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Energy Efficiency: A Capital Offense

Energy Efficiency: A Capital Offense. Comments to MIT NESCAUM Symposium. Thomas R. Casten, Chairman Recycled Energy Development, LLC. August 12, 2009. Presentation Summary. To reduce CO2 emissions, look at the main sources – generation of electricity and thermal energy

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Energy Efficiency: A Capital Offense

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  1. Energy Efficiency: A Capital Offense Comments to MIT NESCAUM Symposium Thomas R. Casten,ChairmanRecycled Energy Development, LLC August 12, 2009 RED | the new green www.recycled-energy.com

  2. Presentation Summary • To reduce CO2 emissions, look at the main sources – generation of electricity and thermal energy • Generation efficiency could be doubled, but deploying such efficiency is a capital offense under the Clean Air Act, causing loss of permit to operate • The failure to focus on the main sources of CO2 emissions results in costly, inefficient regulations that force citizens to pay more to heat the planet • The single most important action is to modernize rules to eliminate barriers to efficiency and allow waste energy recycling to capture most of the value it creates. RED | the new green

  3. The Energy/Carbon Story The Generation Story Conclusions RED | the new green - 3 - www.recycled-energy.com

  4. 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 • Access to energy services allowed population to explode RED | the new green - 4 - www.recycled-energy.com

  5. World population hasgrown dramatically 1999 1987 1975 1957 1925 3 million ca. 1760:Watt’s steam engineallows coal to be used for power 1810 B.C. A.D. Source: various authors cited by the U.S. Bureau of Census RED | the new green - 5 - www.recycled-energy.com

  6. Increases in world population andenergy consumption 1850-2007 Populationup 430% Consumption per Capitaup 760% Total Consumptionup 4600% Nuclear Natural Gas Oil Hydro Coal Wood Source: ArulfGrubler (1998), BP Statistical Review of World Energy (2008), US Bureau of Census (2008) RED | the new green - 6 - www.recycled-energy.com

  7. Ninety percent of human greenhouse gas emissions during the past century Emissions of Greenhouse Gasesfrom Fossil Fuels (cumulative, in MT CO2e) 90% GHG emissions since 1909 1979 Source: RED calculations based on data from BP Statistical Review andJ. David Hughes, Geological Survey of Canada (ret.) RED | the new green - 7 - www.recycled-energy.com

  8. The Energy/Carbon Story The Generation Story Conclusions RED | the new green - 8 - www.recycled-energy.com

  9. Looking for CO2 in all the wrong places • Analysts slice the world into transportation, residential, commercial, and industrial and then look for ways to reduce CO2 • For example, latest McKinsey study of options uses this framework • Others put faith in technology, calling for more R&D, without asking why generation efficiency has been stagnant for 50 years • Others demand a specific path – inducing renewable energy – and thus emasculate market forces ability to optimize clean energy generation • Electricity generation is the elephant in the room RED | the new green

  10. Generation efficiency –the elephant in the room “I’m right there in the roomand no one even acknowledges me” RED | the new green - 10 - www.recycled-energy.com

  11. Electricity generation is thelargest source of CO2 emissions 50% 40% 30% % of US CO2 Emissions CO2 Emissions by theU.S. Electric Power Sector 20% 10% 0% 1950 1960 1970 1980 1990 2000 Source: RED calculations based on data from Emissions of Greenhouse Gases in the United States 2007; State Energy Data Report; and Annual Energy Review. RED | the new green - 11 - www.recycled-energy.com

  12. Inefficient heat and poweremits two-thirds of CO2 Emissions of U.S. CO2 from Fossil Fuels • Heat & power account for 69% of fossil fuel emissions • Efficiency has been flatfor 50 years Source: RED calculations based on data from the U.S. Energy Information Agencyand the U.S. Department of Transport RED | the new green - 12 - www.recycled-energy.com

  13. US electricity generation is inefficient • Wastes energy • Inflates costs • Increases pollution Inefficientgeneration U.S. Delivered Electric Efficiency Source: U.S. Energy Information Agency RED | the new green - 13 - www.recycled-energy.com

