The obvious blind spots in pessimistic energy predictions

The obvious blind spots in pessimistic energy predictions
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The Energy Information Administration released its Annual Energy Outlook in late January, just ahead of Groundhog Day. Like Punxsutawney Phil, the agency's ability to foresee the future is more folklore than fact. But EIA’s fossil-friendly forecasts can cause more lasting damage than a wayward groundhog.

Admittedly, EIA has a much tougher job. Its outlooks look ahead not just one month but three decades, and span all aspects of America’s energy economy. EIA’s methods are far more sophisticated than a shadow-seeking rodent, and its dedicated civil servants strive each year to improve them.

Some of those improvements were apparent in this year’s outlook. EIA now acknowledges that coal plants will continue to close, solar farms will continue to proliferate and electric car technologies will continue to progress.

But puzzlingly pessimistic predictions persist. EIA’s latest outlook shows surviving coal plants ramping up their output, the wind industry virtually vanishing and electric cars remaining a sliver of the market. Taken together, this would leave carbon dioxide emissions in 2050 more than three times as high as President Obama pledged under the Paris Agreement.

There are reasons to believe that the future won’t be so bleak. That’s because two blind spots persist in EIA outlooks.

The first is policy. EIA assumes policies will stay fixed for the next three decades, not just nationally but in cities and states and corporate boardrooms too. Sure, it’s not EIA’s role to predict breakthrough actions by Congress, like a carbon tax or a Green New Deal. But assuming policies remain completely stagnant means ignoring the likelihood of mundane steps like updated federal efficiency standards and more ambitious actions being pledged by cities, states, and businesses.

For example, New Jersey and New York last year announced plans for more than 100 times as much offshore wind power by 2030 as EIA predicts for the entire country by 2050; last month, New York Gov. Andrew Cuomo (D) more than tripled his state’s target. Cities and states have pledged through the Climate Mayors, We Are Still In and America’s Pledge initiatives to curb their emissions. Dozens of corporations have pledged to get 100 percent of their electricity from renewables. But since none of these plans are codified into law, they don’t exist in EIA’s model.

Whatever justification there may be for neglecting new policies, there’s less excuse for EIA’s second blind spot — technology. Wind turbines, solar panels, batteries and electric cars have all been galloping ahead in performance and plunging in price for years. All of that progress would abruptly slow in EIA’s outlook, contrary to ongoing trends. For example, EIA foresees electric vehicles remaining perpetually costlier than their gasoline and diesel counterparts, contrary to numerous forecasts of cost parity in the 2020s.

Sure, it’s possible that policy and technology will stagnate. But EIA blinds itself to the possibility that they won’t. That means ignoring the possibility that faster adoption and falling prices will propel each other forward in a virtuous cycle, thanks to learning curves and economies of scale.

Most troublesome, EIA doesn’t even model what-if scenarios with more rapid advances in clean energy technology, or with policies consistent with the Paris climate agreement. That sets EIA apart from virtually every other energy forecaster. The International Energy Agency and even oil companies like Shell, BP, Exxon Mobil and Equinor all model scenarios in which emissions are constrained by climate targets.

As I’ve argued before, there’s a danger in unrealistically pessimistic outlooks for clean energy. Fossil industry executives point to EIA outlooks to justify the need for ever more infrastructure. Policymakers may act with insufficient ambition if they treat EIA’s emissions outlooks as a baseline. Pessimistic outlooks may have influenced Obama’s Clean Power Plan, which set emissions caps so high that they’ll likely be met without the plan itself.

Congress can’t demand perfection in energy outlooks. After all, predictions are hard, especially about the future. But Congress could insist that EIA at least model scenarios with faster progress in clean technologies, or with policies that constrain emissions. EIA already models alternate scenarios for oil and gas — there’s no reason that clean energy innovation must remain a blind spot.

Until then, like Bill Murray in Groundhog Day, we’ll experience deja vu all over again with each annual outlook, and EIA’s blind spots will impair visions for a clean energy future.

Daniel Cohan is an associate professor in the Department of Civil and Environmental Engineering at Rice University.