China and the United States are the two biggest carbon-emitting countries in the world. Decarbonization in these two countries will have material impacts on a global scale and is timelier than ever, according to a recent report from Stanford University’s Precourt Institute for Energy, Stanford Center at Peking University, APARC's China Program, and Peking University’s Institute of Energy.

The report is the product of a roundtable series, held in October 2021 that brought together leading American and Chinese current and former officials, and experts in the public and private sectors working on energy, climate, the environment, industry, transportation, and finance. The roundtables promoted discussion around how China and the United States can accelerate decarbonization and cooperate with one another to meet their carbon neutrality goals by mid-century.

The thematic areas of the roundtables included U.S.- China collaboration on climate change, global sustainable finance, corporate climate pledges, and the opportunities and challenges for the acceleration of decarbonization in both countries in general, as well as specifically for the power, transportation, and industry sectors.

The resultant report reviews the key themes and takeaways that emerged from the closed-door discussions. It builds on the “U.S.-China Joint Statement Addressing the Climate Crisis” released by the U.S. Department of State on April 17, 2021 and shares some common themes with the “U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s” released on November 10, 2021. Shiran Victoria Shen of the Hoover Institution authored the report, with contributions by Yi Cui of the Precourt Institute for Energy, Zhijun Jin of the Institute of Energy and Jean Oi, Director of APARC's China Program. 

The report suggests that tensions in U.S.-China relations have hindered the acceleration of decarbonization and that open science in fundamental research areas must be encouraged. Universities can educate future leaders, advance knowledge, and foster U.S.-China collaboration on open-science R&D, regardless of the political environment. The report argues that the most promising strategy to decarbonize energy is to electrify consumption now served by fossil fuels as much as possible while decarbonizing electricity generation. 

The roundtables identified six areas where the U.S. and China could collaborate: global green finance, carbon capture and storage, low-carbon agriculture and food processing, methane leak reduction, grid integration and greater use of intermittent renewables, and governance, including at the subnational level. The report further identifies more concrete and additional promising areas for accelerated decarbonization and bilateral collaboration, as well as the obstacles to be tackled, including institutional, political, and financial constraints. 

The Biden administration has pledged to reduce US greenhouse gas emissions to half of 2005 levels by 2030. A large share of these reductions would have to come from the power sector, with high-emitting coal-fired power plants being obvious targets for closure. Program on Energy and Sustainable Development (PESD) Associate Director Mark Thurber spoke on NPR's Here & Now about why phasing out coal-fired generation in the US by 2030 is an achievable goal -- and how we need to take care of affected workers along the way.  Listen to the interview.

Stanford's Program on Energy and Sustainable Development (PESD) is collaborating with the California Public Utilities Commissions (CPUC) on an Impact Lab that tackles an urgent policy question: How do we make sure the lights stay on as the electricity mix climbs towards state targets of 50% renewable energy in 2026 and 60% in 2030? Wind and solar are essential zero-carbon energy sources, but they are only available when the wind blows and the sun shines. Blackouts in Northern California last August were a warning that system reliability is at risk if the state doesn't act quickly to implement policies that ensure backup generation is available when needed.

The existing regulatory instrument for ensuring long-term resource adequacy, capacity payments, is not well-adapted to a high-renewables future. Capacity payments aim to ensure enough "firm capacity" is always available to keep the lights on, but the firm capacity construct is not applicable to wind and solar, which cannot be turned on and increased at the system operator’s discretion. 

The PESD/CPUC Impact Lab has proposed an alternative resource adequacy mechanism that is robust to a world of high and solar generation: auctions of Standardized Fixed-Price Forward Contracts (SFPFCs) that ensure every megawatt-hour of energy consumed in the state is hedged through long-term financial contracts. Unlike capacity payments, the SFPFCs provide a strong financial incentive for generators to meet their commitments to supply reliable energy wherever and whenever it is needed. PESD research suggests this novel policy mechanism can provide enhanced reliability and major cost savings relative to the capacity payment approach.

The CPUC has initiated a stakeholder process to consider possible implementation of this proposal, and PESD is assisting with research, policy outreach, and development of market simulation games that will allow stakeholders to gain hands-on experience with how the SFPFC mechanism would work in a realistic electricity market.

In a virtual panel discussion November 19 hosted by MIT’s Center for Energy and Environmental Policy Research (CEEPR), PESD Director Frank Wolak joined Alex Breckel, Associate Director of Strategic Research at Energy Futures Initiative (EFI), in addressing the impacts of power sector decarbonization on grid reliability. View recording

Recent record-breaking heat waves followed by rolling blackouts in California have sparked renewed discussion about the state’s options to address future power outages. Program on Energy and Sustainable Development Director Frank Wolak spoke to Bloomberg about power market reforms as one option where California could open up its electricity to retail competition.  While pricing would better reflect grid supply and demand, it’s unlikely this option would have backing given today’s political climate.   Read more (may require subscription)