red | the new green profitably reducing carbon emissions in maine presentation to governor...

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Profitably Reducing Carbon Emissions in Maine

Presentation to Governor Baldacci’s

Energy Efficiency Summit

Thomas R. Casten Chairman, Recycled Energy Development, LLC

April 3, 2008


Thoughts on Global Warming Global Warming threatens life as we know it.

Overwhelming evidence that human actions are causing climate change.

Conventional wisdom assumes energy system is optimal. We know this is not true

Electricity is protected from competition, but pundits assume free market principles prevail. We know this is not true

The world must improve electric generation efficiency to mitigate climate change


Presentation Summary: Profitably Mitigating Climate Change

Describe economic and environmental inefficiency of electric generation

Show how to reduce US carbon emissions by 20% and save $70 billion/year

Describe Recycled Energy Development’s Approach

Propose Maine Actions to promote profitable greenhouse gas reductions


Homer Simpson’s Power Plant (Springfield, ?)


Electric Generation Plant (Craig, CO)

Two-thirds of the fuel’s energy is vented to atmosphere.


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U.S. Delivered Electric Efficiency

Wasted Energy

Excess Costs

Excess Pollution

Inefficient US Electric Generation

Related Headlines:

Energy Costs Push Consumer Prices Higher”

-Associated Press

“US Manufacturing Jobs Fading Away Fast”

-USA Today

“Recent Warming of Arctic may Affect World Climate”

-NASA


Electric Generation’s Increasing Contribution to Domestic CO2

Emissions

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US Electric Power Sector’s CO2 Emissions


Electricity42%

Thermal27%

Other Transport12%

Cars19%

US Carbon Dioxide Emissions, 2005

Breakdown of Emitting Sources:

Heat & Power;

69% of all fossil fuel CO2 emissions


U.S. Electric System Efficiency Since 1960

Pollution

Fuel

100 units

Power Plant

=

67 units Waste Energy

33 units Electricity

End User

Waste Heat Transmission Line Losses 3 units (9.0%)


Combined Heat and Power Options

Pollution

Recycle Waste Heat

CHP Plant

End User Site

33 units

Waste Energy

=66

units Useful Work

33 units Electricity

33 units Thermal Energy

Fuel

100 units


Recycling Industrial Energy Even Better

ElectricitySteam

Hot Water End User Site

Energy Recycling

Plant

Electricity

Process Fuel

Finished Goods

Waste Energy

SavedEnergy Input


US Energy Recycling Potential

EPA and DOE studies identify 200,000 megawatts CHP & waste energy recycling potential

(750,000 MW US peak load)

Capital investment of $350 billion

Society could save $70 billion per year

Energy Recycling can profitably eliminate 20% of U.S. CO2 emissions (1.4 of the 7.2 gigatons)


US Electric I ndustry Fuel-Conversion Efficiency

0%10%20%30%40%50%60%70%80%90%

100%Recovered Energy

U.S. Average Electric Only

CHALLENGE & OPPORTUNITY

• ~$70 billion potential energy savings if U.S. returned to 1920s model

• 1.4 gigaton GHG reduction/year

U.S. Grid is Less Efficient than 100 Years Ago


US Energy Recycling (CHP) Potential

EPA and DOE studies identify 200,000 megawatts CHP & waste energy recycling potential

Capital investment of $350 billion

Society could save $70 billion per year

Profitably eliminate 1.4 gigatons of CO2 emissions

Many other benefits including: Improve manufacturing competitiveness, add jobs

Reduce need for transmission wires

Reduce vulnerability to extreme weather and terrorists

Improve balance of payments


Examples of Local Generation Projects that Recycle Waste Energy

Projects RED and its predecessor companies have developed


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U.S. Delivered Electric Efficiency

Efficiencies of Energy Recycling Projects

Steam Pressure Recovery (190 Projects)

Combined Heat & Power (56 Projects)

Industrial Waste Heat Recovery (6 Projects)


95 MW Recycled from Coke Production (Gary, IN)


Silicon Production, Alloy WV

Plant uses 135 MW

$60 million investment

Recycles exhaust into 44 megawatts

Plant will use power to expand production by 20%

We are taking silicon production back from China!

