1 climate change & clean energy: business opportunities environmental industry summit 2007 san...
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Climate Change & Clean Energy:Business Opportunities
Environmental Industry Summit 2007Environmental Industry Summit 2007
San Diego, CA San Diego, CA 619 – 807-3267619 – 807-3267
Environmental Business International
www.ebiusa.com
Friday Energy Panel
Andrew Paterson, EBI
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Environmental Business Summit 2007
Friday Panel: Climate Change & Clean Energy
Climate Change & Clean Energy: OverviewAndrew Paterson, EBI – moderator
Campaign: “Climate Clean” (VERF)Stanley Field, Climate Clean, LLC
Carbon Offsets
David Shearer, California Environmental Associates
Case Study: Toyota’s Hybrid Vehicles Mary Nickerson, Toyota Motor
Capital Market Perspective(s)Walter Howes, EBI Capital Advisors
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Environmental Business Summit 2007
Controversial Overview / Overview of a Controversy
THE “CONSENSUS” VIEW Climate Change is real. There
is scientific consensus. Man-made emissions are the
leading cause. “With the Kyoto Protocol, at
least we have a path forward.” Lack of participation by the
USA is irresponsible. Not taking near term action
threatens the global economy. However, a new regime is
required for the post-2012 timeframe.
But, big developing economies need to grow to survive.
AN “ALTERNATIVE” VIEW Climate Change is real on many
fronts, but “scientific consensus” is an oxymoron, and proof the debate is political.
Man-made emissions are a key “trigger” and must be reduced.
- Plus, the same measures that reduce carbon emissions enhance OECD energy security
Mandates, like the Kyoto Protocol, are not the only way, and bureaucratize solutions.
The way forward must engage the big developing economies: China, India, Brazil, N.America
A cap creates regional losers.
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Environmental Business Summit 2007
Global Primary Energy Needs Outstripping Supply
World Energy Scenarios,IIASA-WEC, 2000
As climate change worsens, we might go to war on resources… are we?
“Gringo Mentality”:Telling big developing economies to curb their demand while we consume 5x-10x as much energy per capita will not work.
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Environmental Business Summit 2007
IEA: An Energy Investment Challenge
$- $100 $200 $300 $400 $500
Oil - Explore & Develop
Oil sands, other
Oil Refining
Gas - Explore & Develop
LNG terminals
Gas Transmission
Gas Distribution / Storage
Coal - Mining
Electricity - Generation
Elec- Transmission
Elec- Distribution
2001-2010 2011-2020
“We don’t have an energy crisis, we have an energy investment crisis. We will need billions invested… make that trillions.”
Skip Bowman, President - Nuclear Energy Institute, 2005
IEA forecasts that roughly $1,000 billion needs to be invested in North America each decade to meet energy demands, half of it in the electric sector.
World Energy investment
Outlook, 2003
For U.S. & Canada $Billions
Investments in energy efficiency offer options.
World Energy Outlook 2006 calls for $20T to invest globally by 2030.
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Environmental Business Summit 2007
U.S. Energy Expenditures as a % of GDP, 1970 – 2030
Before the oil embargo of 1973-74, total energy expenditures were equal to 8% of U.S. GDP, (5% on oil, and 1% on natural gas. Following the price shocks of the 1970s and early 1980s, those shares rose dramatically—to 14% overall (8% for oil and 2% for gas in 1981). Since then they have fallen consistently, to 2004 levels of about 7% for total energy expenditures, 4% for petroleum expenditures, and just over 1% for natural gas expenditures.
Although recent developments in the world oil market have pushed the shares upward, they are projected to decline from current levels: in 2030, total nominal energy expenditures are projected to equal 5% of nominal GDP (3% for oil, 1% for natural gas expenditures. Figure 28). The overall decline in energy expenditures relative to GDP has resulted in large part from a decline in world oil prices (in real dollar terms) from their peak in 1981, combined with enhanced efficiencies.
http://www.eia.doe.gov/oiaf/aeo/economic.html
The economy can support higher expenditures on energy to cover carbon capture costs.
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Environmental Business Summit 2007
EIA: U.S. Oil Production Declining (AEO 2006)
AEO 2006:“Oil prices also determine whether unconventional oilproduction (such as oil shale, CTL, and GTL) is economical, as illustrated in the alternative price cases. CTL production is projected in both the reference and high price cases; however, GTL production and syncrude production from oil shale, both of which require higher prices before they become economical, are projected only in the high price case.
