Transcript Document
Profitably Reducing Greenhouse Gas Emissions MIT Energy Initiative Seminar Series Thomas R. Casten, Chair Recycled Energy Development, LLC September 9, 2008 RED | the new green www.recycled-energy.com Presentation Synopsis Generation efficiency is the Elephant in the Room – that no one sees RED | the new green Improving generation efficiency addresses climate change, jobs, balance of payments, security, income growth & more Regulations select against efficiency, local generation & waste energy recycling Waste energy recycling can profitably lower GHG emissions Suggested policies to improve efficiency www.recycled-energy.com Generation Inefficiency is the Elephant in the Room The elephant seems invisible, but threatens life as we know it RED | the new green www.recycled-energy.com Homer Simpson’s Power Plant RED | the new green www.recycled-energy.com Generation Plant in Craig, CO, Venting 65% of Input Energy RED | the new green www.recycled-energy.com Inefficient US Electric Generation Related Headlines: “Recent Warming of Arctic may Affect World Climate”—NASA “US Manufacturing Jobs Fading Away Fast” — USA Today “UN Warns of Rapid Decay of Environment” — New York Times “OPEC Not Expected to Raise Production despite Record-High Oil Prices” —Associated Press RED | the new green www.recycled-energy.com Electric Generation’s Increasing Contribution to CO2 Emissions RED | the new green www.recycled-energy.com 69% of CO2 from Generating Heat and Power RED | the new green www.recycled-energy.com Can U.S. Simply Switch to All Renewable? Gore calls for 100% switch by 2020 Huge investment in T&D and wind Solar very expensive Dirty coal underpins much industrial production Consider historical data Consider doubling fossil generation efficiency first RED | the new green www.recycled-energy.com US Fuels for Electricity Petroleum Coal Natural Gas Nuclear Renewable 100% 90% 80% % of total fuel 70% 60% 50% C 40% 30% 20% 10% 0% 05 19 15 19 25 19 35 19 45 19 55 19 65 19 75 19 85 19 95 19 05 20 Year RED | the new green www.recycled-energy.com Tentative Conclusions Electric generation efficiency peaked, has not improved in 50 years (see ‘Technology and Transformation” Richard F. Hirsh) Markets not working? Regulations at fault? Need paradigm shift to local generation to double efficiency RED | the new green www.recycled-energy.com What if Access to Useful Energy Explains Most of Observed Income Changes? People know intuitively the importance of having energy services, but economists do not find a correlation between raw fuel use and income growth. RED | the new green www.recycled-energy.com Analysis of Exergy to Useful Work (Thanks to Dr. Robert U. Ayres) RED | the new green MIT’s Dr. Solow said, in 1956, that changes in technical productivity explain most changes in income Dr. Ayres estimated the useful work each year from 1900 -2005, says this explains 85% of income changes If Ayres is right, stagnant efficiency & rising fossil fuel prices spell trouble The low conversion efficiencies to useful work surprise most people www.recycled-energy.com Conversion of Electricity to Light is Awful Efficiency of Conversion 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 20 05 19 95 19 85 19 75 19 65 19 55 19 45 19 35 19 25 19 15 19 05 0.0% Year RED | the new green www.recycled-energy.com 2nd Law Conversion Efficiency to Low Temperature Heat – Lousy! 4.0% Efficiency of Conversion 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 05 9 1 15 9 1 25 9 1 35 9 1 45 9 1 55 9 1 65 9 1 75 9 1 85 9 1 95 9 1 05 0 2 Year RED | the new green www.recycled-energy.com 2nd Law Conversion to High Temperature Heat a Little Better Efficiency of Conversion 35% 30% 25% 20% 15% 10% 5% 20 05 19 95 19 85 19 75 19 65 19 55 19 45 19 35 19 25 19 15 19 05 0% Year RED | the new green www.recycled-energy.com Electricity Conversion to All Uses < 60% Elec. Conversion to Useful Work 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 05 20 95 19 85 19 75 19 65 19 55 19 45 19 35 19 25 19 15 19 19 05 0% Year RED | the new green www.recycled-energy.com But Delivered Electric Efficiency Stalled Since Eisenhower Primary Efficiency, Delivered Electricity 100% 90% % Efficiency 80% 70% 60% 50% 40% 30% 20% 10% 20 05 19 95 19 85 19 75 19 65 19 55 19 45 19 35 19 25 19 15 19 05 0% Year RED | the new green www.recycled-energy.com Electric-only Coal & Oil Heat Rates Stopped Falling by 1960 Heat Rates (btu/kWh) Coal Natural Gas Petroleum 15,000 12,000 9,000 6,000 3,000 0 1950 1960 1970 1980 1990 2000 Year Source: EIA RED | the new green www.recycled-energy.com Electric Efficiency Gains Slowed after Mid-Fifties, Now Gone 2.5% Ten Year % Unit Change 2.0% 1.5% 1.0% 0.5% 01 05 20 20 93 97 19 19 85 89 19 19 77 81 19 19 69 73 19 19 61 65 19 19 53 57 19 19 45 49 19 19 37 41 19 19 29 33 19 19 21 25 19 19 19 19 13 17 0.0% -0.5% Ending Year RED | the new green www.recycled-energy.com Yearly Changes in U.S. Efficiency (Potential Energy to Useful Work) Trouble Ahead? 