Electricity, coal and wood chips melt quartz in a large furnace


Operating Maine Projects by RED Subsidiary Turbosteam

Livermore Falls, ME

2002 2,980 kW 4,713 tons CO2 saved

annually

Colby CollegeWaterville, ME

1998 600 kW 480 tons CO2 saved

annually

HuhtamakiWaterville, ME

2004 605 kW 1,043 tons CO2 saved

annually


Potential Clean Energy Project:

University of Maine at OronoProfitably reduce greenhouse gas emissions by

recycling waste energy with a backpressure steam turbine.

• The University currently generates steam at 150 psig and distributes at 50 psig

• A Turbosteam backpressure steam turbine could generate 684 kW of electricity for roughly 3 cents per kWh and avoid 540 tons per year of CO2/year

• RED offers greater savings and emission reductions could by replacing oil boilers with biomass

• Project delayed by interconnection agreement with Bangor Hydro


RED’s Goals with Respect to Climate Change Mitigation

Deploy $1.5 billion to profitably reduce greenhouse gas emissions

Cause a societal ‘tipping point’, with public demanding removal of all barriers to efficiency

Change the debate from “Who pays to mitigate climate change?” to

“How can we induce profitable climate change mitigation?”


Maine Actions to Spur Profitable Carbon Reduction

Enact a Clean Energy Standard Offer Program (CESOP)

Allow all clean energy to qualify for Maine renewable portfolio standard rules

Remove barriers to efficiency

Treat clean energy projects as ‘Pollution Control’ devices for environmental permitting


Clean Energy Standard Offer(CESOP)

Calculate delivered cost of electricity from best new base load central electric-only plant

Include generation and T&D capital amortization, fuel & O&M, line losses, utility profits and expected carbon costs

Offer 20 year contracts for CESOP power at 80% of the delivered cost from the best new base load central station.

Define ‘Clean Energy’ as all power plants with 60% or better annual fossil efficiency, and include power from recycling waste energy

Contract for up to projected 10-year net load growth

Distribution utility keeps retail load, but buys power

Distribution utility designs and installs interconnection to Clean Energy Projects, puts capital in rate base.


CESOP Advantages

Guarantees improved efficiency - requires 60% overall efficiency versus 33% grid average

Guarantees savings – contract prices 80% of delivered cost of new central generation

But calculation includes full avoided long run marginal costs, including transmission, line losses and carbon

Utility keeps customers and its historic profits from distribution of electricity

No standby rates to slow or discourage Clean Energy

Utility manages interconnection at their expense, adds to rate base, just like central generation


Effects of CESOP Induces power industry to build clean energy plants of

all types Government does not pick technology or fuel, just forces

economic and environmental efficiency

Gives local clean energy projects benefit of low cost financing, comparable to financing costs of less efficient central plants

All renewable energy qualifies along with all projects that recycle industrial waste energy

Maine never builds another inefficient electric-only fossil fueled plant unless CESOP response falls short of needs.


Possible Objections to CESOP Some clean energy projects will make extraordinary

profits. Public can cry all the way to the bank

Fossil fueled CHP could push out more expensive renewable projects

CESOP keeps economic pressure on all technologies to reduce costs and at least double fossil efficiency

The distribution utilities cannot control generation

This is a soluble technical problem, worth the gain in efficiency


Other Actions to Speed Clean Energy Deployment in Maine

Broaden Maine RPS to all clean energy

Include all power from renewable energy sources and all power that meets ‘clean energy’ definition in RPS and rename ‘Clean Energy Portfolio Standard”

Strengthen percentages of Clean Energy required, but include new power under CESOP contract

Treat clean energy project as a ‘pollution control’ permit application for environmental approvals, greatly reducing time and cost of developing projects


Thank You

red | the new green profitably reducing carbon emissions in maine presentation to governor...

Documents

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