okc 4 10 2012 energy presentation - cleanskies.org€¦ · 250 us’ eu’ frg’ ok’ mi oh pa’...
TRANSCRIPT
Energy Transi,ons and U.S. Compe,,veness: Lessons From Washington, Oklahoma and Beyond
Gregory C. Staple Chief Execu6ve Officer
American Clean Skies Founda6on 750 First Street, N.E. – Suite 1100
Washington, D.C. 20002 www.cleanskies.org
Karl F. and June S. Mar6n Family Founda6on Energy Management Speaker Series
Oklahoma City University
April 10, 2012
Energy Transi6on = “Energiewende”*
In March 2011, German Prime Minister Angela Merkel changed course, announcing Germany would shut down all 17 of its nuclear power plants by 2022 – approximately 25 GWs that provided 18% of Germany’s capacity in 2010.
* Literally, Energy Turnaround
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Energiewende: Promise or Peril
“In the best tradi6ons of German engineering, new technologies and products, new export opportuni6es and thus employment and growth will be created [by the nuclear shut down].”
Norbert Rö`gen, FRG Environment Minister (New York Times, August 13, 2011)
“The energy supply is now the top risk for Germany as a loca6on for business.”
Hans Heinrich Driemann, President Associa6on of German Chamber of Industry and Trade (DIHK)
(Spiegel OnLine, February 14, 2011)
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TAKE A NUMBER PLEASE
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TAKE A NUMBER PLEASE (cont’d)
TAKE A NUMBER PLEASE (cont’d)
Washington’s Energiewende
One One Hand
“We have a supply of natural gas that can last America nearly one hundred years, and my Administra6on will take every possible ac6on to safely develop this energy.”
President Obama, State of the Union January 24, 2012
But On The Other Hand
-‐ EPA (Region 2) twenty-‐six page line-‐by-‐line comments on Revised Drae NYS Supplemental Generic Environmental Impact Statement (SGEIS) call for a host of new standards on waste water treatment and well comple6on plus comprehensive web-‐based drilling maps with well-‐by-‐well data updated monthly.
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See h`p://www.epa.gov/region2/newsevents/pdf/EPA%20R2%20Comments%20Revised%20dSGEIS%20Enclosure.pdf
Washington’s Energiewende (cont’d)
One One Hand
“Think about an America where more cars and trucks are running on domes6c natural gas than on foreign oil . . . . [L]et’s get more of these natural gas vehicles on the road.”
President Obama in Las Vegas January 26, 2012
But On The Other Hand
Proposed 2017-‐2025 DOT/EPA mileage rules and tailpipe emission standards for cars and light trucks – moving from 27 to 54 mpg – only offer manufacturing incen6ves for electric vehicles.
See 76 Federal Register 74854 (December 1, 2011)
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Washington’s Energiewende (cont’d)
On The One Hand
“[I]nnova6on is what America has always been about. Innova6on also demands basic research . . . . [I]t was public research dollars . . . that helped develop the technologies to extract . . . natural gas out of shale rock . . . .”
President Obama, State of the Union January 24, 2012
But On The Other Hand
New 2013 FY budget deletes all funding for Research Partnership to Secure Energy for America (RPSEA) – a historic government –industry effort to advance unconven6onal and ultra deep water technologies for large and small companies alike.
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Poli6cal Fall Out
“Washington is broken, and the Majority party’s refusal to address soaring energy prices is a perfect example . . . . As a result of their iner6a . . . Electricity prices are as high as they’ve ever been.”
Rep. John Boehner h`p://johnboehner.house.gov/issues/issue/?IssueID=3946
“Concurrent EPA regula6ons impose significant burdens on U.S. businesses and consumers . . . What do those burdens mean for global compe66veness, jobs and prices?”
