Decarbonization Pathways and Impacts

Taiwan has established an ambitious Net Zero by 2050 strategy to reduce greenhouse gas emission across all sectors. Realizing this vision will require carefully balancing decarbonization objectives with energy affordability, reliability, and economic competitiveness. Success will depend on coordinated action among stakeholders—including utilities, industry, infrastructure providers, and policymakers—to develop the low-carbon energy systems, fuels, and infrastructure needed to support the transition.

To help address this challenge, Taiwan Power Company (TPC) and EPRI collaborated to develop data-driven analyses and strategic insights for the Taichung Energy Hub—a three-county region in Central Taiwan anchored by the Taichung Power Plant and a dense industrial base. By aligning energy demand, infrastructure development, and deployment pathways across sectors, the Energy Hub concept can enhance asset utilization, support technology scale-up, and create opportunities for lower-cost pathways to Net Zero.

This report summarizes the assessments conducted to evaluate net-zero pathways for Taiwan's power sector and hard-to-abate industrial subsectors within the Taichung Energy Hub and represents four strategic workstreams within the comprehensive Taichung Energy Hub project. The analyses Inform strategic planning and investment decisions for TPC, demonstrates the power sector transition to Net Zero, and enable development of regional strategies that optimize energy and infrastructure investments for power generation and industry within Taichung Energy Hub and reduce the carbon intensity of products produced there.

In recent months, conflict in the Persian Gulf region has severely impacted global trade flows of energy and related products, highlighting the vulnerability of these supply chains to geographic and geopolitical factors. Exports from Middle East countries with significant oil and gas reserves, including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Iraq, and Iran, currently account for around 40% of global crude oil trade, 29% of trade in refined petroleum products, and 14% of natural gas trade, along with 20–30% of global trade in fertilizer and related inputs. Nearly all of these exports are transported by ship through the Strait of Hormuz, a narrow passage subject to strategic control by Iran and other parties.

This study explores the energy system impacts of large-scale synthetic methane (e-gas) exports from the United States to Asia, using the US-REGEN energy-economy model. The analysis evaluates how varying levels of export demand—centered on Japan and Southeast Asia—could interact with U.S. decarbonization pathways, infrastructure constraints, and technology deployment. Scenarios span a range of demand levels and policy environments, including a Reference case and a Net-Zero-by-2050 target.

Results show that e-gas production is concentrated in regions with strong wind resources (e.g., SPP and MISO-North). Inter-regional pipeline congestion and renewable resource limits can shift production to other regions like Texas in the highest export-demand scenarios. High-export scenarios significantly increase electrolytic hydrogen production needs and drive expansion in wind, solar, and gas-fired generation, with nuclear also playing a key role in the highest-demand scenarios. In the absence of stringent national emissions targets, e-gas exports can lead to a modest increase in domestic CO2 emissions. Net-Zero targets can exert greater influence on e-gas prices than demand growth.

Robust growth in electric sector capacity in recent years has likely been slowed by technical, policy, and economic barriers, including but not limited to interconnection queues, permitting, availability, cost of emerging technologies, inflation, and supply chain delays. Incorporating these barriers into models is often challenging, resulting in a divergence between model results and realized deployment rates. This analysis attempts to address this challenge by developing scenarios that constrain deployment rates of power system assets, reflecting possible realizations of uncertain barriers.

Net-zero climate targets are being discussed and even requested; however, there is very little scientific discussion of net-zero strategies for local decision-makers such as regions, cities, and corporations. With stakeholders calling for net-zero targets, there is need for scientific guidance. This brief addresses this issue and, using available resources and illustrative analysis, generates foundational insights for more informed dialogue and development of local strategies and policies, which are critical for realistic, actionable solutions. Across analyses, the article finds evidence that net-zero is not for everyone. It is essential to consider differences in decarbonization opportunities and enabling conditions that will help balance the challenges of decarbonization and facilitate greater ambition. Companies, policy-makers, stakeholders, and researchers will find this brief to be of value given its insights regarding potential local low-carbon strategies and transitions and opportunities for progress managing the climate.

