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Renewing America’s Economy From Crisis to Opportunity

Renewing America’s Economy From Crisis to Opportunity. Steve Clemmer Research Director, Clean Energy Program Union of Concerned Scientists www.ucsusa.org The Southeast & Mid-Atlantic Regional Wind Summit Raleigh, NC September 19, 2005. The problem: Surge of new natural gas plants….

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Renewing America’s Economy From Crisis to Opportunity

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  1. Renewing America’s EconomyFrom Crisis to Opportunity Steve Clemmer Research Director, Clean Energy Program Union of Concerned Scientists www.ucsusa.org The Southeast & Mid-Atlantic Regional Wind Summit Raleigh, NC September 19, 2005

  2. The problem:Surge of new natural gas plants… Source: EIA, Annual Energy Outlook 2004

  3. While US gas productivity declines… 28% Decline in 2003 Source: Richard Levitan: IHS Energy, Petroleum Information Corp., EOG Resources

  4. 5 4 3 2 1 0 …Helping to drive gas higher & higher Hurricane Katrina 13 13 12 12 11 11 Daily price history of 1st-nearby 10 10 NYMEX natural gas futures contract 9 9 8 8 7 7 Nominal $/MMBtu (Henry Hub) Nominal $/MMBtu (Henry Hub) 6 6 NYMEX 5 natural gas 4 futures strip 3 from 09/13/2005 2 1 Source: LBNL 0 2009 2010 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 1990 1991 1992 1993 1994 1995 1996 2007 • 8.8 Bcf or 17% of U.S. natural gas production capacity initially lost due to Hurricane Katrina

  5. High gas prices are hurtingthe economy • EIA: 52% increase in total consumer natural gas expenditures this upcoming winter • 71% increase in gas home heating bills for the Midwest • 31% increase in fuel oil costs for the Northeast • 17% increase in residential electricity bills for the South • Cut U.S. economic growth by 2.1% a few years ago • Federal Reserve Bank of Dallas • Forcing industrial users like the petrochemical industry to move their operations overseas. • U.S. chemical workers lost ~78,000 jobs between 2000-2004. • Wall Street Journal, 2/17/04. • Farmers are also feeling the pain because natural gas accounts for 90 percent of fertilizer costs

  6. History Projections LNG Canada Mexico Increasing dependence on gas imports from overseas… U.S. Natural Gas Net Imports, 1990-2025 Source: EIA, Annual Energy Outlook 2004.

  7. New LNG terminals and tankers will increase our vulnerability

  8. Leading to new coal plant proposals and higher carbon emissions • 17 advanced IGCC plants • No plans to capture and store CO2 • Economic risk of future CO2 limits

  9. Coal has other importantfuel cycle impacts • Mountaintop removal mining in West Virginia

  10. http://www.eia.doe.gov/oiaf/aeo/figure_105.html Coal mining jobs declining… Source: EIA

  11. Coal imports a drain on many state economies * $>1 billion $601 million - $1 billion $201-$600 million 0-$200 million *Data not available Expenditures for imported coal for electricity Source: EIA

  12. Myth: The Southeast isn’t windyWind Power Class at 80m Class 6 Class 7 “The greatest previously uncharted reservoir of wind power in the continental United States is offshore and near shore along the southeastern and southern coasts” Source: Archer C, Jacobsen M, 2003

  13. North Carolina has significantwind potential

  14. Offshore Wind Technical Potential Total – Shallow: 97,975 MW (8.0% U.S. electricity) Deep: 809,725 MW (66.0%) Source: Musial W, Butterfield S., 2004

