energy efficiency: a capital offense
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Energy Efficiency: A Capital Offense. Comments to MIT NESCAUM Symposium. Thomas R. Casten, Chairman Recycled Energy Development, LLC. August 12, 2009. Presentation Summary. To reduce CO2 emissions, look at the main sources – generation of electricity and thermal energy - PowerPoint PPT PresentationTRANSCRIPT
Energy Efficiency:A Capital Offense
Comments to MIT NESCAUM Symposium
Thomas R. Casten,Chairman
Recycled Energy Development, LLC
August 12, 2009
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Presentation Summary
• To reduce CO2 emissions, look at the main sources – generation of electricity and thermal energy
• Generation efficiency could be doubled, but deploying such efficiency is a capital offense under the Clean Air Act, causing loss of permit to operate
• The failure to focus on the main sources of CO2 emissions results in costly, inefficient regulations that force citizens to pay more to heat the planet
• The single most important action is to modernize rules to eliminate barriers to efficiency and allow waste energy recycling to capture most of the value it creates.
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The Energy/Carbon Story
The Generation Story
Conclusions
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The history of accessto energy services
• Our standard of living depends on access to energy services:• Heat, power, mechanical energy
• Until recently, homo sapiens depended only on metabolic energy:100,000 years ago: Fire tamed10,000 years ago: Animals domesticated5,000 years ago: Power from wind 2,000 years ago: Power from water
• Recent use of ‘Ancient Sunlight’ – fossil fuel:1760: First significant use of coal1859: Oil discovered 1885: Natural gas first used
• Access to energy services allowed population to explode
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World population hasgrown dramatically
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1999
1987
1975
1925
1810
1957
3 millionca. 1760:Watt’s steam engineallows coal to be used for power
A.D.B.C.
Source: various authors cited by the U.S. Bureau of Census
Source: Arulf Grubler (1998), BP Statistical Review of World Energy (2008), US Bureau of Census (2008)
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Increases in world population andenergy consumption 1850-2007
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
Populationup 430%
Consumption per Capitaup 760%
Total Consumptionup 4600%
1850 1900 1950 2000 1850 1900 1950 2000 1850 1900 1950 2000
Nuclear
Natural Gas
Oil
Coal
Hydro
Wood
0 bn
1 bn
2 bn
1750 1800 1850 1900 1950 2000
Natural GasOilCoal
Ninety percent of human greenhouse gas emissions during the past century
100%
50%
0%1979
Emissions of Greenhouse Gasesfrom Fossil Fuels(cumulative, in MT CO2e)
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Source: RED calculations based on data from BP Statistical Review andJ. David Hughes, Geological Survey of Canada (ret.)
90% GHG emissions since 1909
The Generation Story
Conclusions
The Energy/Carbon Story
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Looking for CO2 in all the wrong places
• Analysts slice the world into transportation, residential, commercial, and industrial and then look for ways to reduce CO2
• For example, latest McKinsey study of options uses this framework
• Others put faith in technology, calling for more R&D, without asking why generation efficiency has been stagnant for 50 years
• Others demand a specific path – inducing renewable energy – and thus emasculate market forces ability to optimize clean energy generation
• Electricity generation is the elephant in the room
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Generation efficiency –the elephant in the room
“I’m right there in the roomand no one even acknowledges me”
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Electricity generation is thelargest source of CO2 emissions
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Source: RED calculations based on data from Emissions of Greenhouse Gases in the United States 2007; State Energy Data Report; and Annual Energy Review.
0%
10%
20%
30%
40%
50%
1950 1960 1970 1980 1990 2000
CO2 Emissions by theU.S. Electric Power Sector
% o
f US
CO2 E
mis
sion
s
Inefficient heat and poweremits two-thirds of CO2
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12%
14%
27%
42%
0% 25% 50%
Other Transport
Cars
Thermal
Electricity• Heat & power account for
69% of fossil fuel emissions
• Efficiency has been flatfor 50 years
Emissions of U.S. CO2 from Fossil Fuels
Source: RED calculations based on data from the U.S. Energy Information Agencyand the U.S. Department of Transport
0%
50%
100%
1900 1920 1940 1960 1980 2000
US electricity generation is inefficient
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Source: U.S. Energy Information Agency
Inefficientgeneration
U.S. Delivered Electric Efficiency
• Wastes energy• Inflates costs• Increases pollution
Homer Simpson’s power plant Springfield, ?
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Two-thirds ofthe energy generated is released
into the atmosphere
Electricity generation plant Craig, CO
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PollutionFuel
100%
Generation Consumption
Conventional electricity generation1960 (& 2009)
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WasteHeat
65%
Transmission
UsefulPower
33%
WasteHeat 2%
Fuel
PollutionFuel
100%
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WasteHeat33%
Combined Heat and Power Plant
UsefulPower
33%
Fuel
Decentralized generation, combined heat and power
UsefulThermalEnergy
33%
RecycleWaste
Heat
66%Efficient
No LineLosses
ElectricitySteam
Hot Water
End User Site
Energy Recycling Plant
Electricity
Process Fuel
Finished Goods
Waste Energy
SavedEnergyInput
Recycling industrial waste energy: Cost effective clean energy
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Produces as much clean
energy each year as all
grid-connected photo-voltaic
solar generation produced in
2004
Recycling industrial waste energyCokenergy Mittal Steel, Northern Indiana
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* Includes T&D, line losses, backup generation and subsidies
Waste energy recyclingis cost-effective
All-in Cost ofClean Energy Generation*US$ per delivered MWh
Average 2008 Retail Cost
Use Energy Twice
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Cost of reducing CO2 vs. old CoalUS$ per ton
Only waste energy recycling lowers the cost of avoiding CO2 emissions
Use Energy Twice
The potential to use energy twice is enormous
• EPA study identifies 64,000 MW potential to recycle waste energy in 16 industries
• DOE study identifies 135,000 MW potential for fueled CHP that replaces thermal generation with waste heat from new electricity generation
• World Alliance for Decentralized Energy (WADE) study found potential to reduce U.S. CO2 by 20% and save $80 to $100 billion per year
• By contrast, deploying new renewable electricity generation will strongly raise electric costs.
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Policy observations
• All currently profitable low-carbon options involve recycling waste energy to increase efficiency
• But; the Clean Air Act, as administered, treats investments in generation efficiency as a ‘Major Modification’ and allows EPA to void the operating permit.
• Most existing electrical and thermal generation plants cannot economically meet current BACT to obtain a new permit
• Capital punishment may or may not deter crime, but it certainly deters investments in generation efficiency.
• Penalizing all carbon emissions won’t spur new and more efficient thermal and electric generation
• Old inefficient plants with free allowances are cheaper to operate than new efficient plants that must buy allowances
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0%
50%
100%
1900 1920 1940 1960 1980 2000
U.S. Delivered Electric Efficiency
Steam Pressure Recovery190 Projects
Combined Heat & Power56 Projects
Industrial Waste Heat Recovery 14 Projects
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We have proven this thesis with 200 projects ($2.0 billion)with double
conventional efficiency
The Energy/Carbon Story
The Generation Story
Conclusions
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Conclusions
• Using energy twice could cut CO2 by 20% while saving $80 to $100 billion per year, but:
• Current policies largely ignore options that use energy twice
• Changes to existing thermal or electric generating plant are a capital offense, potentially costing the operator the right to operate
• Laws, new an old, need to pay attention to encouraging efficiency – using energy twice.
• Willie Sutton robbed banks because that was where the money was. To profitably lower CO2 emissions, we must change the way the world generates electric and thermal energy.
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Thank you
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