Transcript North Carolina Legislative Commission On Global Climate Change December 11, 2006 Recycling Energy: Profitable Climate Change Mitigation by Tom Casten Alliance for Clean Technology Founder, former CEO Trigen.

North Carolina Legislative Commission
On Global Climate Change
December 11, 2006
Recycling Energy:
Profitable Climate Change
Mitigation by
Tom Casten
Alliance for Clean Technology
Founder, former CEO Trigen & Primary Energy
Commission Mission
 Reach consensus on what NC can do to
alleviate or prepare for the effects of
climate change
 Solicit ideas from experts
 Take advantage of economic
opportunities
 Actions taken will shape the direction of
NC economy for decades
Presentation Summary
 The central generation of electricity is not
optimal
 The better option – local generation that
recycles energy waste – faces regulatory
barriers, is denied benefits it creates
 The Alliance for Clean Technology (ACT)
proposes a suite of policies to encourage
‘clean technology’
 ACT believes governments can profitably
mitigate climate change with a ‘blue box’
energy policy – recycling waste energy
Introducing the Alliance for
Clean Technology (ACT)
 ACT is new, a coalition of local power
developers, WWF, Greenpeace, Sierra Club,
Suzuki Foundation, unions, and gas and electric
distribution utilities
 Mission is polices that induce deployment of
clean technology to profitably reduce
greenhouse gas emissions
 These policies will reduce pollution, improve
industrial competitiveness, preserve good jobs
and lower societal heat and power costs
An Inconvenient Truth
 Al Gore describes global warming as an
‘Inconvenient Truth’ – a reality that we would
rather not face.
 Why inconvenient?

Conventional wisdom assumes energy conversion
is optimal; thus mitigating climate change will
increase energy costs
 Why wrong?


The energy system is not optimal
Electric generation efficiency peaked in 1960,
creates 38% of US GHG
Conventional Central Approach
1960 Data (& 2003 Data)
Pollution
Waste Heat
Transmission Line Losses
3 units (7.5%)
67 units
Waste
Energy
Fuel
=
100
units
33 units
Electricity
End User
Power Plant
US Electric Efficiency,1900-2005
Primary Efficiency, Delivered Electricity
Final Efficiency raw energy to useful work
35%
30%
45 Years with no efficiency gains
20%
15%
10%
5%
Year
20
00
19
90
19
80
19
70
19
60
19
50
19
40
19
30
19
20
19
10
0%
19
00
% Efficiency
25%
We Have Better Electric
Generation Options
Local generation can recycle energy
to reduce costs and pollution
ACT’s ‘Convenient Truth’
Energy Recycling Eases All Problems
 Recycling industrial waste energy could
produce 20% of US electricity, fuel free
 Combining heat and power generation
(CHP) produces electricity with half the
fossil fuel of conventional central
generation
 Recycling waste energy will improve US
competitive position
What is Recycled Energy?
 Recycled energy is useful energy
derived from:

