Princeton University Princeton University Undergraduate Task Force on Undergraduate Task Force on

Energy for Sustainable Energy for Sustainable DevelopmentDevelopment

Generation, Efficiency, Development, and Implementation

Commission on Sustainable DevelopmentUnited NationsMay 12, 2006

About the Task Force

o Composed of nine undergraduate students of public policy at Princeton University

o Directed by Prof. Denise Mauzerall

o Consisted of one semester of research and collaboration

o Informed by individual research and presentations from outside experts

o Focused on the generation, efficiency, development, and implementation of energy services in India, China, and the U.S.

Global Energy Consumption

Total Carbon Emissions from

Energy Consumption, 1880-2002

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Per Capita Carbon Emissions (1950-2002)

Objectives of the Task Force

o Address the question, how can access to increased sources of sustainable energy be achieved?

o Consider the need to balance increased energy services with environmental concerns, specifically climate change and air quality

Structure of the Presentation

Generation– Clean Coal– Wind Power

Efficiency– Green Building– Improving Vehicle

Fuel Efficiency– Public

Transportation

Development– Slum Electrification– Energy Services for

Rural Areas

Implementation– Mandated Market

Systems– Financing

Renewable Energy

Questions and Comments

STRENGTHENING HEALTH, SECURITY, AND ENVIRONMENT

Towards a Sustainable Coal-based Development Strategy for China

W. Ulysses Fowler

N o rth A m e ric a

C e n tra l/S o u th A me ric a

O th e r A sia /P a c ific in c In d ia n S u b c o n tin e n t

M id d le E a st

A fric a

C h in a

E u ro p e (e xc l. R u ssia n F e d )

R u ssia n F e d e ra tio n

A u stra lia /N e w Z e a la n d

Coal Oil Gas Uranium

Coal Power Plant Growth Leads to Carbon Lock-in

Current Status and Growtho Abundant reserveso Electricity demand

rising at 15%o Electricity generation 77%

dependent on coalo China responsible for 75%

of current global coal growth

o Coal electricity generation capacity projected to triple by 2020

o If installed, this new capacity will lock-in enormous carbon emissions, due to long lifetimes of power plants and infeasibility of retrofits

Nuclear8%

Coal26%

Natural Gas24%

Oil39% Hydro

2%

Non-Hydro

RE1%

World

Hydro2%

Natural Gas3%

Oil24%

Nuclear1%

Coal70%

China

Annual Carbon Emissions in 2025 from New Chinese Coal Power Plants Exceed Proposed

McCain-Lieberman CSA Reductions

MMTCe, 851.5

MMTCe, 682.3

Coal modernization required now to avoid carbon lock-in.

Coal Gasification to Avoid Carbon Lock-in

What is it?o Process that converts any

hydrocarbon into a synthesis gas composed of hydrogen and carbon monoxide

Allows production of:o Electricityo Liquid fuelso Petrochemicals

Provides a pathway to:o Reducing air pollutiono Enhancing energy security

by providing alternative to foreign oil and natural gas imports

o Potential lower-cost route to reductions in carbon emissions

Barriers to Coal Gasification

(1)Environmental Policyo Environmental regulations are poorly enforced and not tough

enough to justify investment in clean technology

(2) Institutional Capabilities o The innovation system is weak and fragmented

(3) Intellectual Property Rights Protection o Intellectual property rights protection for coal gasification

technology is poor, hindering acquisition and diffusion of the technology

(4) Investment and Trade Ruleso Ownership restrictions and complex approval processes for

foreign investments restrict access to Chinese market for advanced coal technologies

(5) Finance and Economicso Coal gasification relies on expensive imported technology that is

unfamiliar to the energy sector and not affordable without strong financial incentives

Policy Recommendations(1)Environmental Policyo Enforce existing environmental regulations to reward clean

technologies.o Require installation of monitoring equipment to enable enforcement

(2) Institutional Capabilitieso Reform the innovation process to allow coordinated research,

development, demonstration, and commercialization of gasification technologies

(3) Intellectual Property Rights Protectiono Strengthen intellectual property rights protection for advanced coal

technologies

(4) Investment and Trade Ruleso Streamline the approval process for large gasification-related foreign

investmentso Define priority channels for technology transfer, favoring technology

acquisition through foreign direct investment (FDI) and licensing over simple equipment import

(5) Finance and Economicso Encourage gasification-based electricity generation demonstration

projects with loan guarantees, capital subsidies, and grants

Wind Power: A Clean and Wind Power: A Clean and Renewable Supplement to Renewable Supplement to

the World’s Supply of Energythe World’s Supply of Energy

Michael Treadow

How Much Will Wind Help?

