profitably reducing greenhouse gas emissions

RED | the new greenwww.recycled-energy.com

Profitably Reducing Greenhouse Gas Emissions

MIT Energy Initiative Seminar Series

Thomas R. Casten,ChairRecycled Energy Development, LLC

September 9, 2008


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


Generation Inefficiency is the Elephant in the Room

The elephant seems invisible, but threatens life as we know it


Homer Simpson’s Power Plant


Generation Plant in Craig, CO, Venting 65% of Input Energy


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


Electric Generation’s Increasing Contribution to CO2 Emissions


69% of CO2 from Generating Heat and Power


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


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


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


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.


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


Conversion of Electricity to Light is Awful

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

20051995198519751965195519451935192519151905

Year

Efficiency of Conversion


2nd Law Conversion Efficiency to Low Temperature Heat – Lousy!

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

20051995198519751965195519451935192519151905

Year



2nd Law Conversion to High Temperature Heat a Little Better

0%

5%

10%

15%

20%

25%

30%

35%

20051995198519751965195519451935192519151905

Year



Electricity Conversion to All Uses < 60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20051995198519751965195519451935192519151905

Year

Elec. Conversion to Useful Work


But Delivered Electric Efficiency Stalled Since Eisenhower

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20051995198519751965195519451935192519151905

Year

% Efficiency

Primary Efficiency, Delivered Electricity


Electric-only Coal & Oil Heat Rates Stopped Falling by 1960

0

3,000

6,000

9,000

12,000

15,000

1950 1960 1970 1980 1990 2000

Year

Heat Rates (btu/kWh)

Coal Natural Gas Petroleum

Source: EIA


Electric Efficiency Gains Slowed after Mid-Fifties, Now Gone

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

200520011997199319891985198119771973196919651961195719531949194519411937193319291925192119171913

Ending Year

Ten Year % Unit Change


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?


Conversion of Exergy to Useful Work Has Improved, but < 14%

0%

2%

4%

6%

8%

10%

12%

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


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!


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


Regulations Block Efficiency

Electricity is not a free market!


“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


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


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


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


Energy Recycling Plants We Have Developed


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)


Silicon Furnace Alloy WV


Economics of Clean Generation

Compare costs of recycling waste energy with other clean energy approaches


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


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


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


Policy Options to Promote Clean Energy


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


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


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


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


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


Thank You for Your Interest in Clean Energy

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