Event Debrief: Planning the Mid-Transition for Just and Sustainable Decarbonization

Key Takeaways

• Achieving net-zero emissions targets will require decommissioning—or radically adapting—roughly 80% of the existing energy system.
• The transition to a clean energy system will involve a long, uneven but gradual, “mid-transition” period, in which both fossil-based and renewable-based energy systems will need to operate simultaneously.
• The effective co-management of both systems will be crucial to protect against the consequences of unplanned industrial transitions, which can result in higher costs for all, unemployment and economic shocks, disruption of critical services, and more.
   

The world is in the process of moving from a mostly fossil-based energy system to a mostly renewable-based system. But while a lot of attention is paid to where we are going, less is paid to where we are coming from, and what we can expect from that transition in the mid-term. To Emily Grubert, Associate Professor at the Keough School of Global Affairs at Notre Dame, the “mid-transition” involves a mixture of carbon-based and zero-carbon systems, each with their own operational particularities, that will require effective coordination. As the world transitions from an energy system optimized for fossil fuels to one optimized for clean energy, there will be a period of time in the middle where it is non-optimal for both, which presents multiple challenges.

Reaching net-zero greenhouse gas (GHG) emissions will require retiring or dramatically remaking roughly 80% of the world’s current energy system. While there are many reasons to take carbon-intensive assets out of the system, Grubert urged the audience at an April 1 Energy Policy Seminar to remember that our current energy sources are supplying critical and life-saving activities today. In the United States, these assets are also primarily concentrated in the Midwest and the South, where a greater portion of overall jobs are tied to the fossil fuel industry. Retiring these assets raises important policy questions about the health of local economies, equity, and re-skilling. 

The transportation sector, the largest contributor to U.S. GHG emissions, is over 90% dependent on fossil fuels. As a result, Grubert noted, there are “many, many pieces of infrastructure that you need to transition,” which are also associated with the provision of critical public services, making the transition even more complex. Similarly, heating, particularly in colder regions, is “probably, in some ways, the hardest to transition” given the potential threat to health and safety should the system fail. A lot of electricity will be needed to replace fossil fuels in this sector, raising concerns about capacity constraints and redundancy, should a shortage occur. “De-networking” from fossil fuels over decades, while ensuring that people have adequate backups for heat, is “one of those areas where we really need to know what we’re doing.”

Ultimately, Grubert expects the mid-transition to be a hybrid landscape of two systems—one shrinking through divestment, one growing through investment. The result, Gruber said, will be two different paradigms for the energy system, probably for decades, with two different sets of requirements. With neither one being optimized, the carbon-based and non-carbon systems will constrain each other and depend on each other, while society is forced to pay for both simultaneously. “We expect decades where each system is too small to support all energy services, but too large to operate without affecting the other,” said Grubert.

Power generation is already rapidly approaching this point, with renewables starting to impose constraints on the fossil system, such as fast-ramping of thermal power plants when renewable generation is low and, conversely, the curtailment of renewables as a result of the two systems not operating well together. With different energy technologies expected to enter and exit the mid-transition at different points, the mid-transition becomes “directional, with one system shrinking and one growing,” but “not monotonic” or evenly paced. Typically, Grubert noted, disruptions begin occurring at levels of penetration as low as 20%.

The transition will also disrupt the economies of scale enjoyed by the fossil fuel system as that system begins to decline, making it more expensive and more difficult to operate. The mid-transition will also have labor market challenges: retention problems in shrinking fossil fuel industries will likely lead to a shortage in location- and skills-matched workers. For decades, the labor market will need to support training, regulations, inspections, and standards for both systems simultaneously, which also will come at a cost.

Decarbonization involves both the elimination of entire industries and the advent of new ones. While proponents of the energy transition often cite the benefits of clean industrialization—new green jobs, new industries, innovation, etc.—and the environmental benefits of decarbonization, Grubert lamented that little attention is paid to the “disbenefits of industrialization” or deindustrialization. Few examples exist of intentional phase-outs of industries, but there are many examples of the consequences of unexpected industrial collapse, such as with the U.S. coal or steel industries. “I live in the rust belt,” said Grubert, “and we know what happens when you don’t plan ahead.”

Grubert offered a few suggestions for smoothing such shocks to avoid the dangers of an “unplanned transition.” Fossil fuel industries, such as coal, are capital-intensive but relatively small employers. For example, there are only an estimated 50,000 coal miners left in the United States. Grubert pointed out that about 3% of the social cost of carbon could pay out the salaries of all workers employed in the entire U.S. fossil fuel industry. There is precedent for this option, too: the government did something similar during the consolidation of the passenger rail industry into Amtrak.

In conclusion, Grubert emphasized that an unplanned transition endangers everyone. To be successful in the mid-transition, system planners need to clearly define which systems provide which services, identify and prevent unplanned industry collapse, scale up re-skilling efforts, and not rush to close existing fossil assets without the new system being ready to replace it. “I’m not a fossil fuel apologist,” Grubert stressed, “but letting these things go away is just dangerous.”