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10 th Annual IOF WV Symposium November 9, 2006 Energy Recycling – A Convenient Truth! Thomas R. Casten Past Chairman & CEO Primary Energy, LLC. An Inconvenient Truth. Al Gore has described global warming as an ‘Inconvenient Truth’ – a reality that we would rather not face

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10th Annual IOF WV Symposium

November 9, 2006

Energy Recycling – A Convenient Truth!

Thomas R. Casten

Past Chairman & CEOPrimary Energy, LLC


An inconvenient truth
An Inconvenient Truth

  • Al Gore has described global warming as an ‘Inconvenient Truth’ – a reality that we would rather not face

  • Present and coming policy changes mandate GHG (Greenhouse Gas) reductions

  • Conventional wisdom: restrictions will increase energy costs and penalize industry


More inconvenient truths
More ‘Inconvenient Truths”

  • Richard McCormack: US industrial production shrinking at alarming rate

  • Grid electricity cost is certain to rise due to CAIR, rebuilding US T&D system, and permanently higher fossil fuel prices

  • US fossil fuel addiction dictates foreign policy (and expensive wars), bloats balance of payments deficits, and exacerbates pollution control costs


A convenient truth energy recycling
‘A Convenient Truth’ Energy Recycling

  • US industrial waste energy could produce 20% of US electricity

    • Recycling creates significant new revenue streams for US manufacturers and reduces emissions

  • Power generation that recycles waste heat uses half of the fossil fuel of conventional generation

    • Recycling cuts power costs, reduces emissions

  • US industries single best hope to regain competitiveness: recycle waste energy


Examining energy trends
Examining Energy Trends

  • New work by Robert U. Ayres examines relationship of energy, conversion to useful work, and GDP (Gross domestic product)

  • Raw energy use and GDP do not correlate, economists treat energy as simply a 4% factor in overall economy

  • Ayres finds changes in useful work explain over 50% of past century’s economic growth


Economic growth driven by improving energy efficiency
Economic Growth Driven by Improving Energy Efficiency

  • Long trend of falling energy use per dollar of GDP, does not correlate with rising GDP

  • However, also long trend of increasing efficiency of converting exergy (potential energy) to useful work

  • Useful work per $ of GDP has been remarkably constant, explains over half of economic growth

  • Trends of energy efficiency have reversed, largely due to electric industry stagnation


Exergy conversion to useful work by sector
Exergy Conversion to Useful work by Sector

  • Look at the % of exergy converted to useful work in low temperature heat, high temperature heat, lighting, and electricity

  • Electricity is by far the most efficient way to use energy, but

  • Efficiency has stagnated in electricity production

    • Stagnant power industry efficiency is key to many US problems, including industrial competitiveness, pollution, jobs, balance of payments, and global warming


Industry has options

Industry Has Options

Recycle energy to reduce cost and reduce pollution


Conventional central approach 1960 data 2003 data

Pollution

Waste Heat

Transmission Line Losses

3 units (7.5%)

Fuel

100

units

67 units Waste Energy

=

33 units Electricity

Conventional Central Approach1960 Data (& 2003 Data)

End User

Power Plant


Decentralized generation option combined heat and power

Pollution

33 units Thermal Energy

=

66 units Useful Work

Fuel

100

units

33 units Electricity

End User Site

Decentralized Generation Option Combined Heat and Power

33 units Waste Energy

CHP Plant

Recycle Waste Heat


Defining recycled energy
Defining Recycled Energy

  • Recycled energy is useful energy derived from:

    • Exhaust heat from any industrial process or power generation

    • Industrial tail gas that would otherwise be flared, incinerated or vented,

    • Pressure drop in any gas


Industrial energy options

Saved

Energy Input

Energy Recycling Plant

Electricity

Finished Goods

Process

Fuel

Waste

Energy

End User Site

Industrial Energy Options

Electricity

Steam

Hot Water


Primary energy s approach 90 mw recycled from coke production
Primary Energy’s Approach 90 MW Recycled from Coke Production



Future Generation Options

Renewable Energy Options

Central Generation Options

No incremental fossil fuel line

Avg. Retail Power Price 8.1¢ / kWh

Recycled Energy Options

Avg. Industrial Power Price 5.5¢ / kWh

(33% efficiency)

(net fossil savings)

(100% efficiency)

(50% efficiency)


Power cost and co 2 policy choices

Policy Goal

Power Cost and CO2 Policy Choices

Cost and Emissions Today

Coal gasification, CCGT,

Cost up, CO2 up

Central generation with coal,

no criteria pollutant control

Cost down, CO2 up

CO2 down CO2/MWh CO2 up

CHP, industrial energy recycling

(Requires local generation) off grid solar, local hydro

Cost down, CO2 down

Wind, Geothermal,

CO2 sequestering, on grid solar

Cost up, CO2 down

Cost down Cost / MWh Cost up


How can wva governance spur reduced energy costs ghg
How Can WVA Governance Spur Reduced Energy Costs & GHG

  • Modernize old rules that are now barriers to modern technology

  • Enable recycled energy projects to capture more of value they create

    • Reward local generation for avoiding T&D capital and line losses

    • Pay part of health and environmental savings to energy recycling facilities


More specific wva suggestions
More Specific WVA Suggestions

  • Provide open standard offer for power from energy recycling facilities

  • Provide limited loan guarantees for industrial energy recycling plants, valid only if waste energy supply ceases

  • Identify specific barriers to efficiency and enact new rules that serve the social purpose but do not block efficiency.


Convenient truth energy recycling solves multiple problems
Convenient Truth:Energy Recycling Solves Multiple Problems

  • WVA can ‘mine’ industrial waste energy, create added revenue streams for industry

    • Recycle presently wasted energy streams to provide affordable, clean energy

  • Requires unconventional, innovative governance

    • Remove barriers to efficiency

    • Pay part of health savings to recycled energy facilities that create those savings

    • Pay T&D savings to energy recycling facilities

    • Permit energy recycling as pollution control device


Denmark Changed in Two Decades

Source: Danish Energy Center


Conclusions
Conclusions:

  • Local pollution, global warming, and industrial competitiveness are all serious problems

  • The only ‘double dividend’ approach is energy recycling -- clean energy solutions that reduce costs and emissions

  • Our collective future depends on how fast governments remove barriers to efficiency and encourage clean energy



Economies of scale central versus decentralized generation
Economies of Scale? Central versus Decentralized Generation


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