Is Joe Biden’s Green New Deal Really Feasible?
Joe Biden has proposed a climate change framework that aims to zero down on carbon emissions and create millions of new jobs by 2050.
July 2 2019, Updated 1:12 p.m. ET
Green New Deal
Climate change is becoming one of the most important issues in the 2020 presidential election campaigns. US utilities rely heavily on fossil fuels for power generation, which contributes to greenhouse gas emissions. Joe Biden, a Democratic front-runner, has proposed a climate change framework that aims to zero down on carbon emissions and create millions of new jobs by 2050. He estimates that the plan will cost $1.7 trillion. The plan would be partially financed by higher taxes. Republicans have already criticized the plan as an economic threat that isn’t feasible. Although challenging, there’s a need to substantially reduce, if not totally eliminate, the use of fossil fuels in electricity generation.
High costs
However, the cost to shift the entire power generation mix in the US from fossil fuels to cleaner sources could be extremely high. According to a report from Reuters, eliminating oil and gas from power generation in the next 20 years would cost $4.7 trillion. Eliminating oil and gas would involve economic and social challenges based on studies from Wood Mackenzie—an energy research firm. The cost translates to $35,000 per household for the next 20 years. The cost estimate only considers the US power sector. The estimate excludes sectors like transport, manufacturing, and agriculture.
Many Americans agree that aggressive actions must be taken to tackle climate change. However, very few Americans continued to support the actions when they learned about the costs involved.
Long way to go
According to the EIA (U.S. Energy Information Administration), fossil fuels accounted for 63.5% of the total power generated in the US in 2018—27% came from coal. Renewables contributed 17.1%, while nuclear contributed 19.3%. The power generation in the US has shifted from coal to natural gas in the last few years due to lower costs. According to the EIA’s estimates, since the beginning of 2015, almost 47 GW (gigawatts) of coal-fired capacity has retired, while another 4.1 GW will retire this year.
Many top utilities (XLU) like Duke Energy (DUK) and American Electric Power (AEP) still rely heavily on coal for power generation. American Electric Power generates ~47% of its total power from coal. NextEra Energy (NEE), the biggest utility by market cap, has a relatively cleaner energy mix. In 2018, NextEra Energy used 25% renewables, 26% nuclear, 48% gas, and 1.5% coal.