American Energy Security speech (August 2006):In 1985, when I first came to Congress, we imported 4.3 MBD – about 27% of total consumption. Today, we import nearly three times that much and imported oil is now nearly 60 percent of our domestic appetite. It accounts for a third of our trade deficit. America spends $200,000 each minute on foreign oil imports.
Rep. Pete Visclosky (D-IN)
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Environmental Business Summit 2007
Vulnerability on Oil Imports: USA still #1 !Energy Vulnerability: Absolute Total Oil Imports (Size of Circle), plotted on GNP per Capita vs. Per Capita Oil Consumption (energy demand)[ Red circles denote volume of net exports of oil: Canada, U.K., Mexico, Russia, Iran, Colombia ]
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
-5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0
Per Capita Oil Use (BBls per year) - 2004
GN
P p
er C
apita
(PP
P) -
200
5
USA
Japan
S.Korea
France
Germany
Italy
Poland
China
India
Turkey
U.K.
Thailand
Brazil
Canada
S. Africa Mexico
Russia
Pakistan
Iran
Colombia
Spain
Vulnerable
Most Vulnerable
Some major oil suppliers not shown
Consumption per capita (dimension of personal addiction)
Mea
sure
of
“w
hat
na
tio
ns
hav
e t
o l
ose
”
Source: ADPaterson
Vulnerability rises with imports and “value at risk”
GN
P p
er C
apit
a, 2
005
Per Capita Oil Use (bbls/yr)
“Fat, dumb, and happy” is not sustainable
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Environmental Business Summit 2007
Situation Briefing: Vulnerable Oil Sources
(green: state-owned)
Country Hostile to U.S. ?AramCo Saudi Arabia 260.0 …Not right nowNIOC Iran 125.8 Whenever possibleINOC Iraq 115.0 Your call… (Saddam out)KPC Kuwait 100.0 Nope; we saved ‘emPdVSA Venezuela 77.8 “Yanqui, go home”Adnoc UAE 55.2 No; new Navy baseLibya NOC Libya 22.7 Playing nice, but iffy NNPC Nigeria 21.2 Politically vulnerablePemex Mexico 16.0 Mostly in soccer Lukoil Russia 16.0 Nyet; Cold War over Gazprom Russia 13.6 Depends on Putin’s moodExxonMobil U.S. 12.9 Not to shareholders Yukos Russia 11.8 Under siegePetroChina China 11.0 NeutralQatar Petro Qatar 11.0 Nope; very friendly Sonatrach Algeria 10.5 Radical leaningsBP (Amoco) UK 10.1 Still see us as a colonyPetrobras Brazil 9.8 Not exportingChevronTexaco U.S. 8.6 SafeTotalfina France 7.3 They’re French !Imperial Oil Canada tar sands During hockey seasonSubtotal Biggest holders 916.3 Two-thirds held by OPEC
TOTAL ~1,200.0 (not including tar sands)
Energy Company
Reserves (Bil bbls)
Tanker “Prestige” off coast of Spain, Nov. 2002
U.S. imports ~ 60% of oil.
Source: Economist
Unstable Sources
Vulnerable Transit
Big Oil is National Oil: supply decisions can be politicized further.
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Environmental Business Summit 2007
Transportation Sector Vital for Progress
“Tonight, I am proposing $1.2 billion in research funding so that America can lead the world in developing clean, hydrogen-powered automobiles.”
President Bush, Jan. 2003
FORD HYBRID
IPHEInternational
Partnership for the Hydrogen Economy
TOYOTA PRIUS
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Environmental Business Summit 2007
Baseline: U.S. Carbon Emissions by Sector, 2000
Ele
ctr
icit
y
Re
sid
en
tia
l
Co
mm
erc
ial
Ind
us
tria
l
Tra
ns
po
rtCoal
Petro
NGas0
100
200
300
400
500
600
Coal
Petro
NGas
2000
To
ns
of
Ca
rbo
n e
mit
ted
Source: EIA, AEO 2003
Electricity broken out by end-use sector.
Electricity broken out by end-use sector.
Power sector drew early attention, but transportation is crucial.Power sector drew early attention, but transportation is crucial.