The answer to this question depends on several factors:

1) Pace of technological advancement in wind industry

2) Ability of wind-generated electricity to compete cost-wise with traditional energy sources 3) Extent of support wind industry receives from governments and policymakers via legal, financial and environmental channels

Though wind currently generates less than 1% of the global electricity demand, new installations are increasing worldwide wind capacity at a rate of 30-40% per year

Key Points on U.S. Wind Power

• Currently ranks 3rd in the world in terms of installed wind capacity at 9.149 GW

• Financing is vital for wind industry’s growth, but many in U.S. still regard wind power as a novel and risky endeavor

• Part of this perception stems from on-again/off-again nature of federal production tax credit (1.5-1.8 cents per kilowatt-hr)

• Remoteness of wind in U.S. poses a hurdle to its ability to compete cost-wise with established energy sources; it makes transmitting wind-generated electricity more expensive

• There is an enormous potential for U.S. wind power in the offshore setting which is estimated at over 1000 GW

Key Points on Chinese Wind Power

• Ranks 8th in the world in terms of installed wind capacity at 1.260 GW but had laid out ambitions plans for expansion of its wind industry: 4 GW by 2010, 20 GW by 2020

• Currently generates over 70% of its energy from coal• Overly reliant on imported equipment for wind

industry and thus sees higher costs for wind-generated electricity

• Antiquated grid system in China incapable of automatically rerouting power to match supply and demand

• Control over wind energy policy decisions is not vested in a single government agency which can give rise to bureaucratic delays in implementing reforms

Policy Recommendations

United States1) Ensure fair grid access

rules regarding electricity transmission system

2) Promote partnerships between wind industry and offshore oil/gas sectors to expand offshore capacity

3) Expand Renewables Portfolio Standard to all 50 states and stabilize Federal Production Tax Credit

China1) Renovate aging grid system to enable wind to be integrated efficiently

2) Drive down wind power’s cost through tax incentives and policy measures which promote renewable sources

3) Encourage homegrown wind industry

Reducing Climate Change Reducing Climate Change through Green Buildingthrough Green Building

Andrew Turco

Picture: Energy Star, 2006

Current Consumption and Future Strategies

o Buildings = 39% of energy use in the US (Energy Information Administration, 2004)

o Long lifetime / lasting influenceo Peak electric loads: lighting and cooling (Tester et

al., 2005)

o Heating/Cooling & Lighting = 2 largest energy uses in buildings (Energy Star, 2006)

o Make buildings more efficiento Internalize energy costso Push-pull policies to reduce energy useo Factor in life cycle

Technologies and Approaches

o Energy Star certified equipment: 30% energy savings

o Better windows, insulation, site orientation

o Geothermal heat pumps- Can reduce energy consumption by 63%-72%- Available everywhere- High Initial Investment but payback: 5-10 yrs

(US Department of Energy, 2005)

Advantages & Policy Models

Advantages:• Reduced operating costs – payback on higher

investments is quick• Reduced need for new power plants• Increased property values (David, 2006)

Policy Models:• US Green Building Council / Leadership in

Energy and Environmental Design (LEED) / Energy Star

• NYC LEED certification requirements• Grants, rebates, & tax credits for sustainable

energy infrastructure• Fannie Mae and Freddie Mac mortgages

Policy Recommendations

1) Implement a carbon tax, paid by consumers, on electricity purchased from non-renewable sources

2) Provide larger subsidies for the initial investment in geothermal heat systems, with funding from the “dirty electricity tax”

3) Partner with programs such as Fannie Mae and Freddie Mac in devising a mortgage program targeted at energy efficient homes

4) Incorporate estimated life-cycle energy operating costs on labels of all energy consuming equipment

5) Mandate a renewable energy component for a portion of the energy used in buildings over a certain size

6) Through Type II partnerships, provide the framework for business alliances that seek to reduce their carbon footprints

