A 2040 vision for the US power industry

A number of PJM states have announced decarbonization policies. These could reduce PJM’s emissions by 49 percent by 2040 (relative to 2017) and economy-wide emissions in these same markets by 26 percent. We call this the status quo scenario. We also devised a hypothetical, “deep decarbonization” scenario that envisions PJM markets reducing emissions by 95 percent by 2040, and economy-wide emissions by 80 percent.

The difference between the two is stark. Under the status quo scenario, renewable power grows relatively slowly, and the overall capacity of fossil fuel–fired power doesn’t change much, though lower-cost natural gas displaces coal to a large degree.

Under the deep-decarbonization scenario, the grid shifts much more quickly toward renewable power, particularly the use of onshore wind Exhibit 2). By 2040, emissions from the power sector decline 95 percent. The transition is costly, however, requiring an estimated additional $193 billion in investment over 20 years.