Transcript Document

Profitably Reducing
Greenhouse Gas Emissions
MIT Energy Initiative
Seminar Series
Thomas R. Casten,
Chair
Recycled Energy Development, LLC
September 9, 2008
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Presentation Synopsis

Generation efficiency is the Elephant in the Room
– that no one sees

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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
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Generation Inefficiency is the
Elephant in the Room
The elephant seems invisible, but threatens life
as we know it
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Homer Simpson’s Power Plant
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Generation Plant in Craig, CO,
Venting 65% of Input Energy
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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
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Electric Generation’s Increasing
Contribution to CO2 Emissions
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69% of CO2 from Generating
Heat and Power
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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
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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
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25
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35
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45
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55
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65
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75
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85
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95
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20
Year
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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
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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.
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Analysis of Exergy to Useful Work
(Thanks to Dr. Robert U. Ayres)
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
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
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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
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85
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75
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65
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55
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45
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35
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25
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15
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05
0.0%
Year
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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
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65
9
1
75
9
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85
9
1
95
9
1
05
0
2
Year
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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
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Electricity Conversion to All Uses
< 60%
Elec. Conversion to Useful Work
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
05
20
95
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85
19
75
19
65
19
55
19
45
19
35
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25
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15
19
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05
0%
Year
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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
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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
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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
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53
57
19
19
45
49
19
19
37
41
19
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29
33
19
19
21
25
19
19
19
19
13
17
0.0%
-0.5%
Ending Year
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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
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40
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35
19
30
19
25
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20
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15
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10
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05
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0.0%
19
Percentage points of change
0.6%
-0.2%
-0.4%
-0.6%
Year
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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
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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!
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Conversion Efficiency Conclusions
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
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
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Regulations Block Efficiency
Electricity is not a free market!
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“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
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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:
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
1970: 10 years old

2007: 35 years old
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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
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But Recycling Waste Energy
Solves Many Problems


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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
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Energy Recycling Plants
We Have Developed
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Indiana CHP Plant Recycles Heat To
US Steel Tin Plate Plant (85% efficiency)
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Silicon Furnace Alloy WV
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Economics of Clean Generation
Compare costs of recycling waste energy with
other clean energy approaches
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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
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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
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Cost (Savings) / Ton of Avoided
CO2 Emissions
$500
$300
Local Generation with
Recycling of Waste Energy
$200
$100
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$0
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Dollars / Ton Avoided CO2
$400
Clean Energy Type
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Policy Options to Promote Clean
Energy
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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
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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
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Output Pollution Standards
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
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
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Other Policy Changes

End monopoly protection of electric generation

Preserve monopoly protection of electric
distribution

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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
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Conclusions
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
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
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Thank You for Your Interest in
Clean Energy
XX
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