Raising Automobile Fuel Efficiency: Policy Recommendations

Ben Steiner

Convergence of Rationale for Higher Standards

1. Climate Change Transportation responsible for 33% of US

CO2 emissions and 23% of emissions worldwide

Developing world demanding more personal automobiles

2. Energy Security US oil imports at new high Hubbert’s Peak

3. Environmental Effects Air pollution major problem in India and

China

4. Feasibility Shorter lifecycle than other fossil fuel burning

infrastructure Bipartisan political support

Current Situation in US:CAFE Standards

• History Established in midst of Arab Oil Embargo

in 1975 Standards stagnant since mid-1980s

• Rules Separate standards for light truck and

passenger car fleets Light trucks to be split into 5 “footprint”

groupings in 2009 Current regulations: 27.5 mpg for cars,

22.5 mpg for light trucks

• Opportunity Great chance to improve fuel efficiency

while rectifying market failure

Current Situation in China:New Fuel Efficiency Standards

• History China set fuel efficiency standards in 2004,

above US but below EU and Japanese levels

• Rules Separate standards for 16 vehicle weight

classes Each model meets standard Current regulations: between 19 and 38 mpg

by 2005, and between 21 and 43 mpg by 2008

• Opportunity Chinese car market to be largest in world by

2020 China will set global standard for fuel

efficiency

Policy Recommendations1. Raise and reform CAFE standards and suggest improvements in Chinese standards

Follow McCain-Kerry plan to raise standards 40% by 2015 Create one fuel efficiency standard for entire vehicle fleet Make credits tradable Most politically feasible option

2. Increase gas tax to $1.20 a gallon in US and suggest higher gas tax rates in China Eliminates “rebound effect” of 1 extra mile driven for every 5 mpg improvement in fuel

efficiency Economically cheapest solution, but least politically feasible

3. Implement feebate system that subsidizes high efficiency vehicles with fees collected on low efficiency vehicles Eliminates market failure by bringing total lifecycle costs to foremarket Program is revenue neutral if pivot point is set properly Provides constant incentive to improve fuel efficiency

Promoting Public Promoting Public Transportation for Transportation for

Sustainable DevelopmentSustainable Development

Nikki Laffel

The Problem• Personal vehicle use is increasing increasing

emissions• Vehicle emissions have two negative effects

– Global climate change– Air pollution

• United States– World leader in carbon emissions

• China– World’s second leader in carbon emissions– Projected to become top emitter by 2020

• India– Current carbon emissions are low– National population growth rate exceeds

global rate which means increasing global share of emissions

Existing Public Transportation

o General trends: road based and rail based transit– Some public transit systems exist, other locations lack – Private vehicle use

• more convenient/appealing due to independence/flexibility• Increase with increasing wealth

o United States– In 2000: 88% use private vehicles for commuting– New York, Chicago, Atlanta: good public transportation

systemso China

– Guangzhou: 18 % use public transportation – Shanghai: impressive magnetic-levitation rail link

o India– Delhi: 34% use public transportation (effective bus transit)– Mumbai: 86% commuter trips by bus system and suburban

rail– Calcutta: impressive 17 km metro

The Problem (continued)o Public transportation systems are not ubiquitous in

natureo Current systems cannot meet increasing commuter

demando % annual change in per capita vehicle ownership 1990-

2020– US: 0.1% - China and India:

7.5%

US Per Capita Vehicle Ownership

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Policy Recommendations

• Allocate more money to build new subway and bus systems and expand or improve old systems

• Encourage citizens to use public transportation systems– subsidize mass transit fees for employees– reward carpooling – educate citizens to dismantle negative stigmas of

public transportation• Discourage citizens from using personal vehicles for

travel– increase the price of personal vehicle travel– reduce the number of vehicles allowed in urban areas

• Change urban plans and city designs– build more walking and biking paths and bike racks– build cities to link resident zones to business zones

Clean Distributed Clean Distributed Generation for Slum Generation for Slum

Electrification: Electrification: The Case of MumbaiThe Case of Mumbai

David A. Schaengold

o Electrification is important: Better worker productivity, increasing wealth, air quality, and empowering

o Unsafe, expensive electricity widely available, due to theft from power lines

o Three kinds of barriers to traditional electricity service in poor urban areas:

