a call to action: use energy twice to profitably avert climate change
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A Call to Action: Use energy twice to profitably avert climate change. Changing the way the world makes power. Thomas R. Casten, Chairman Recycled Energy Development, LLC. IDEA 100 th Anniversary June 29, 2009. The Energy/Carbon Story. The Generation Story. The Changing Rules. - PowerPoint PPT PresentationTRANSCRIPT
A Call to Action:Use energy twice to
profitably avert climate change
Changing the way the world makes power
Thomas R. Casten,Chairman
Recycled Energy Development, LLC
IDEA 100th Anniversary
June 29, 2009
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The Energy/Carbon StoryThe Energy/Carbon StoryThe Energy/Carbon StoryThe Energy/Carbon Story
The Changing RulesThe Changing Rules
The Generation StoryThe Generation Story
ConclusionsConclusions
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The history of accessto 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
1909: IDEA formed to distribute thermal energy
• Access to energy services allowed population to explodeRED | the new green - 3 -
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World population hasgrown dramatically
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1999
1987
1975
1925
1810
1957
3 millionca. 1760:Watt’s steam engineallows coal to be used for power
A.D.B.C.
Source: various authors cited by the U.S. Bureau of Census
IDEA Formed
Source: Arulf Grubler (1998), BP Statistical Review of World Energy (2008), US Bureau of Census (2008)
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Increases in world population andenergy consumption 1850-2007
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
Populationup 430%
Consumption per Capitaup 760%
Total Consumptionup 4600%
1850 1900 1950 2000 1850 1900 1950 2000 1850 1900 1950 2000
Nuclear
Natural Gas
Oil
Coal
Hydro
Wood
IDEA Formed
0 bn
1 bn
2 bn
1750 1800 1850 1900 1950 2000
Natural Gas
Oil
Coal
During IDEA’s first 100 years, 90% of human greenhouse gas emissions
100%
50%
0%
1979
Emissions of Greenhouse Gasesfrom Fossil Fuels(cumulative, in MT CO2e)
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Source: RED calculations based on data from BP Statistical Review andJ. David Hughes, Geological Survey of Canada (ret.)
90% GHG emissions since IDEA Formed
Climate change is occurringfaster than predicted
• Science has no experience with the rising concentrations of greenhouse gases:
• Feedback effects are happening faster than predicted by any model
• E.g., melting ice caps, rising sea levels, increasing ocean acidity
• Growing species extinction, caused by human actions
• 1,000 times the background rate
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The Generation StoryThe Generation StoryThe Generation StoryThe Generation Story
The Changing RulesThe Changing Rules
ConclusionsConclusions
The Energy/Carbon StoryThe Energy/Carbon Story
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Electricity generation is thelargest source of CO2 emissions
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Source: RED calculations based on data from Emissions of Greenhouse Gases in the United States 2007; State Energy Data Report; and Annual Energy Review.
0%
10%
20%
30%
40%
50%
1950 1960 1970 1980 1990 2000
CO2 Emissions by theU.S. Electric Power Sector
% of US CO2 Emissions
Inefficient heat and poweremits two-thirds of CO2
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12%
14%
27%
42%
0% 25% 50%
Other Transport
Cars
Thermal
Electricity• Heat & power account for 69% of fossil fuel emissions
• Efficiency has been flatfor 50 years
Emissions of U.S. CO2 from Fossil Fuels
Source: RED calculations based on data from the U.S. Energy Information Agencyand the U.S. Department of Transport
0%
50%
100%
1900 1920 1940 1960 1980 2000
US electricity generation is inefficient
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Source: U.S. Energy Information Agency
Inefficientgeneration
U.S. Delivered Electric Efficiency
• Wastes energy
• Inflates costs
• Increases pollution
Homer Simpson’s power plant Springfield, ?