House, Energy and Commerce Commi`ee 2011 Fact Sheet on TRAIN Act, Sept. 19, 2011
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0
50
100
150
200
250
US EU FRG OK MI OH PA
$/MWHr
Industrial Electricity Prices: U.S. and Germany (Exchange rate: 1€ = $1.35)
$66
$190
$230
$51 $71
$60
$81
Sources: EIA Electric Power Monthly; EC Directorate-‐General For Energy
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$19,995 + VW Passat
U.S.-‐FRG Trade and Energy Inputs (2011)
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Imports (From FRG)
What $ B % Power$ % NatGas$
Autos 19.4 .20 .18
Pharma 7.7 .34 .16
Engines 2.0 .20 .18
Vehicle Parts
3.0 .20 .18
Iron & Steel 1.8 ~2.80 ~2.90
Construc6on Machinery
1.5 .29 N/A
Aircrae Engines
1.4 .09 N/A
Other $61.6 N/A N/A
Total $98.4 billion
Exports (To FRG)
What $ B % Power$ % NatGas$
Autos 5.6 .20 .18
Pharma 2.0 .34 .16
Aircrae 5.5 .24 .09
Chemicals 1.3 ~4.00 ~6.00
Medical & Lab Equip.
1.9 .47 N/A
Semicon-‐ductors
1.2 0.60 N/A
Waste & Scrap
1.2 0.2 0.0
Other 30.4 N/A N/A
Total $49.1 billion
A $49 billion deficit!
Energy Intensity of Major Economies
Data: Enerdata Global Energy Sta6s6cal Yearbook 2011. GDP adjusted for purchasing power parity.
Abundance Alone Is Not A Winning Strategy
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“Canadians and Americans consume twice as much energy per capita as the richest EU countries or Japan without, obviously, being twice as rich, smart or happy.”
Vaclav Smil (quoted in Winnipeg Free Press, March 7, 2012)
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Strategy For Transi6ons
• Be pa6ent: “All energy transi6ons are mul6-‐genera6onal affairs with … complex infrastructural and learning needs.”
Vaclav Smil
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U.S. Primary Energy Consump,on by Source Evolu6on from 1850 – 2010
Data: EIA Annual Energy Review 2011
Strategy For Transi6ons (cont’d)
• So set mid-‐ to long-‐term goals and s6ck to them (investors and consumers dislike uncertainty).
• Give greater weight to long-‐term economy-‐wide benefits over short-‐term fuel or sector specific costs.
• Efficiency is key driver because it impacts both supply and demand. And it cuts across different fuels and economic sectors (residen6al, commercial, industrial).
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What About Implementa6on?
• Address supply and demand issues together. • For clean energy, the public prefers new standards (hidden prices) to markets (published prices) and taxes.
• Standards should be technology neutral, however, to let markets drive efficient solu6ons.
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Recent “Clean Energy” Standards
• Autos: -‐ New (2017-‐2025) Mileage Economy Standards and Limits On Tailpipe Emissions (for GHGs)
• Power Genera6on: -‐ CSAPR (Cross State Air Pollu6on Rule)
-‐ MATS (Mercury and Air Toxics Standards)
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Maximizing Subsidies and Mandates
• Fixed grants vs. market bids (e.g., solar power subsidies in Germany vs. California)
• Rate base recovery of environmental retrofits vs. repowering op6ons
• “Prudence” reviews of new transmission facili6es vs. non-‐transmission alterna6ves
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Oklahoma First Energy Plan
• Pragma6c approach that seeks to use markets and efficiency to leverage OK advantages
• Some stand outs: – Transport – NGV procurement (pool buying power: compe66ve RFPs)
– U6li6es – level playing field for long term natural gas fuel purchase contracts. New Oklahoma Corpora6on Commission rule adopted so that purchases pursuant to RFP process deemed “prudent.” A model for other states.
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Disrup6ve Transi6ons
“If we are looking at 20 years of natural gas that is somewhere between $3 and $6 [per MMBTu] . . . That is the most disrup6ve change in the energy market place in this country that I have ever seen.”
John Rowe, Former Exelon CEO
Washington, D.C., March 21, 2012
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• Upcoming ACSF report looks at the opportunity for fuel switching from coal to gas.
• Building and opera6ng a new 500 MW CCGT with gas at ~$5.00 MMBTu saves $68.5 million/year compared to installing environmental controls on a Appalachian coal unit. That’s $1.37 billion over 20 years.
“No Regrets” Fuel Switching
Source: American Clean Skies Founda6on
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