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Environmental Business Summit 2007
EIA: U.S. Carbon Emissions by Sector, 2010
Ele
ctri
city
Re
sid
en
tial
Co
mm
erc
ial
Ind
ust
rial
Tra
nsp
ort
CoalPetro
NGas0
100
200
300
400
500
600
Coal
Petro
NGas
2010
To
ns
of
Car
bo
n e
mit
ted
Source: EIA, AEO 2003
Sources of GHG emissions change very slowly: power, transport.Sources of GHG emissions change very slowly: power, transport.
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Environmental Business Summit 2007
EIA Forecast: Carbon Emissions by Sector, 2010
End-Use Sector - CO2 Coal Petro NGas Total ElecElectricity 580 10 100 690Residential 28 80 108 243Commercial 3 13 55 71 247Industrial 56 100 150 306 200Transport 615 10 625Total CO2 (MMT-C) 639 766 395 1800 690
DOE’s Climate VISION Focus:Reductions in carbon emissions can be achieved through: 1) broader conservation and efficiency in transmission and end-use of electricity; 2) shifts in electricity generation toward high-efficiency “clean coal” gasification systems or to nuclear and low carbon generation (e.g., wind, biomass blending with coal); and 3) shifts in transportation away from fossil fuels (e.g., through biofuels, hybrid engines, ultimately hydrogen fuel cells).
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Environmental Business Summit 2007
Carbon Emissions from Coal-fired Electricity
215243
210
247
195 200
0
50
100
150
200
250
300
Residential Commercial Industrial
2000
2010
To
ns
of
Ca
rbo
n e
mit
ted
Electricity usage is spread fairly evenly across the three end-use consumer sectors. The industrial sector has instituted many conservation measures already in part through the efforts of the DOE “Industries of the Future” programs in EE/RE, therefore the best area for gain by focusing on the vast commercial building and residential sectors. The residential sector changes over time as the housing sector rotates gradually. Large apartment buildings in urban core areas could provide a focused target for CHP efficiency upgrades as a specific application area.
Source: EIA, AEO 2003
Slow capital stock rotation in the buildings sector is a major hurdle.Slow capital stock rotation in the buildings sector is a major hurdle.
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Environmental Business Summit 2007
U.S. Power Generation - 2005
EIA: Based on AEO 2006
Baseload
Seasonal
Peak
Alternative
Coal
Nuclear
HydroN.Gas
OilBio
MSWGeo
WindSolar
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Coal
Nuclear
Hydro
N.Gas
Oil
Bio
MSW
Geo
Wind
Solar
U.S. Power Generation - 2005Remains mostly "big" baseload (75%)
EIA Baseline
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Environmental Business Summit 2007
U.S. Power Generation - 2010
Baseload
Seasonal
Peak
Alternative
Coal
Nuclear
HydroN.Gas
OilBio
MSWGeo
WindSolar
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Coal
Nuclear
Hydro
N.Gas
Oil
Bio
MSW
Geo
Wind
Solar
U.S. Power Generation - 2010Baseload still dominates (78%)
EIA: Based on AEO 2006
EIA Baseline
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Environmental Business Summit 2007
U.S. Power Generation - 2015
Baseload
Seasonal
Peak
Alternative
Coal
Nuclear
HydroN.Gas
OilBio
MSWGeo
WindSolar
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Coal
Nuclear
Hydro
N.Gas
Oil
Bio
MSW
Geo
Wind
Solar
U.S. Power Generation - 2015N.gas provides the margin
(baseload at 80%)
EIA: Based on AEO 2006
EIA Baseline
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Environmental Business Summit 2007
U.S. Power Generation – 2020, “Back to Baseload”
Baseload
Seasonal
Peak
Alternative
Coal
Nuclear
HydroN.Gas
OilBio
MSWGeo
WindSolar
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Coal
Nuclear
Hydro
N.Gas
Oil
Bio
MSW
Geo
Wind
Solar
U.S. Power Generation - 2020Back to Coal
(baseload at 83%)
EIA: Based on AEO 2006
EIA Baseline Not much real shift is forecast by 2020. Fossil (coal and gas) still dominate power supply.
Not much real shift is forecast by 2020. Fossil (coal and gas) still dominate power supply.
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Environmental Business Summit 2007
Baseline: U.S. Power Generation - 2005
0 50 100 150 200 250 300 350
Coal
Nuclear
Hydro
N.Gas
Oil / Dual
Bio
MSW
Geo
Wind
Solar
Capacity (GWe) - 2005Total Capacity Used Capacity
Challenge: A MW of Wind or Solar does NOT equal a MW of coal…
Lower capacity factors diminish contribution by renewable sources (wind, bio, solar).