The material included in this report originally was developed as a set of technical briefing papers to accompany a series of webcasts conducted as part of EPRI’s 24/7 Carbon-Free Energy Buyers Forum collaborative supplemental project. These webcasts explored key issues associated with the procurement of hourly-matched carbon-free energy (CFE) by the federal government and large commercial and industrial (C&I) companies. This technical update summarizes information developed for this project on three key topics related to the potential deployment of CFE on a 24-hour, seven day per week basis (24/7 CFE): 1) A review of existing and advanced future carbon-free power generation technologies and their expected cost and performance; 2) Energy supply agreements and electric utility tariff designs that may facilitate deployment of 24/7 CFE; and 3) Data tracking and reporting associated with the purchase and use of 24/7 CFE products.

This is an update to the Net-Zero 2050: U.S. Economy-Wide Deep Decarbonization Scenario Analysis, originally published in 2022. The 2024 update includes revised technology assumptions, representation of current policies, emerging trends in data center loads, and a broader perspective on uncertainty with a range of technology and sensitivity cases.

To access LCRI Net-Zero 2050: Sensitivity Analysis and Updated Scenarios v2.0, click here: https://lcri-netzero.epri.com

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Data center (DC) activity and electricity use have increased rapidly in recent years and are expected to grow significantly in the years ahead, especially with emerging applications of artificial intelligence (AI) for commercial and consumer use as well as growing demand from small-scale data centers, large-scale commercial data centers, and cryptocurrency mining. The need for power has become a critical consideration for DC and AI growth with multi-year connection lead times, demand for reliable electricity, and company emissions targets all creating the potential for regional electricity supply challenges. However, projections of electricity consumption from these fast-moving technologies remain uncertain. Responses to anticipated load growth include both new investments by electric companies and direct power acquisition by DC developers. Both can reflect corporate procurement preferences for clean energy, as seen for example with recently announced dedicated nuclear and geothermal projects. An earlier EPRI white paper discusses key considerations for DC impacts on the power sector and highlights key steps to support rapid DC expansion.

This paper builds on that effort, providing updated projections for future regional load growth from data centers; estimates of load growth from other sources including domestic manufacturing, end-use electrification, and electrolytic hydrogen; and analyses of how these loads could alter electric sector investment decisions and carbon dioxide (CO2) emissions under a range of future policy (including current policy and economy-wide net-zero by 2050 cases) and corporate strategy scenarios.

Data center operation is one of the fastest growing industries worldwide. The International Energy Agency recently projected that global data center electricity demand will more than double by 2026. In the United States, the national outlook could resemble the global outlook, but is highly uncertain.

One key uncertainty that could change the trajectory of data center load growth is the use of generative AI models. Both public and corporate imaginations were triggered by the release of OpenAI’s ChatGPT on November 30, 2022. Evidence about how widely these tools will be used and how much they will change computational needs is just starting to emerge. These early applications were estimated to require about ten times the electricity—from 0.3 watt-hours for a traditional Google search to 2.9 watt-hours for a Chat- GPT query—to respond to user queries. Creation of original music, photos, and videos based upon user prompts and other emerging AI applications could require much more power. With 5.3 billion global internet users, widespread adoption of these tools could potentially lead to a step change in power requirements. On the other hand, history has shown that demand for increased processing has largely been offset by data center efficiency gains.

EPRI highlights three essential strategies to support rapid data center expansion:

1. Data center efficiency improvements and increased flexibility.
2. Close coordination between data center developers and electric companies regarding data center power needs, timing, and flexibility, as well as electric supplies and delivery constraints.
3. Better modeling tools to plan the 5–10+ year grid investments needed to anticipate and accommodate data center growth without negatively impacting other customers and to identify strategies for maintaining grid reliability with these large, novel demands.

Momentum for decarbonization is building in the United States, driven by company targets, state and federal policy, and stakeholder advocacy for greater ambition and transparency. Planning and decision-making for decarbonization will consider the interactions between technology, economics, energy demand and policy in the U.S. power sector, and the entire energy economy. This report draws insights and sensitivities from several EPRI decarbonization pathway studies and summarizes a set of key decarbonization drivers to offer a framing of the energy industry’s ongoing transformation.

However, beyond the question of “what technology mix aligns with a pathway to decarbonization?” there are several core challenges that impact the feasibility, and speed at which decarbonization can occur. These challenges include the supply chain, development of advanced technologies, reliability, electrification, demand-side participation, load forecasting, and climate resiliency. This report offers a summary of each, and highlights EPRI research and initiatives to address each challenge. The broader energy transition is comprised of these challenges, in addition to decarbonization. Furthermore, these energy transition challenges influence and interact with one another, and a broad understanding of these interactions may improve company strategy and long-term planning.