  14. Homer Simpson’s power plant Springfield, ? RED | the new green - 14 - www.recycled-energy.com

  15. Electricity generation plant Craig, CO Two-thirds ofthe energy generated is releasedinto the atmosphere RED | the new green - 15 - www.recycled-energy.com

  16. Conventional electricity generation1960 (& 2009) Fuel 100% WasteHeat 65% Pollution WasteHeat 2% UsefulPower 33% Fuel Generation Transmission Consumption RED | the new green - 16 - www.recycled-energy.com

  17. Pollution Decentralized generation, combined heat and power Fuel 100% WasteHeat 33% No LineLosses UsefulThermalEnergy33% 66% Efficient UsefulPower 33% Recycle Waste Heat Fuel Combined Heat and Power Plant • RED | the new green - 17 - www.recycled-energy.com

  18. Energy Recycling Plant Electricity Finished Goods Process Fuel Waste Energy Recycling industrial waste energy: Cost effective clean energy SavedEnergyInput Electricity Steam Hot Water End User Site RED | the new green - 18 - www.recycled-energy.com

  19. Recycling industrial waste energyCokenergyMittal Steel, Northern Indiana Produces as much clean energy each year as allgrid-connected photo-voltaic solar generation produced in 2004 RED | the new green - 19 - www.recycled-energy.com

  20. Waste energy recyclingis cost-effective Average 2008 Retail Cost All-in Cost ofClean Energy Generation*US$ per delivered MWh Use Energy Twice * Includes T&D, line losses, backup generation and subsidies • RED | the new green - 20 - www.recycled-energy.com

  21. Only waste energy recycling lowers the cost of avoiding CO2 emissions Cost of reducing CO2 vs. old CoalUS$ per ton Use Energy Twice • RED | the new green - 21 - www.recycled-energy.com

  22. The potential to use energy twice is enormous • EPA study identifies 64,000 MW potential to recycle waste energy in 16 industries • DOE study identifies 135,000 MW potential for fueled CHP that replaces thermal generation with waste heat from new electricity generation • World Alliance for Decentralized Energy (WADE) study found potential to reduce U.S. CO2 by 20% and save $80 to $100 billion per year • By contrast, deploying new renewable electricity generation will strongly raise electric costs. RED | the new green

  23. Policy observations • All currently profitable low-carbon options involve recycling waste energy to increase efficiency • But; the Clean Air Act, as administered, treats investments in generation efficiency as a ‘Major Modification’ and allows EPA to void the operating permit. • Most existing electrical and thermal generation plants cannot economically meet current BACT to obtain a new permit • Capital punishment may or may not deter crime, but it certainly deters investments in generation efficiency. • Penalizing all carbon emissions won’t spur new and more efficient thermal and electric generation • Old inefficient plants with free allowances are cheaper to operate than new efficient plants that must buy allowances RED | the new green - 23 - www.recycled-energy.com

  24. We have proven this thesis with 200 projects ($2.0 billion)with double conventional efficiency Industrial Waste Heat Recovery 14 Projects Steam Pressure Recovery190 Projects Combined Heat & Power 56 Projects U.S. Delivered Electric Efficiency RED | the new green - 24 - www.recycled-energy.com

  25. The Energy/Carbon Story The Generation Story Conclusions RED | the new green - 25 - www.recycled-energy.com

  26. Conclusions • Using energy twice could cut CO2 by 20% while saving $80 to $100 billion per year, but: • Current policies largely ignore options that use energy twice • Changes to existing thermal or electric generating plant are a capital offense, potentially costing the operator the right to operate • Laws, new an old, need to pay attention to encouraging efficiency – using energy twice. • Willie Sutton robbed banks because that was where the money was. To profitably lower CO2 emissions, we must change the way the world generates electric and thermal energy. RED | the new green - 26 - www.recycled-energy.com

  27. Thank you RED | the new green - 27 - www.recycled-energy.com

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