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Environmental Business Summit 2007
Real Cost of Power Sources Affected by Capacity Factor
80% 90% 30% 90% 75% 30% 43% 60% 25% 24%$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Coal-IGCC
Nuclear Gas Geo Biomass Wind Hydro Fuel cells Solar-thermal
PV
$ p
er
KW
e
$/KWe Eff. $/KWe Cap Factor
$12,000
$25,000
Fuel costs, weather affect downtime of some sources, which impacts investment.
Data Source: NETL, EPRI
Example: An installed KW of wind is not the same as in installed KW of baseload coal and nuclear, which run many more hours regardless of weather. So, the cost per KWe must be adjusted for average capacity factor: red bar is “Effective Capacity”, adjusted for downtime.
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Environmental Business Summit 2007
Some GHG / Energy Policy Approaches
APPROACH Examples Key Drawbacks?A. Enforced Mandates
Emission / Performance Stds. Appliance efficiency Can become a ceilingFederal Cap & Trade CAA: SOx, NOx Arbitrary; can be gamedRegional Trading Agreements RGGI, PJM Airshed is globalPower / Fuel mandates (RPS/RFS) State RPS, Biofuel RFS Uneven impact; big losers
B. Government ProgramsRD&D on low carbon options DOE Slow, gaps in deploymentResource Mgmt. (DOI, BLM) Nat'l Parks, Forest Srvc Federal mgmt. less efficientAgency Purchasing Agreements FEMP None, unless fragmented
C. Fiscal / Investment MeasuresCarbon Tax Gasoline taxes Politically unpopularInvestment Tax Credit / Fast Depr. Sec. 48/49 ITCs Plagued by some fraudProduction Tax Credits Ethanol tax credits Fails to deal with early risksCredit Support (Loan Guarantees) USDA / DOT LGs Creates contingent liabilitiesPrice Guarantees Boucher Bill for CTL Difficult to administerFeed-in Tariffs / Rate Boosts EU RE incentives Expensive to government
D. Voluntary Initiatives / CampaignsFederal Performance Labeling Energy Star Industry lobbies to diminishIndustry Sector Commitments Climate VISION Lacks enforcementPublic - Private Partnerships Climate Leaders Easy to let targets slipGHG Registries EPAct '92 1605b Burdensome to administerRegional Initiatives Western states Industry can move
A variety of tools are available… and needed.
Capital incentives may be superior to cap and trade by triggering innovative solutions and economic growth.
A cap with lower growth curbs agency budget resources.
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Environmental Business Summit 2007
Capacity by NERC Electricity Region (GWe)
Sharp regional differences remain in electricity sourcing and use, so regional policies are important in shaping options for North America.
ftp://www.nerc.com/pub/sys/all_updl/docs/pubs/LTRA2005.pdf
Garnering a national consensus is extremely difficult, especially on energy sources.
GWe
NERC region
Fuelsource
Lack of Consensus on Power Options
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Environmental Business Summit 2007
Turmoil in EU Carbon Market (May 2006)
http://www.ft.com/cms/s/b03dbc7a-06cf-11db-81d7-0000779e2340.html
Europe hopes to avert a false economy in carbonBy Fiona Harvey, June 28 2006 19:38 | Financial Times of London“What came close to putting the scheme on life support was data released between late April and mid-May which showed that last year – the first the scheme had been in operation – businesses covered by it had been given more permits than they needed because member states had overestimated demand.”
Public sector “gaming”
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Environmental Business Summit 2007
20552005
14
7
Billions of Tons of Carbon Emitted per Year
1955
0
Currently
projected path
Flat path
Historical emissions
1.9
2105
14 GtC/y
7 GtC/y
Seven “wedges”
Robert Socolow (Princeton): Stabilization Wedges
O1. Aggressive end-use efficiencies2. More biofuels, biomass3. RE: more wind, solar, geo4. Expand safe nuclear worldwide5. Sequester carbon (coal use)6. Better vehicles (PI hybrids)7. Manage natural sinks
All wedges will be needed to make progress on curbing carbon emissions.
