Infrastructure Constraints on Energy Transitions

Abstract:

A major obstacle to large-scale transition of the energy sector is its capital intensiveness, the large fixed investment in long-lived infrastructure such as pipelines, refineries, and power plants. Because much of this infrastructure is exclusive to fossil fuels, any transition requires replacing existing assets, and an overly rapid transition requires absorbing losses from premature retirement of “stranded assets”. Insight into plausible timescales of energy transitions has been hindered by lack of a comprehensive accounting of energy-related assets, and by lack of comprehensive analysis of past energy transitions. We report here on two efforts to meet this need and help modelers and policymakers in understanding the cost and timing of potential future energy transitions: a physical inventory of all current long-lived energy infrastructure in the United States, and a historical study mapping 200 years of evolving energy use disaggregated by end-use sector as well as by fuel. The infrastructure inventory involves a listing of all assets, as well as their upfront costs, typical service life, and age structure where available. We find that the collective replacement cost of long-lived assets in the U.S. energy system in the benchmark year of 2012 is ~$9.8 T, two-thirds of which ($6.4 trillion) is exclusive to fossil fuels. This total is equivalent to ~$30,000 per U.S. resident in replacement cost ($16,000 in depreciated value), or $3 per Watt of primary energy flow. The historical study involves archival research to track evolving energy use in the U.S. from 1800 to the present, across the transition from wood to coal and into the current era where coal use is narrowly restricted to the electric sector. Per capita coal use peaked in 1920, when it was the dominant fuel in every sector (industrial, residential, and transportation); within three decades it was displaced for nearly all non-electric uses by natural gas and petroleum. Historical data suggests that both the adoption of coal and the movement away from it were governed less by price than by the construction of large-scale infrastructure for transporting energy: railroads for coal and pipelines for oil and gas. All data are publicly available, and visualizations are available at us.infrastructure.rdcep.org and us.sankey.rdcep.org.