profitably reducing greenhouse gas emissions
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Profitably Reducing Greenhouse Gas Emissions. MIT Energy Initiative Seminar Series. Thomas R. Casten, Chair Recycled Energy Development, LLC September 9, 2008. Presentation Synopsis. Generation efficiency is the Elephant in the Room – that no one sees - PowerPoint PPT PresentationTRANSCRIPT
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Profitably Reducing Greenhouse Gas Emissions
MIT Energy Initiative Seminar Series
Thomas R. Casten,ChairRecycled Energy Development, LLC
September 9, 2008
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Presentation Synopsis
Generation efficiency is the Elephant in the Room – that no one sees 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
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20051995198519751965195519451935192519151905Year
% of total fuel
Petroleum Coal Natural Gas Nuclear Renewable
C
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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)
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
0.0%
0.5%
1.0%
1.5%
2.0%
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3.0%
3.5%
20051995198519751965195519451935192519151905
Year
Efficiency of Conversion
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2nd Law Conversion Efficiency to Low Temperature Heat – Lousy!
0.0%
0.5%
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20051995198519751965195519451935192519151905
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Efficiency of Conversion
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2nd Law Conversion to High Temperature Heat a Little Better
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20051995198519751965195519451935192519151905
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Efficiency of Conversion
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Electricity Conversion to All Uses < 60%
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20051995198519751965195519451935192519151905
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Elec. Conversion to Useful Work
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But Delivered Electric Efficiency Stalled Since Eisenhower
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% Efficiency
Primary Efficiency, Delivered Electricity
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Electric-only Coal & Oil Heat Rates Stopped Falling by 1960
0
3,000
6,000
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1950 1960 1970 1980 1990 2000
Year
Heat Rates (btu/kWh)
Coal Natural Gas Petroleum
Source: EIA
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Electric Efficiency Gains Slowed after Mid-Fifties, Now Gone
-0.5%
0.0%
0.5%
1.0%
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200520011997199319891985198119771973196919651961195719531949194519411937193319291925192119171913
Ending Year
Ten Year % Unit Change
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Yearly Changes in U.S. Efficiency (Potential Energy to Useful Work)
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
2005200019951990198519801975197019651960195519501945194019351930192519201915191019051900
Year
Percentage points of change
Trouble Ahead?
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Conversion of Exergy to Useful Work Has Improved, but < 14%
0%
2%
4%
6%
8%
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14%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Year
Potential Energy to Useful Work
Conversion efficiency to useful work Linear Trend Line
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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 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: 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 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 Indiana CHP Plant Recycles Heat To US Steel Tin Plate Plant US Steel Tin Plate Plant (85% efficiency)(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
-$300
-$200
-$100
$0
$100
$200
$300
$400
$500
Recycled Energy
CHP
RE w/ CHPBiomass CHP
NG CCGT
Biomass Elec. OnlyRemote Wind Farm
Nuclear
Coal w/ Seq.
Concentrated Solar
Solar PV
Clean Energy Type
Dollars / Ton Avoided CO2
Local Generation with Recycling of Waste Energy
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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 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 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 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
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