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Environmental Business Summit 2007
Climate & Clean Energy Business Opportunities
CARBON MANAGEMENT APPROACHES Now to 2010 2010 - 2020 2020 - 2030A. Energy & Sequestration
1 Energy Efficiency (Practices / Equip)- Buildings: residential, commercial, community-scale M M H- Industrial efficiency and co-generation; on-site power M M M- Smart transmission and distributed generation L M H- Expanded demand side mgmt.; consumer campaigns L L M
2 Low Carbon Power Generation- Power from coal or gas with carbon capture - storage L M M- More nuclear power L L H- Renewable power: wind, biomass, solar, geothermal L L M
3 Transportation- Vehicles and motors L M H- Non-grain Biofuels L M H- Electrified transport (plug-in hybrids) L L H- Hydrogen fuels (from nuclear or renewables) L L M- Telecommuting, traffic flows L L L
B. Sinks and Resource Management (CO2 + Methane)Aggressive forestry L L MAgricultural soil management L L LLandfill gas capture L L LLivestock management L L L
C. AdaptationCoastal building and community measuresCommunity preparation & Emergency response systems
Different opportunities emerge at varying paces with varying impact.Different opportunities emerge at varying paces with varying impact.
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Environmental Business Summit 2007
Wrap-up: Capital Incentives >> Cap & Trade
The fundamental issue is accelerating the turnover of capital stock from carbon intensive assets to low-carbon, efficient ones:
Power generation (and sequestration) Fuel refineries, vehicles, and transport infrastructure End-use efficiency in buildings (design, use, equipment) Industrial manufacturing and energy production
Capital incentives do not impair economic growth, which is needed to fund innovation and regional infrastructure, and change demand
Capital incentives create demand for engineering / tech services. North American capital markets are the largest, most efficient Cap & trade creates bureaucratic inefficiencies and incentives for
“gaming” and fraud in both public and private sectors Economy-wide reporting and monitoring costs are extensive Uneven impact creates large scale winners and losers
Natural sources of carbon are immense and not “capped” Incentives engage big developing economies (China, India, etc.)
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Environmental Business Summit 2007
“Bordeaux Energy Enterprise Framework” (2006)
FossilFuture
Carbon Mgmt(Energy Security)
High Growth
E.U./Japan
Low Growth
N.Am / Austr.
RisingAsia
New World
“ENERGY ENTERPRISE”“GREENHOUSE”
“GRAPES OF WRATH” “CLUB OF ROME”
N. America & EU share goals, but different paths…
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Environmental Business Summit 2007
“Bordeaux Energy Enterprise Framework” (2006)
FossilFuture
Carbon Mgmt(Energy Security)
High Growth
E.U./Japan
Low Growth
N.Am / Austr.
RisingAsia
New World
• High demand + carbon intensity reduction• Less vulnerability to disruptions• Massive EE & DSM• Accelerated nuclear plant construction• Renewable power (wind, solar, bio); Biofuels• Clean coal with CCS• Plug-in hybrid vehicles + mass transit• Community scale EE and Co-gen• Reforestation / sequestration
“ENERGY ENTERPRISE”“GREENHOUSE”
“GRAPES OF WRATH” “CLUB OF ROME”
• Low demographic growth• Lower carbon intensity • Heavy mandates / regulations• Huge imports of natural gas (to replace coal)• CO2 limits / allocations / trading• Marked rise in biopower• Feed-in tariffs for renewable power• Urban electric mass transit • Co-generation for EE / DG
• High demographic growth• More vulnerability to disruptions• More Oil & Gas E&P• Gas turbines for power• Diesel engines for power • GTL + CTL for fossil fuels• LNG bonanza• Coal-fired power• Mass transit for urban growth
• Low relative demographic growth• Vulnerability to disruption • More Oil & Gas E&P (tax incentives)• Gas turbines for power / LNG growth• Higher mileage ICE (cars) • Extended coal plant life• Some mass transit growth• EE in new homes• Hybrid vehicles
• Technology • Joint Venture• Investment incentives
• Guidelines / Regulations • Multi-lateral agreements• Public-private partnerships
• Joint R&D • Bi-lateral agreements• Market mechanisms
The way forward for N.America will be an Asia – Pacific Partnership
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Environmental Business Summit 2007
Finish
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Environmental Business Summit 2007
Backup / Extras
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Environmental Business Summit 2007
U.S. Power Capacity: 2005 - 2020 (AEO 2006)
AEO 2006 GWe2005 2010 2015 2020
Coal 313.0 318.7 329.3 345.0Nuclear 100.0 101.0 104.0 109.0Hydro 78.0 78.0 78.0 78.0N.Gas 224.0 302.0 318.9 360.0Oil / Dual 206.0 124.0 110.0 95.0Bio 6.0 7.0 8.0 10.0MSW 3.5 4.0 4.0 3.8Geo 2.2 3.0 3.5 4.6Wind 9.7 16.0 18.0 20.0Solar 0.7 0.5 1.0 2.0Total 943.0 954.2 974.7 1027.4
EIA: Based on AEO 2006
Baseline: Fossil fuels still projected to provide most electricity.
