy solutions. Opportunities to promote energy equity and reduce energy burdens include collective, inclusive decision-making around utility-initiated power shutdowns; adopting energy storage with decentralized solutions, such as microgrids or off-grid systems;⁷³ developing community-sharing opportunities for solar energy (including rooftop solar) and energy storage;^144,244 and building emergency cooling or heating shelters to serve overburdened communities.²⁴⁵ An example of a Tribal community addressing a just transition from fossil fuels to renewable energy is the Blue Lake Rancheria Tribe’s large-scale solar and microgrid project.^223,246

Many decarbonization technologies are expected to decrease environmental impacts such as air pollution (KMs 14.5, 32.4),^{247,248,249,250} potentially benefitting overburdened communities that disproportionately experience pollution from roadways, refineries, and power plants.^251,252,253 However, impacts of some decarbonization technologies can shift the magnitude, location, and type of pollution (KM 32.4).^{254,255,256,257} Environmental regulations and permitting requirements play an important role in addressing impacts.

Energy burden remains high for overburdened groups. Many policies and programs that promote clean energy or energy efficiency are inaccessible to low-income households.²⁵⁸ Policies that fix energy prices during extreme events or prioritize energy restoration for overburdened communities can provide more equitable support.¹⁸⁴ Federal assistance programs can help communities overcome climate challenges and enhance resilience (Ch. 31).²⁵⁹ In addition, federal programs are being established to promote energy equity and serve overburdened communities.^260,261

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