1. Sociological: unfamiliarity with traditional payment methods, anti-slum sentiments

2. Infrastructural barriers: poor access for vehicles, no legal rights or existence, no property rights

3. Economic barriers: extreme poverty, not cost-effective for most utility companies

Current Situation

Distributed Generation (DG) is a possible solution

o Can be a small investment, compared to expanding traditional service

o Flexible - parts reusable o Low transmission costs, and hard to

stealo Empowering for residents - DG can

allow slum-dwellers to control their own power sources

Renewable DG best option

(solar and wind, specifically)o Photovoltaic (PV) and Wind have no fuel

costs – reduces recurring expenses– no need for fuel distribution network, which

would be difficult in slums

o Adverse health effects of non-renewable DG, such as diesel generators

o Climate conditions in Mumbai ideally suited for wind and PV

o If necessary, can be combined with diesel generator for increased reliability (useful for refrigeration)

Financing & Implementation

o Micro-credit to local actors through existing banks or new sub-bank of Indian Renewable Energy Development Agency (IREDA)

o Allow for entrepreneurship (eg if one slum-dweller can pay, allow him/her to establish generators and charge others)

o Utility companies can be a source of capital for loans, since they have a financial incentive

o Variety of non-traditional payment options (for instance, upfront)

o Gender-conscious — women have most to gain from electrification, and are traditionally more reliable investors

o Community-focused

Off-grid Energy in Rural Off-grid Energy in Rural IndiaIndia

Antonio I. Lacayo

Rural Energy Electric Connectivity in Rural Areaso World: 1.6 billion, 1.3 in rural areas (80%)o India: 580 million, 400 in rural areas

– Too expensive, poor people, difficult terrain.

Dependence on traditional biomasso 2.4 billion people worldwide

– Negative effects: time spent finding fuel, wood, indoor air pollution, other hazards, environmental degradation

– Energy for development: wellbeing, education, health, income.

– Energy ladder: biomass is free, use of electricity selectively, moving up is dependent on three factors.

Government of India’s Goals

o Government of India’s Goals– Extend electricity grid to every village by 2008 and

every household by 2012 (Rural Electricity Act 2003).• Necessary yearly investments: $ 15 billion.• Current energy investments: $ 350 million.

– Over-ambitious, too expensive. – No coordination between institutions (3 ministries).– Does not attend end-uses, just focuses on access.

o Off-grid Alternatives Focusing on End-use• Efficient wood fueled cookers, solar thermal cookers.• Biogas digesters for fuel, wind power for water pumping,

photovoltaic panels for stand-alone systems.• Small hydropower and biomass gasifiers for electricity

micro-grids.

Policy Recommendationso Renewable Energy Technologies (RETs)

– Offer a variety of direct-end uses, lower costs for transmission and distribution, environmentally friendly, and low operating costs.

1.Focus on micro-credit to overcome high capital costs.

2.Provide consultancy to families.

o Targeting Women’s Energy Needs– Women suffer the most from energy scarcity, provide

higher benefits to the household, and 70% of the world poor are women.

1.Focus to women’s energy needs, like cooking and water.

2. Provide financing for women’s businesses, like baking and pottery.

Policy Recommendationso Capacity Building and using Local Resources

– Allow community members to operate, maintain and repair energy technologies to foster self sufficiency and overcome cultural barriers.

1. Form partnerships with community members for energy provision.

2. Include capacity building on all projects.

o Energy through micro-enterprise– Use energy as a means to increase income and reduce

reliance on subsidies and hand-outs.

1. Provide financing for energy-dependent businesses and energy service providers.2. Promote the creation of micro-enterprise zones.

Building Markets for Renewable Energy in

China

Sabina Sequeira

AP Multimedia Archive

Renewable Portfolio Standards, Feed-In Tariffs, and Tendering

China’s Capacity for Renewables

•253 GW onshore capacity, 1000 GW offshore•Majority of materials imported•Has 1.2GW; 20GW planned by 2020

Wind Solar Photovoltaic• 2,000 hours of sunlight/year , 170 Btce annual solar insolation•Vibrant PV manufacturing industry: 85% exported •In 2003, had 50MW

