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Towards a Clean Energy Future: Fracturing Some Energy Fairy

TalesMelanie Kenderdine MIT Energy Initiative NESCAUM/Endicott House

August 17, 2011

MIT Energy InitiativeMIT ei 2

The Sky Really is Falling: Some Hard Truths

MIT Energy Initiative MIT Energy InitiativeMIT ei

United St

ates EUJapan

Russia

ChinaIndia

Middle East

Africa

C/S Americ

aBrazil

5801

4355

11691803

7222

1366 16861086 1311

437

6414

4519

11571978

11730

21152279

1409 1654

682

EIA forecasts a 30% global increase in CO2 emissions in next two

decades

60% of the CO2 emissions in 2010 will be from 6 countries: the US, Japan, Russia, India, Germany and China

49% of this increase will be from China

alone

68% of this increase will be from China,

India, the US, and the Middle East

Climate Change Challenge: Global CO2 Emissions*, 2010/2030

*million metric tons EIA 2009 IAEO

MIT Energy Initiative MIT Energy InitiativeMIT ei

Without Policy With Policy

Analysis of Climate Policy Targets Under Uncertainty, Prinn, et al 2009 4

It’s later – and more serious -- than we think

E.S. Figure 1. America’s electricity comes from old powerplants1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s

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Annual per Capita Electricity Consumption

5

“The world will need to consume four times as much energy by 2100 to raise the standard of living in developing nations to that of those in

developed nations.”

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Challenge: Global Energy Consumption 2030

Source: Lawrence Livermore National Laboratory, John Ziagos

680 quads/yr.

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MIT Energy InitiativeMIT ei

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1850

1860

1870

1880

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

RenewablesNuclearGasOilHydroCoalWood

US Energy Supply Since 1850

?Can We Cut Transition Time by 2/3rds?

WoodCoal

Oil

Gas

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Spinning Straw into Gold (maybe)

9MIT Future of Natural Gas Study

9

GasCoal

Electric sector

CO2 Mitigation with Carbon Price

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Beware the Long-term Impacts of Policy Decisions on Energy Infrastructure/Mix

Use of Petroleum/Natural Gas in Power Generation Hotly Debated Post-OPEC Oil EmbargoDebate has Chilling Effect on New Gas Plant Construction

US Congress, 1975-1977Congress Outlaws Natural Gas for Power Generation Spurs Construction of Coal-Fired Power Plants

Washington DC, 1978

Congress Repeals Fuel Use Act, Paving Way for New Gas Generation

Washington, DC, 1987

Embargo + Fuel Use Act + TMI = New Market Share for Coal Plants

Kenderdine Market Analysis, 2010

De-regulation of Natural Gas, Wave of New Technologies Spurs US Gas Production

1978-1990

In 2007, roughly 27% of all CO2 emissions from the power sector

came from coal plants built between 1975 and 1987.

Uprising Against the Ethanol Mandate

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Federal Reserve Chairman Alan Greenspan Declares Impending Natural Gas Crisis

Fox News, June 23, 2003

ExxonMobil and Qatar Petroleum sign agreement for LNG supply Pipeline & Gas Journal, November 1, 2003

“I strongly support developing new LNG capacity in the United States.”

President Bush, July, 2004 election interview

Exxon to Buy XTO for $31 Billion in Bet on U.S. Gas

Bloomberg, December 14, 2009

Beware of the “Herd Mentality”

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Exxon says N. America gas production has peaked Reuters, June 21, 2005

Huge natural gas field 'discovered' in TexasMajor energy firms seeing benefit in developing domestic sources

WorldNetDaily, June 21, 2005Up, Up and Away: Shale Gas Production Takes Off

Oil and Gas Investor, June 15 2008U.S. Shale Gas Plays Affecting Global LNG Market WSJ, November 3, 2009

12MIT Future of Natural Gas Study

Coal Pet. NGCC NG other

Nuc. Hydro Other Renew

All energy

73.6 13.4 42 11.4 91.8 36.3 40 48.7

42

6

31

7 410

3

23

1

44

7 3.6

20

0.600000000000001

Power Generation Technologies, Capacity Factors, 2007

% Nameplate Capacity vs. % Generation ,

2009

13MIT Future of Natural Gas Study 13

TX LAMS

AROK

NM

AZ

CA

NV

OR

WA

ID

MT

WY

ND

SD

MN

IAWI

IL

MOTN

AL

FL

GA

SC

NC

VA

WV

OH

MI

IN

PA

MD

DE

NJ

NY

CT RI

MA

ME

NH

KY

Scale: 100,000,000 MWh

MWh coal generation, heat rate <10,000

MWh coal generation for pre-1987 plants with >10,000 heat rate Existing NGCC capacity operating at 85% capacity factor minus 2008 actual MWh generation (FDNP)

Scale and Location of Fully-Dispatched NGCC Potential and Coal Generation (MWh, 2008)

14MIT Future of Natural Gas Study

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Coal to Gas Fuel Substitution Benefits Vary by Region