0.4% 0.2% 05 00 20 95 20 90 19 85 19 80 19 75 19 70 19 65 19 60 19 55 19 50 19 45 19 40 19 35 19 30 19 25 19 20 19 15 19 10 19 05 19 19 00 0.0% 19 Percentage points of change 0.6% -0.2% -0.4% -0.6% Year RED | the new green www.recycled-energy.com Conversion of Exergy to Useful Work Has Improved, but < 14% Linear Trend Line 14% 12% 10% 8% 6% 4% 2% 20 00 19 90 19 80 19 70 19 60 19 50 19 40 19 30 19 20 19 10 0% 19 00 Potential Energy to Useful Work Conversion efficiency to useful work Year RED | the new green www.recycled-energy.com Conclusions From Dr. Ayres Work The U.S. wastes 86% of input energy - room for improvement Efficiency gains in end use no longer offsetting electric generation stagnation – the elephant in the room Not one Presidential candidate mentioned generation efficiency The elephant is invisible! RED | the new green www.recycled-energy.com Conversion Efficiency Conclusions RED | the new green We appear to have bred efficiency out of the U.S. energy conversion system The electric sector stopped improving efficiency in 1950’s, is now loosing ground The overall U.S. conversion efficiency to useful work stopped growing, began shrinking after 2000 The elephant in the room, although largely invisible, explains many problems www.recycled-energy.com Regulations Block Efficiency Electricity is not a free market! RED | the new green www.recycled-energy.com “Since the Industrial Revolution, government regulation has been used to control the production and distribution of the social necessity called energy” “Energy Law” Toman, Joseph P. and Cudahy, “Richard D. West Publishing Co., 1992 RED | the new green www.recycled-energy.com Regulation Blocks Generation Efficiency Utilities not rewarded for efficiency since 1920 The 1970 Clean Air Act ignores efficiency, mandates controls that increase parasitic loads, cut efficiency New Source Review penalizes efficiency investments with loss of operating permit Blocks new construction. Weighted average age of coal plants: RED | the new green 1970: 10 years old 2007: 35 years old www.recycled-energy.com Regulation Also Blocks Local Generation MIT was bloodied by Boston Edison for generating their own power; regulators did nothing Local generation that recycles waste energy streams, denied 40% to 50% of benefits it creates by regulation Local generation is not ‘charismatic’ carbon savings, sees few inducements RED | the new green www.recycled-energy.com But Recycling Waste Energy Solves Many Problems RED | the new green Energy recycling: Gives factories added revenue, Preserves U.S. jobs Saves money and Cuts CO2 emissions Requires paradigm shift to local gen Waste energy streams do not travel economically, must convert on the spot Waste heat only economic to transport 2 to 4 miles, needs local gen www.recycled-energy.com Energy Recycling Plants We Have Developed RED | the new green www.recycled-energy.com Indiana CHP Plant Recycles Heat To US Steel Tin Plate Plant (85% efficiency) RED | the new green www.recycled-energy.com RED | the new green www.recycled-energy.com Silicon Furnace Alloy WV RED | the new green www.recycled-energy.com Economics of Clean Generation Compare costs of recycling waste energy with other clean energy approaches RED | the new green www.recycled-energy.com World Alliance For Decentralized Energy WADE modeled 20 year future of U.S. generation and electric use. Meeting growth with local generation Reduced capital by 50% Reduced CO2 in U.S. by 20% Reduced fossil fuel used by electric generation by 40% Saved $150 to $200 billion per year RED | the new green www.recycled-energy.com Consider Costs (Savings) of Avoiding 1 Ton of CO2 Versus the Best New Central Generation The four highest profit options are local generation that recycles waste energy RED | the new green www.recycled-energy.com Cost (Savings) / Ton of Avoided CO2 Emissions $500 $300 Local Generation with Recycling of Waste Energy $200 $100 CH P w/ CH m P as s CH Bi P NG om CC as s GT Re El ec m ot .O e nl W y in d Fa rm Nu cl Co ea Co al r nc w /S en tra eq . te d So la r So la rP V -$300 Bi o Re c yc l -$200 En -$100 RE er gy $0 ed Dollars / Ton Avoided CO2 $400 Clean Energy Type RED | the new green www.recycled-energy.com Policy Options to Promote Clean Energy RED | the new green www.recycled-energy.com Policy Options to Induce Clean Local Generation Clean Energy Standard Offer Program or CESOP – LT contract for clean energy at 85% of delivered cost of best central generation Convert CAA to Output Pollution Standards – allow every emission source same allowances per unit of useful output for criteria pollutants and for CO2 RED | the new green www.recycled-energy.com Clean Energy Standard Offer Program (CESOP) U.S. encourage recycled energy and other clean technology with a 'Clean Energy Standard Offer Program' (CESOP) incorporating the following principles: Offer 20-year CESOP contracts to qualifying clean technology facilities Pay roughly 85% of cost of delivered power from new coal plants. Let local generation compete with conventional central generation RED | the new green www.recycled-energy.com Output Pollution Standards RED | the new green Replace CAA rules with output allowance per unit of useful heat and of useful power for each pollutant Require each plant to obtain allowances equal to annual pollution Dirty plants purchase from clean plants Recycling waste heat adds allowances Each ‘stick’ has equal ‘carrot’, market decides which technology to build Lower allowances on schedule, corrected for total output www.recycled-energy.com Other Policy Changes End monopoly protection of electric generation Preserve monopoly protection of electric distribution RED | the new green Require local generators to sell to grid to be eligible for CESOP – avoids backup issue End New Source Review, use output allowances to control and reduce pollution, freeing all to invest in efficiency Adopt national Clean Energy Portfolio Standards covering all clean energy, including waste energy recycling www.recycled-energy.com Conclusions RED | the new green Stagnant generation efficiency is the elephant in the room, causing many problems New research suggests importance of energy services to income growth We can cut CO2 by 20% and save $150 billion per year with local generation that recycles waste energy Regulatory changes will induce profitable GHG reduction www.recycled-energy.com Thank You for Your Interest in Clean Energy XX RED | the new green www.recycled-energy.com