Barriers to RE Growth

http://www.agu.org/journals/jd/jd0512/2004JD005462/

http://grid2.cr.usgs.gov/ms_demo2/swera/china/template.html

•High initial costs for developers•Nascent industries: investor uncertainty•High market prices: 7-9cents/KWh wind, 42cents/KWh solar PV•Supply/demand alignment Policy: engage private sector, expand

development

Mandated Market Share Policies• Renewable Portfolio

Standards- Gradually increasing purchase obligation for electric utilities, Tiers, credit multipliers, credit trading system

Competition, innovation drive down price

• Feed-in Tariffs- Fixed cost of RE (subsidized), Optional purchase

Set price lessens investor uncertainty

• Tendering - Competitive bidding process

Economies of scale, competition, promote lower prices

Wiser et al, 2004

Key Considerations- Market development stage of technology, presence of competition

- Costs, Market distortions

- Efficiency, results

Renewable Energy Policy in China

• Goal-setting: Five-Year plans and growing energy concerns

• Tenth Five-Year Plan and 2005 Renewable Energy Law: First target set: 15% RE by 2020

• Many organizations, lack of coordination- Agencies, programs, province, local, and village

governments- Currently under National Reform and Development

Commission, National Energy Leading Group

• Still, lack of concrete implementation processes• Steps toward MMS: Wind Resource Concession

Program, province-level feed-in tariffs, considering national feed-in tariff or RPS

Recommendations• Policy Design

- Carefully Consider renewable energy capacity and market conditions- RPS in urban areas, feed-in tariffs for rural, tendering for high capacity rural sites, separate purchase obligations for solar PV and wind

• Transparency and Coordination- Create a department of energy, require monthly energy reports from provinces - Compliance incentives for provinces

• Supply and Demand- Nationwide credit trading: allow urban electric utilities to purchase rural credits- Restructure transmission system, develop with R&D

• Costs- Spread costs of across all energy consumers: fund initiatives through electricity surcharge, public benefits fund, reductions of fossil fuel subsidies- China pledged to spend $1.84 Billion by 2020 on renewable energy, can be used on MMS policies to promote rapid private sector expansion of renewable energy

Financing Renewable Financing Renewable EnergyEnergy

Karis Anne Gong

The Export-Import Bank of the United States

o An independent agency of the United States, chartered by the U.S. Congress

o An export-credit agency, a “financial institution whose purpose is to promote the exports of their respective countries by providing loans, guarantees, insurance, technical assistance, and more with the backing or approval of the national government”– ECAs directly finance 1/8 dollars of world trade

(Gianturco)

o The Export-Import Bank of the U.S. (ExIm Bank) finances $10-13 billion of U.S. exports per year

Ex-Im Bank Energy Ex-Im Bank Energy FinancingFinancing

o 98% of energy financing (~ $1-3 billion/year) is authorized for the export of fossil-fuel based energy projects, including generation and extraction

o Climate Change contribution: by 2012, the Bank’s power project will contribute to at least 450 million tonnes of CO2 emissions annually; this is on par with Mexico and Canada. In addition, its extraction projects financed from 1989-1999 in their lifetimes will generate about 14.1 billion tonnes of CO2 emissions. (ExIm Bank)

Policy Recommendations

• Partnerships between the ExIm Bank and private banks should be established to support sustainable energy technologies in developing countries

• These partnerships should be accompanied by reduced subsidies for fossil-fuel based technologies

• Financing programs should be designed to support renewable energy technologies

Overall Recommendations

Energy Generation o Promote advanced technology to decarbonize fossil

fuelso Increase the proportion of energy generated from

renewable sourceso Internalize all costs associated with energy generation

Energy Efficiencyo Internalize the costs of energy inefficiencyo Promote green building, from construction to

operationo Reform and raise fuel efficiency standardso Improve public transportation services

Overall Recommendations

Developmento Finance renewable technologies that facilitate

electricity generation and cooking fuels close to end-users in slums and rural areas. 

o Focus on women and capacity-building projects for community empowerment.

o Use micro-credit to support local entrepreneurs who could either benefit from energy access or supply their communities with energy services. 

Implementationo Implement market systems where appropriate

administrative infrastructure existso Use existing public finance institutions to provide

incentives for renewable energy exports

for an online version of this presentation and copies of complete student reports

please see:

http://www.wws.princeton.edu/mauzerall/dlm_teaching.htm/WWS402d_reports_S2006