Governments and societies around the world face increasing urgency in responding to climate change by accelerating the transition to a low-carbon energy system but differing views remain on the combination of energy technologies that will best achieve this goal. Identifying technological pathways is complicated by wide uncertainties in economic and technological factors.
Mort Webster and a team of Penn State researchers developed a model to help reframe the energy transition discussions. Their model demonstrates the value of flexible investment strategies and that many pathways are needed to meet the emissions reduction goals outlined in the Paris Agreement.
Webster hopes their findings will reverse policy recommendations emerging from research literature calling to adopt narrow assumptions that favor, or limit, certain technologies while advancing highly specific portfolio recommendations. The reason is simple: the future is hard to predict.
“There’s a lot of great analyses and simulations out there, but many say ‘this is the path and draw a perfectly predictable line heading straight to the year 2050,” said Webster, professor of energy engineering at Penn State’s College of Earth and Mineral Sciences. “However, two years ago natural gas was $3 a gallon, and this summer it went up to $9 in California. Nobody saw that coming. How can we predict costs or how much fuel we’ll be using in 2049?”
Webster noted that planning models with targeted mandates and specific recommendations are well-intentioned, but the reluctance to grapple with uncertainty limits their practicality. Conversely, Webster sees value in preserving options and even postponing some decisions, which follows a long-established decision science concept known as the option value.
Webster sees advantages in dividing planning models into two separate investment strategies, near-term and long-term, as a more promising way to navigate the challenge of retiring existing electricity-generating capacity for new technologies. The flexibility gained from simply recognizing that we are more certain of near-term conditions than those decades away helps avoid the selective approach found in most academic and industrial literature.
The team’s proposal is not without challenges. Many near-term and long-term strategies offer conflicting recommendations due to the vast amounts of capital investment, time, and infrastructure some technologies require. For Webster though, that simply highlights the importance of broadening the technology portfolio with a focus on adaptability.