Transcript Document

A Call to Action:
Use energy twice to profitably
avert climate change
Changing the way the world makes
power
Thomas R. Casten,
Chairman
Recycled Energy Development, LLC
IDEA 100th Anniversary
June 29, 2009
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The Energy/Carbon Story
The Generation Story
The Changing Rules
Conclusions
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The history of access
to 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 tamed
10,000 years ago:
Animals domesticated
5,000 years ago:
Power from wind
2,000 years ago:
Power from water
• Recent use of ‘Ancient Sunlight’ – fossil fuel:
1760:First significant use of coal
1859:Oil discovered
1885:Natural gas first used
1909: IDEA formed to distribute thermal energy
• Access to energy services allowed population to explode
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World population has
grown dramatically
1999
IDEA
Formed
1987
1975
1957
1925
3 million
ca. 1760:Watt’s steam engine
allows coal to be used for power
B.C.
1810
A.D.
Source: various authors cited by the U.S. Bureau of Census
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Increases in world population and
energy consumption 1850-2007
Population
up 430%
Consumption per Capita
up 760%
Total Consumption
up 4600%
100%
100%
100%
80%
80%
80%
60%
60%
60%
40%
40%
40%
IDEA
Formed
Nuclear
Natural Gas
Oil
20%
20%
20%
Hydro
Coal
0%
0%
1850
1900
1950
2000
1850
Wood
0%
1900
1950
2000
1850
1900
1950
2000
Source: Arulf Grubler (1998), BP Statistical Review of World Energy (2008), US Bureau of Census (2008)
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During IDEA’s first 100 years, 90% of
human greenhouse gas emissions
2 bn
100%
Emissions of Greenhouse Gases
from Fossil Fuels
(cumulative, in MT CO2e)
Natural Gas
Oil
Coal
1 bn
50%
90% GHG
emissions
since IDEA
Formed
0 bn
1750
Source:
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1800
1850
1900
1950
1979
2000
0%
RED calculations based on data from BP Statistical Review and
J. David Hughes, Geological Survey of Canada (ret.)
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Climate change is occurring
faster than predicted
• Science has no experience with the rising concentrations of
greenhouse gases:
• Feedback effects are happening faster than predicted by any
model
• E.g., melting ice caps, rising sea levels, increasing ocean
acidity
• Growing species extinction, caused by human actions
• 1,000 times the background rate
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The Energy/Carbon Story
The Generation Story
The Changing Rules
Conclusions
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Electricity generation is the
largest source of CO2 emissions
% of US CO2 Emissions
50%
40%
30%
CO2 Emissions by the
U.S. Electric Power Sector
20%
10%
0%
1950
Source:
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1960
1970
1980
1990
2000
RED calculations based on data from Emissions of Greenhouse Gases in the United States 2007;
State Energy Data Report; and Annual Energy Review.
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Inefficient heat and power
emits two-thirds of CO2
Emissions of U.S. CO2 from Fossil Fuels
Electricity
42%
Thermal
14%
Other Transport
12%
0%
Source:
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• Efficiency has been flat
for 50 years
27%
Cars
• Heat & power account for
69% of fossil fuel emissions
25%
50%
RED calculations based on data from the U.S. Energy Information Agency
and the U.S. Department of Transport
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US electricity generation is inefficient
100%
Inefficient
generation
• Wastes energy
• Inflates costs
• Increases pollution
50%
U.S. Delivered Electric Efficiency
0%
1900
1920
1940
1960
1980
2000
Source: U.S. Energy Information Agency
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Homer Simpson’s power plant
Springfield, ?
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Electricity generation plant
Craig, CO
Two-thirds of
the energy
generated
is released
into the
atmosphere
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Generation efficiency –
the elephant in the room
“I’m right there in the room
and no one even acknowledges me”
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Conventional electricity generation
1960 (& 2009)
Fuel
100%
Waste
Heat
Pollution
65%
Waste
Heat 2%
Useful
Power
33%
Fuel
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Generation
Transmission
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Consumption
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Decentralized generation,
combined heat and power
Fuel
Waste
Heat
100%
33%
Pollution
No Line
Losses
66%
Efficient
Recycle
Waste
Heat
Fuel
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IDEA
Roles
Useful
Thermal
Energy
33%
Useful
Power
33%
Combined Heat and Power Plant
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Recycling industrial waste energy the
IDEA way
Saved
Energy
Input
Energy
Recycling
Plant
Electricity
Process
Fuel
Finished Goods
Waste
Energy
Electricity
Steam
Hot Water
End User Site
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Recycling industrial waste energy
Cokenergy Mittal Steel, Northern Indiana
Produces as
much clean
energy each
year as all
grid-connected
photo-voltaic
solar generation
produced in
2004
Figure 1 - Energy Recycling at Mittal Steel, East Chicago, Indiana
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Waste energy recycling
is cost-effective
Average 2008 Retail Cost
All-in Cost of
Clean Energy Generation*
US$ per delivered MWh
IDEA
Role
* Includes T&D, line losses, backup generation and subsidies
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Only waste energy recycling lowers the
cost of avoiding CO2 emissions
