Transcript Energy Efficiency: A Capital Offense Comments to MIT NESCAUM Symposium Thomas R. Casten, Chairman Recycled Energy Development, LLC August 12, 2009 RED | the new green www.recycled-energy.com.

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 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
• Access to energy services allowed population to explode
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World population has
grown dramatically
1999
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%
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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Ninety percent of human greenhouse
gas emissions during the past century
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 1909
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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The Energy/Carbon Story
The Generation Story
Conclusions
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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 room
and no one even acknowledges me”
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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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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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Useful
Thermal
Energy
33%
Useful
Power
33%
Combined Heat and Power Plant
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Recycling industrial waste energy:
Cost effective clean energy
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
Use
Energy
Twice
* Includes T&D, line losses, backup generation and subsidies
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Only waste energy recycling lowers the
cost of avoiding CO2 emissions
Use
Energy
Twice
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Cost of reducing CO2 vs. old Coal
US$ per ton
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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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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
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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