Exhaust heat from power generation or
industrial processes

Tail gas that would otherwise be flared

Pressure drop in steam or any gas
 Promoting energy recycling is a ‘blue
box’ energy policy
Decentralized Generation Option
Combined Heat and Power
Pollution
33 units
Waste
Energy
Fuel
100
units
=
33 units
Thermal
Energy
CHP Plant
33 units
Electricity
Recycle
Waste
Heat
End User
Site
66 units
Useful
Work
Industrial Energy Options
Saved
Energy Input
Energy
Recycling
Plant
Electricity
Finished Goods
Process
Fuel
Waste
Energy
Electricity
Steam
Hot Water
End User
Site
Backpressure Turbine-generators Extract Electricity
from Gas/Steam Pressure Drop
Low Pressure steam out
High Pressure steam in
Extracted kWh reduces
steam price
Potential applications save money at industrial plants, hospitals,
universities, and district energy systems and natural gas city gates
Industrial Energy Recycling
90 MW Recycled from Coke Production
US Electric Efficiency,1900-2005
Primary Efficiency, Delivered Electricity
Final Efficiency raw energy to useful work
100%
90%
Local CHP Plants
that recycle waste
heat
80%
Denmark Electric
Efficiency
60%
50%
40%
30%
20%
10%
Year
20
00
19
90
19
80
19
70
19
60
19
50
19
40
19
30
19
20
19
10
0%
19
00
% Efficiency
70%
Energy Recycling Impact on the
Grid
 Local generation reduces grid loading,
line losses and need for new T&D
 Local generation stabilizes voltages and
reduces vulnerability to extreme weather
and terrorists
 Only local generation can recycle waste
energy; it is not economic to recycle
waste energy from remote generation
plants
What About Economies of
Scale?
Skeptics claim local generation
will raise capital costs
Economies of Scale?
Central versus Decentralized Generation
KW
Total costs/
Transmission Total / kW
Generation & Distribution
of
required/ kW New
Generation kW Load
Load
Central Generation
$890
$1380
$2,270
1.44
$3,269
Local Generation
$1,200
$138
$1,338
1.07
$1,432
Savings (Excess) of
Central vs. Local
Generation
$310
$1,242
$1,068
0.37
$1,837
74%
1000%
213%
135%
228%
Central generation
capital as a % of
local capital
Future Generation Options
20
Renewable Energy
Options
Central
Generation
Options
Coal Gas with CO2
Sequestration
Cents / kWh
15
10
No incremental
fossil fuel line
New Combined Cycle
Gas Turbine
New Coal
Coal Gassification CCGT
Remote Wind
Avg. Retail Power Price
8.1¢ / kWh
Recycled Energy
Options
Avg. Industrial Power
Price 5.5¢ / kWh
5
Recycled Industrial
Energy
Balanced CHP
Existing Coal Fossil Plant
- No new T&D
0
3
(33% efficiency)
2
1
(50% efficiency)
(100% efficiency)
0
-1
(net fossil savings)
Average Fossil Heat Rate (Units of fossil fuel per unit of delivered electricity)
do UK
ne
s
Fr i a
an
ce
Br
az
il
I
Ar nd
ge ia
nt
in
a
In
US
De
Ne nm
th ar
er k
la
n
Fi ds
nl
an
Ru d
G ss
er ia
m
an
Po y
la
n
Ja d
pa
n
Ch
Po ina
rtu
g
Ca al
na
d
M a
ex
i
W co
O
R
LD
DE share as a % of total power generation
Comparative Deployment of Combined Heat
and Power in 2004
60
50
ACT Target of 30% CHP in US
40
30
20
10
0
M
Al ain
ab e
am
In a
M di
is an
si
ss a
i
Ar ppi
iz
on
So
a
H
ut
h aw
C
a
W aro ii
as li
hi na
n
O gt
kl o n
ah
M om
ar a
y
Ca lan
lif d
o
M r
Pe ic nia
nn hig
sy an
lv
an
Fl ia
Te or
nn ida
es
se
Ill e
in
M oi
on s
ta
na
Ne Oh
i
Ne w Y o
w
o
M rk
e
Ar xic
ka o
Di
n
st
. O Col sas
f C ora
ol do
um
M
So is bia
u t so
h
Da uri
W co
yo t a
m
in
g
Capacity (MW)
Instaled Recycled Energy Capacity per capita (millions)
500
450
400
350
300
250
200
150
100
North Carolina
(22nd in US)
50
0
State
NC Industry Recycling Potential
 Steel

Blast furnace gas, exhaust heat, pressure drop
 Refineries and chemical factories
 Natural gas pumping station exhaust
 Pressure drop at gas delivery points
 Glass & fiberglass factory exhaust heat
 Sewage gas, landfill gas, biomass, construction
waste, recycled carpet, other
 All process thermal users, housing complexes, all
central chilling users
ACT Definition of Clean
Technology
 Over 57% delivered fossil efficiency
(versus 33% for US central generation)
 GHG emissions less that one unit of
coal-equivalent per unit of electricity
(equal to 100% coal efficiency)
 No limits on size, technology, fuel, or
location
Two Barriers to Clean Technology
 Barriers to local generation:

Interconnection costs and hassle

Standby charges
 Many clean technology benefits are not
available to the facilities that create the
benefits:

T&D avoidance

Line loss avoidance

Health and environmental savings
ACT Proposals to spur Clean
Technology
 Require distribution utilities to interconnect
with clean technology plants, add to rate base
 No standby charges for clean tech facilities
 Permit clean technology as ‘pollution control’
 Statewide standard offer for clean technology
to satisfy expected load growth, no size or time
limits


Pay current market wholesale price for power and,
Pay half of calculated benefits that clean technology
creates – roughly 4 to 6 cents per kWh
Stimulating Recycling of Industrial
Waste Energy
 State insure risk of industrial shutdown
 Provide limited loan guarantees for new
industrial energy recycling plants


Payable only if host ceases to provide
waste energy
Covers risk of industries ceasing
production, creates a virtuous cycle

Will trigger an industrial boom in NC

Costs offset with added income taxes
Recycled Energy Benefits
 New Investment
 Job Creation
 New Revenue Streams for NC Industry
 Improved Industrial Competitiveness
 Public Sector Gains
Conclusions: A Convenient Truth
Energy Recycling Solves Multiple Problems
 NC can ‘mine’ industrial waste energy,
create added revenue streams for industry

Recycle to provide affordable, clean energy
 Requires unconventional, innovative
governance



Remove barriers to efficiency
Pay part of T&D and health savings to
facilities that create those savings
Treat energy recycling as pollution control
devices for environmental permits
Denmark Changed in Two Decades
Source: Danish Energy
Center
Thank you