Nationwide, coal generation displacement with surplus NGCC would:

reduce CO2 emissions from power generation by 20% reduce CO2 emissions nationwide by 8% reduce mercury emissions by 33% reduce NOx emissions by 32% cost roughly $16 per ton/CO2

The displacement of coal generation with NGCC generation should be pursued as the only practical option for near term, large scale CO2 emissions reductions

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Spinning Gold into Straw: Unintended Consequences

Uprising Against the Ethanol Mandate

Senate Committee Ups Ethanol Mandate to 8 Billion Gallons by 2012

AAHSTO Journal, June 1, 2005

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Beware the Unintended Consequences of Mandates

Gov. Schwarzenegger Praises Federal Grant to Help in Building 15 Ethanol Fueling Stations in California

Governor’s Press Release, Oct 31, 2006

Ethanol industry balks at legislative mandate to boost production

Renewable Fuels Assn., Dec 08, 2009US Congress gives final OK to huge ethanol boostICIS News, December 18, 2007

Ethanol's popularity wanes amid rising food prices USA Today 5.22.08U.S. Food Industry Calls for Ethanol Mandate

WaiverReuters, June 6, 2008

Uprising Against the Ethanol Mandate New York Times, July 23, 2008

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17MIT Future of Natural Gas Study

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Coal

Wind

The principal impacts of increased deployment of intermittent renewable energy sources in the short term are –

the displacement of NGCC generation increased utilization of operating reserves more frequent cycling of mid-range or even base load plants.

Gas

NGCC

Large Scale Penetration of Intermittent Wind in Short Term/ERCOT

18MIT Future of Natural Gas Study

Buildings: Full Fuel Cycle Energy/CO2

Energy Consumption

CO2 Emissions

Electric Furnaces Oil-Fired

Furnaces Gas-Fired Furnaces Air Source

Heat Pumps Ground Source Heat

Pumps

101.0 120.5 111.1

41.7 30.3

213.2

16.3 9.6

87.9

64.0

Fuel

Ene

rgy

per 1

00 M

Wh

of U

sefu

l Ene

rgy

Site Energy

Source Energy

Electric Furnaces Oil-Fired

Furnaces Gas-Fired Furnaces Air Source

Heat Pumps Ground Source Heat

Pumps

74

45

27 31

22 Ton

CO2

per 1

00 M

Wh

of U

sefu

l Ene

rgy

Gas +10%

2.7X

+ =

Electricity + 194%For buildings, a move to full fuel cycle efficiency (site vs. source) metrics will improve how consumers, builders, policy makers choose among energy options (especially natural gas and electricity).

Efficiency metrics need to be tailored to regional variations in climate and the electricity supply mix.

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Forgetting the Moral of the Story

20MIT Future of Natural Gas Study

Public and public-private funding for natural gas research is down substantially even as gas takes a more prominent role.

Consideration should be given to restoring a public-private RD&D research model –

Industry-led portfolios Multi-year funding

Federal Funding

GRI FundingSteady over 15 years

Time limited tax credit Gas produced

under tax credit

Gas produced after tax

credit

RD&D SpendingHistorical Overview: Coalbed Methane R&D

MIT Energy Initiative DOE Budget Summary, FY2011

DOE Energy R&D: FY 12 Request (million $)

Fossil Energy Nuclear Electricity Renewables Efficiency

476380

193

1165

1379

Coal 100%

Solar 39%Bio 29%Wind 11%

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Happily Ever After?

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New structures for $1.6 billion in energy research over the next five

years

EFRCs, $457 M

Hubs, $466 M

ARPA-E, $700 M

The Changing DOE Innovation Ecosystem

Uprising Against the Ethanol Mandate

MIT Energy Initiative24

Current DOE Organization of Energy Programs

Renewables/ Efficiency

Nuclear Energy

Electric Reliability

Office of Science

Fossil Energy (Coal, gas, oil)

Undersecretary, Energy/Environment

Undersecretary, Science

Advanced Research Projects

Agency - E

Secretary, US DOE

MIT ei 24

Relationship of electricity to fuel sources?

Is there an organizational home to migrate basic science discoveries to

technology solutions?

Why is efficiency in the renewables office?

Is there any significant relationship between vehicle, building, industrial efficiency

technologies?

Where does transportation fit? What about transportation fuels?

Where would you put an energy and water program?

Which office is responsible for distributed generation?

If a fuel meets environmental specifications do we care which

fuel we use?

Can we develop a comprehensive research/policy

portfolio when offices are organized around fuels?

Uprising Against the Ethanol Mandate

MIT Energy Initiative25

A Different Structure: A Portfolio Approach

Office of Science

Undersecretary, Science & Energy

Advanced Research Projects

Agency - E

Secretary, US DOE

MIT ei

Office of Transportation

Office of Buildings

Office of Industrial Energy

End use model

Functional model

Office of Power

Office of Heat

Office of Fuel

Efficiency, Carbon Mgmt.,

Water Embedded in

Each