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Two-thirds ofthe energy generated is released
into the atmosphere
Electricity generation plant Craig, CO
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Generation efficiency –the elephant in the room
“I’m right there in the roomand no one even acknowledges me”
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PollutionFuel
100%
Generation Consumption
Conventional electricity generation1960 (& 2009)
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WasteHeat
65%
Transmission
UsefulPower33%
WasteHeat 2%
Fuel
PollutionFuel
100%
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WasteHeat
33%
Combined Heat and Power Plant
UsefulPower33%
Fuel
Decentralized generation, combined heat and power
UsefulThermalEnergy33%
RecycleWasteHeat
66%
Efficient
No LineLosses
IDEA Roles
Electricity
SteamHot Water
End User Site
Energy Recycling Plant
Electricity
Process Fuel
Finished Goods
Waste Energy
SavedEnergyInput
Recycling industrial waste energy the IDEA way
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Produces as much clean energy each year as all
grid-connected photo-voltaic
solar generation produced in
2004
Recycling industrial waste energyCokenergy Mittal Steel, Northern Indiana
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* Includes T&D, line losses, backup generation and subsidies
Waste energy recyclingis cost-effective
All-in Cost ofClean Energy Generation*US$ per delivered MWh
Average 2008 Retail Cost
IDEA Role
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Cost of reducing CO2 vs. old Coal
US$ per ton
Only waste energy recycling lowers the cost of avoiding CO2 emissions
IDEA Role
Photovoltaic Solar
Geothermal
Onshore Wind
Offshore Wind
Concentrated Solar
Recycled & CHP
Traditional Coal
Recycled Energy
Fossil CHP
Biomass CHP
Biomass
$0/ MWh $50/ MWh $100/ MWh
Qualifying Renewable
Waste Energy Recycling
Traditional Coal
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Cost of avoiding CO2 vs. old Coal
US$ per ton
Waste energy receives lowest lifetime MWh subsidies
* Healthcare costs, calculated as average of two peer-reviewed reports released by Harvard University and the Ontario Medical Center
FromTax
Credits
Cost of Healthcare and Environment*
Policy observations
• All currently profitable low-carbon options involve recycling waste energy to increase efficiency
• But; numerous policies induce or mandate high-cost low-carbon power generation, responding to vested interests
• Possible unintended consequences:
• Increased global CO2 emissions
• Higher power prices could drive manufacturing to low cost high-carbon nations, increasing carbon emissions
• Lower standard of living
• Loss of jobs reduces income
• IDEA mission: Push for policies that induce markets to deploy profitable clean generation options
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0%
50%
100%
1900 1920 1940 1960 1980 2000
U.S. Delivered Electric Efficiency
Steam Pressure Recovery190 Projects
Combined Heat & Power56 Projects
Industrial Waste Heat Recovery 14 Projects
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We have proven this thesis with 200 projects ($2.0 billion)with double
conventional efficiency
The Changing RulesThe Changing RulesThe Changing RulesThe Changing Rules
The Energy/Carbon StoryThe Energy/Carbon Story
The Generation StoryThe Generation Story
ConclusionsConclusions
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Federal tax credits for clean energy
EnergyProperty
2007 2009
§45PTC
§45ITC
RefundableITC
§45PTC
§48ITC
RefundableITC
CHP/RecycledEnergy
- - - -10% of
1st 15 MW10%
Biomass –open loop
$20/MWhfor 10 yrs
- -$20/MWhfor 10 yrs
30% 30%
Wind $20/MWhfor 10 yrs
- -$20/MWhfor 10 yrs
30% 30%
Solar - 30% - - 30% 30%
Geothermal $20/MWhfor 10 yrs
10% -$20/MWhfor 10 yrs
10% 10%
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If a technology is eligible for both PTC and ITC, then one of the two types of tax credit must be selected
Energy Improvement andExtension Act of 2008
• Included provisions for CHP and recycled-energy projects:
• 10% investment tax credit:
• Applicable to project of up to 50 megawatts
• Applicable to the first 15 megawatts
• Worth $1.35/MWh over project life
• 5-year accelerated depreciation:
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American Recovery andReinvestment Act of 2009
• Provides “refundability” for CHP tax credit
• Allows “bonus depreciation” for CHP:
• 50% of depreciation value can be taken in the first year
• Remainder over the following four years
• Allows CHP tax credits even if projects are financed with local development bonds
• Allows biomass projects to claim a 30% investment tax credit
• Provides some $100 billion of additional government-backed loan guarantees for clean energy projects
• Offers $156 million of cost-share grants for recycled-energy, CHP, and industrial-efficiency projects
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• Mandates GHG-emissions reduction by 83% by 2050
• Sets industrial plant energy efficiency standards
• Authorizes thermal waste energy recovery awards
• Mandates 20% clean energy by 2020, 8% from efficiency
• Expands biomass definition to reward co-firing
• Industrial rebates for GHG compliance costs
• Creates a Clean Energy Deployment Administration to help finance breakthrough technologies
• Allows CHP to qualify for energy saving performance contracts at federal buildings
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Waxman Markey bill: Housepassed Friday, June 26 2009
Tax provisionsproposed for 2009
• Increase investment tax credit to 30% for highly efficient CHP and recycled energy projects
• Increase the ITC’s eligibility from 15 to 25 megawatts for projects of unlimited size
• Remove prohibitions against co-firing in the biomass production tax credit
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Recent state innovations
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State Action Timing
CaliforniaRecycled-energy projects not regulated as GHG sources
2009
15 statesCHP and recycled energy included in portfolio standards
NV, OR, SD, ND(+ B.C. andSaskatchewan)
Waste heat recovery projects equivalent to other renewable electric generation resources
New JerseyOffers rebate ($450/kW ) for CHP and recycled energy capacity
2009
Massachusetts Defines energy savings from CHP property 2008
ISO New England
Offers location payments to local generation
ConclusionsConclusionsConclusionsConclusions
The Changing RulesThe Changing Rules
The Generation StoryThe Generation Story
The Energy/Carbon StoryThe Energy/Carbon Story
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Conclusions
• IDEA has encouraged using energy twice for 100 years,
• Progress inverse to fossil fuel subsidies and utility protection
• Life as we know it depends on increasing energy generation efficiency, but:
• Current policies largely ignore options that use energy twice
• Modest recent incentives are now law, favoring efficiency, (still ignoring thermal energy)
• Pending legislation is game-changing for waste energy recycling projects
• Thus:
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After only 100 years,IDEA’s TIME HAS COME
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Thank you
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