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Environmental Business Summit 2007
U.S. Power Consumed: 2005 - 2020 (AEO 2006)
Baseline: Fossil fuels still projected to provide most electricity.
EIA: Based on AEO 2006
AEO 2006 Bil KWh2005 2010 2015 2020
Coal 2,041 2,217 2,272 2,505Nuclear 774 810 829 871Hydro 270 297 303 300N.Gas 711 774 1,030 1,101Oil / Dual 161 116 103 106Bio 45 76 80 88MSW 25 25 28 30Geo 14 20 23 34Wind 23 52 57 70Solar 1 2 2 3Total 4,066 4,388 4,727 5,108
Renewables 379 471 493 525RE, no hydro 109 174 190 225RE, no hydro 2.7% 4.0% 4.0% 4.4%
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Environmental Business Summit 2007
Change in Capacity Forecasts by EIA (AEO2001 v. 2006)
AEO2001 was issued in Dec. 2000, prior to 9/11, the recession of 2001, and the stock collapse of merchant power. Hence, the forecast for gas turbine capacity was substantially higher than current forecasts. In addition, the forecast for coal capacity was still higher than the updated forecast in AEO2006.
AEO'03 v. '06GWe 2005 2010 Retire Adds 2005 2010 Retire Adds Changes
Coal 309.8 315.0 -13.5 18.7 313.6 322.8 -3.0 12.2 -6.5IGCC 0.5 0.5 0.0 0.0 0.5 0.5 0.0 0.0 0.0Oil / Dual 131.2 123.2 -17.7 9.7 124.4 124.0 -2.0 1.6 -8.1N.Gas CC 49.5 126.0 0.0 76.5 139.3 151.5 -0.6 12.8 -63.7CT/Diesel 130.6 164.1 -5.1 38.6 135.8 139.0 -1.4 4.6 -34.0CHP-NGas 40.0 43.0 0.0 3.0 48.4 50.0 0.0 1.6 -1.4Nuclear 97.5 93.7 -3.8 0.0 100.1 100.9 0.0 0.8 0.8Hydro 79.6 79.7 0.0 0.1 78.3 78.3 0.0 0.1 0.0Geo 3.2 4.3 0.0 1.2 2.2 2.6 0.0 0.4 -0.7MSW 3.8 4.2 0.0 0.4 3.5 3.8 0.0 0.3 -0.1Wood / Bio 6.9 8.0 0.0 1.1 6.3 7.2 0.0 0.8 -0.3Wind 4.4 12.3 0.0 7.9 9.7 16.3 0.0 6.6 -1.3Solar Thm 0.4 0.4 0.0 0.1 0.4 0.5 0.0 0.1 0.0Solar PV 0.2 0.5 0.0 0.3 0.2 0.7 0.0 0.5 0.2Solar CSP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Fuel cell / DG 0.0 0.0 0.0 0 0.0 0.2 0.0 0.2 0.2Totals 857.5 974.9 -40.1 157.53 962.6 998.2 -7.0 42.58 -115.0
AEO 2001 (before 9/11) AEO 2006
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Environmental Business Summit 2007
EIA: AEO 2007 Early Release
AEO 2007:“World oil prices since 2000 have been substantiallyhigher than those of the 1990s, as have the prices ofnatural gas and coal (although coal prices began torise somewhat later than oil and natural gas prices).The sustained increase in world oil prices caused EIAto reevaluate earlier oil price expectations in producingAEO2006. The long-term path of world oil pricesin the AEO2007 reference case is similar to that inthe AEO2006 reference case, although near-termprices in AEO2007 are somewhat higher than thosein AEO2006.
EIA has reduced projections of natural gas use and raised forecasts of coal use.