IDEA
Role
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Cost of reducing CO2 vs. old Coal
US$ per ton
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Waste energy receives lowest lifetime
MWh subsidies
$0/MWh
$50/MWh
$100/MWh
Photovoltaic Solar
Concentrated Solar
Offshore Wind
Onshore Wind
From
Tax
Credits
Cost of avoiding CO2 vs. old Coal
US$ per ton
Geothermal
Biomass
Qualifying Renewable
Biomass CHP
Waste Energy Recycling
Fossil CHP
Traditional Coal
Recycled Energy
Recycled & CHP
Cost of Healthcare
and Environment* Traditional Coal
* Healthcare costs, calculated as average of two peer-reviewed reports released by Harvard University and the Ontario Medical Center
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Policy observations
• All currently profitable low-carbon options involve
recycling waste energy to increase efficiency
• But; numerous policies induce or mandate high-cost low-carbon
power generation, responding to vested interests
• Possible unintended consequences:
• Increased global CO2 emissions
• Higher power prices could drive manufacturing to low
cost high-carbon nations, increasing carbon emissions
• Lower standard of living
• Loss of jobs reduces income
• IDEA mission: Push for policies that induce markets to
deploy profitable clean generation options
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We have proven this thesis with 200
projects ($2.0 billion)with double
conventional efficiency
100%
Industrial Waste Heat Recovery
14 Projects
Steam Pressure Recovery
190 Projects
50%
Combined Heat & Power
56 Projects
U.S. Delivered Electric Efficiency
0%
1900
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1920
1940
1960
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1980
2000
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The Energy/Carbon Story
The Generation Story
The Changing Rules
Conclusions
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Federal tax credits for clean energy
2007
Energy
Property
CHP/Recycled
Energy
§45
PTC
2009
§45 Refundable
ITC
ITC
§45
PTC
Refundable
ITC
§48
ITC
10% of
15 MW
-
-
-
-
Biomass –
open loop
$20/MWh
for 10 yrs
-
-
$20/MWh
for 10 yrs
30%
30%
Wind
$20/MWh
for 10 yrs
-
-
$20/MWh
for 10 yrs
30%
30%
Solar
-
30%
-
-
30%
30%
$20/MWh
10%
for 10 yrs
-
$20/MWh
for 10 yrs
10%
10%
Geothermal
1st
10%
If a technology is eligible for both PTC and ITC, then one of the two types of
tax credit must be selected
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Energy Improvement and
Extension Act of 2008
• Included provisions for CHP and recycled-energy projects:
• 10% investment tax credit:
• Applicable to project of up to 50 megawatts
• Applicable to the first 15 megawatts
• Worth $1.35/MWh over project life
• 5-year accelerated depreciation:
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American Recovery and
Reinvestment Act of 2009
• Provides “refundability” for CHP tax credit
• Allows “bonus depreciation” for CHP:
• 50% of depreciation value can be taken in the first year
• Remainder over the following four years
• Allows CHP tax credits even if projects are financed with local
development bonds
• Allows biomass projects to claim a 30% investment tax credit
• Provides some $100 billion of additional government-backed loan
guarantees for clean energy projects
• Offers $156 million of cost-share grants for recycled-energy,
CHP, and industrial-efficiency projects
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Waxman Markey bill: House
passed Friday, June 26 2009
• Mandates GHG-emissions reduction by 83% by 2050
• Sets industrial plant energy efficiency standards
• Authorizes thermal waste energy recovery awards
• Mandates 20% clean energy by 2020, 8% from efficiency
• Expands biomass definition to reward co-firing
• Industrial rebates for GHG compliance costs
• Creates a Clean Energy Deployment Administration to help
finance breakthrough technologies
• Allows CHP to qualify for energy saving performance contracts
at federal buildings
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Tax provisions
proposed for 2009
• Increase investment tax credit to 30% for highly efficient CHP
and recycled energy projects
• Increase the ITC’s eligibility from 15 to 25 megawatts for projects
of unlimited size
• Remove prohibitions against co-firing in the biomass production
tax credit
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Recent state innovations
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State
Action
Timing
California
Recycled-energy projects not regulated as GHG
sources
15 states
CHP and recycled energy included in portfolio
standards
NV, OR, SD, ND
(+ B.C. and
Saskatchewan)
Waste heat recovery projects equivalent to
other renewable electric generation resources
New Jersey
Offers rebate ($450/kW ) for CHP and recycled
energy capacity
2009
Massachusetts
Defines energy savings from CHP property
2008
ISO New
England
Offers location payments to local generation
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The Energy/Carbon Story
The Generation Story
The Changing Rules
Conclusions
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Conclusions
• IDEA has encouraged using energy twice for 100 years,
• Progress inverse to fossil fuel subsidies and utility protection
• Life as we know it depends on increasing energy generation
efficiency, but:
• Current policies largely ignore options that use energy twice
• Modest recent incentives are now law, favoring efficiency, (still
ignoring thermal energy)
• Pending legislation is game-changing for waste energy recycling
projects
• Thus:
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After only 100 years,
IDEA’s TIME HAS COME
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Thank you
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