Exploring the impact of energy efficiency as a carbon mitigation strategy in the U.S.

Abstract

As temperatures across the globe hit record highs and extreme climate events multiply, interest in least-cost CO2 mitigation pathways is growing. This paper examines the pros and cons of strengthening demand-side options in strategies to reduce carbon emissions from the U.S. electricity sector. To date, demand-side management in the U.S. power sector has received overly simplistic treatment in energy models. To help fill this gap, we develop a customized version of the National Energy Modeling System to assess a range of demand- and supply-side policy scenarios. This enables four research hypotheses to be tested, related to mitigation costs, investment in new natural gas plants, carbon leakage, and local air pollution.We conclude that the clean power transformation can be made more affordable by improving the efficiency of energy utilization. By downscaling the expansion of natural gas plants, energy efficiency can also avoid legacy impacts. While strong energy-efficiency policies lower overall CO2 emissions, coal plant retirements can be delayed, postponing associated local air quality benefits. Thus, we illustrate a limitation of single-pollutant policies while also demonstrating the value of co-optimizing demand- and supply-side carbon mitigation options.