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Environmental Business Summit 2007
Global Natural Gas Costs Differ Sharply
USA $6.30
Feb. 2005
Sources: Bloomberg, Economic Times, EIA, Fertecon, Financial Times, Pace, Platts, World Bank
Canada $5.55
UK $5.15
Belgium $5.25
Russia $0.95
Qatar $0.65
Trinidad $1.60
North Africa $0.80
Japan $4.50
South Korea $4.50
Taiwan $4.65
China $4.50
India $3.10
Bolivia $1.60
Argentina $1.50
Indonesia $2.70Singapore
$3.20
Australia $3.75
Kuwait$1.25
Iran $1.25
Saudi Arabia $0.75
Oman $1.00
Turkey $2.65
Ukraine $1.70
Belarus $1.20
($US per million BTUs)American Chemical Council
Unlike oil, natural gas is still priced regionally rather than globally.This puts U.S. heavy industrial gas users at a distinct disadvantage.
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Environmental Business Summit 2007
Planned Coal Plants Rising; near 100 GWe by 2030
2006
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Environmental Business Summit 2007
Attributes Affecting Energy Choices
PeakingFeatures Coal Nuclear Nat'l Gas Wind Biomass Fuel CellCapital Cost (per KWe) High High Low High High HighMarginal Oper. Cost Med Med Low Low Med LowFuel Costs (per KWh) Low Low High None Med MedFuel Price Stable Stable Volatile None Variable Variable
Air Emissions High None Med Low Low LowLand Use Med Low Low High High LowGrid Dependency High High Med Med Med LowWeather Vulnerability Low None Low High High None
Baseload power Renewables
High capital costs for coal and nuclear drive electricity rate structure toward a regulated outcome rather than competitive rates with market exposure because investors demand assured returns on capital. Plentiful capacity and natural gas would be more suited to competitive rate structures because most of the electricity cost is fuel instead of capital. A regional RPS is essentially a regulated rate approach by dictating fuel mix.
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Environmental Business Summit 2007
Socolow: Carbon Stabilization Wedges
EFFICIENCYBuildings, appliances, transport, industrial processing, lighting, electric power plants, upstream extraction.
DECARBONIZED ELECTRICITY Natural gas for coalPower from coal or gas with carbon capture and storageNuclear powerPower from renewables: wind, photovoltaics, solar concentrators (troughs and dishes), hydropower, geothermal.
DECARBONIZED FUELSSynthetic fuel from coal, natural gas, and biomass, with carbon capture and storageBiofuelsHydrogen
from coal and natural gas, with carbon capture and storagefrom nuclear energy from renewable energy (hydro, wind, PV, etc.)
FUEL DISPLACEMENT BY LOW-CARBON ELECTRICITYGrid-charged batteries (“plug-in hybrids”) for transportHeat pumps for furnaces and boilers
NATURAL SINKSForestry (reduced deforestation, afforestation, new plantations) Agricultural soils
METHANE MANAGEMENTlandfill gas, cattle, rice, natural gas
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Environmental Business Summit 2007
AEO Forecasts for Nuclear Capacity: Rising Every Year
EIA AEO Annual Forecasts for U.S. Nuclear Capacity
40
50
60
70
80
90
100
110
120
2000 2005 2010 2015 2020
Nu
clea
r C
apac
ity
(GW
e)
AEO2006
AEO2005
AEO2004
AEO2003
AEO2002
AEO2001
AEO2000
AEO1998
New reactors forecast for the first time due to passage of EPAct 2005
Retirements forecast
through 2002
EIA raised its forecast for nuclear capacity in 2020 every year since 1998.
40
Environmental Business Summit 2007
Energy Policy Options
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Environmental Business Summit 2007
DOE Programs with Impact on Carbon Emissions
How can Federal Credit help?
DOE – FE-“FutureGen” (275 MWe advanced coal plant)- Carbon Sequestration Initiative
DOE - NE- “Nuclear Power 2010” to address licensing of Gen III plants
DOE – EE/RE- Buildings Program/Weatherize- Distributed Generation (DEER)- Biomass / Biofuels- Industrial Technologies (EE)- Fuel Cells / hydrogen
DOE – FE- Better proposals from industry, less budget exposure for government
DOE Programs Accelerated or Improved Results:
DOE - OETD- Transmission Roadmap- Policy initiatives for investment
DOE - NE- Federal finance focused on key risks for new orders
Lines of Credit; Credit enhancement
Commissioning Coverage
Leasing options, Revolving Loans
DOE – EE/RE-Wider variety of financing; broader market adoption- More repayment
Power purchase agreements
DOE – OETD- Incentives to cover long-term investment, upgrades