  15. Offshore Wind Costs are Falling Source: NREL/DOE Wind Program????

  16. Renewable Electricity Standards Nevada: 20% by 2015, solar 5% of annual New York: 24% by 2013 Minnesota: 19% by 2015* Maine: 30% by 2000 Wisconsin: 2.2% by 2011 Iowa: 2% by 1999 Illinois: 8% by 2013** Montana: 15% by 2015 MA: 4% by 2009 • 21 States + D.C. RI: 16% by 2019 CT: 10% by 2010 NJ: 6.5% by 2008 DE: 10% by 2019 Maryland: 7.5% by 2019 California: 20% by 2017 Washington D.C: 11% by 2022 Pennsylvania: 8% by 2020 Arizona: 1.1% by 2007, 60% solar New Mexico: 10% by 2011 Texas: 5,880 MW (~4.2%) by 2015 Colorado: 10% by 2015 Hawaii: 20% by 2020 *Includes requirements adopted in 1994 and 2003 for one utility, Xcel Energy. **No specific enforcement measures, but utility regulatory intent and authority appears sufficient.

  17. Most New Wind Capacity Installed in States with Renewable Standards New Wind Capacity, 1998-2003 (MW) 283 66 537 235 53 48 1 44 0.2 2 283 129 470 14 3.6 50 0.2 66 223 114 634 2 176 0.1 207 • 74% (3,620 MW) in states with RES 1,264 1 Source: UCS & AWEA

  18. Hawaii New renewable energy supported: - 32,000 MW by 2017 CO2 reductions: 77.1 Million Metric Tons Equivalent to: - 3.7 billion more trees - 11.5 million less cars California Nevada AZ & NM CO & MT Texas Minnesota IA & WI Illinois** Maryland Pennsylvania DC & DE New Jersey New York CT & RI MA Maine Renewable energyexpected from state standards* *Projected development assuming states achieve annual RES targets. **Assumes regulatory enforcement of voluntary RES.

  19. Texas Wind Spurs New Jobsand Rural Development • Texas standard resulted in 913 MW of new wind in 2001 • supported 2,500 jobs • $11.7 mil./yr in tax revenues to school districts in 10 counties Source: Virtus Energy Research Associates, 2002. Source: Virtus, 2003

  20. Wind Power CreatesNew Manufacturing Jobs • 90 companies in 25 states currently mfg wind turbine components • Southeast & Mid-Atlantic have potential to create 38,260 new jobs • Assuming 50 GW of wind capacity in US • 9 states in top 20 • Foreign companies are building wind turbine mfg plants in US • Spanish company Gamesa is building new plant in PA, creating 1,000 new jobs over next 5 years & $40 mil. in new investment • Gamesa CEO credits PA renewable standard, creating market for up to 3,600 MW of new wind • GE manufactures blades in Pensacola FL and has office in Greenville, SC REPP, 2004

  21. Wind Capacity under a National Renewable Electricity Standard 160 20% by 2020 RES 140 10% by 2020 RES 120 100 80 Gigawatts 60 40 20 0 2005 2010 2015 2020 2025 Wind dominates under national renewable electricity standard • Wind generation = 6-10% of US electricity use by 2020 Source: UCS, using EIA model

  22. 200,000 190,180 150,000 98,960 100,000 Jobs 50,000 0 Renewable Energy Fossil Fuels Renewable Energy Creates Jobs 20% by 2020 RES 10% by 2020 RES • Nearly twice as many jobs as fossil fuels Source: UCS, using EIA model

  23. Renewable energy conserves natural gas supplies 16 14 20% by 2020 RES 12 10% by 2020 RES 10 = 1/4 of residential gas use 8 Trillion cubic feet 6 4 2 0 2005 2010 2015 2020 Source: UCS, using EIA model

  24. Renewable energy saves electric & natural gas consumers money Savings in all customer classes: • Res.: $7.9 bil • Comm.: $11.3 bil • Ind.: $9 bil • EIA: 10% RES saves $23 billion • 20% RES saves $49 billion by 2020 $5.4 billion gas savings $22.8 billion electricity savings *Excludes Transportation. Source: UCS, 2004.

  25. Cumulative Energy Bill Savings* by U.S. Census Region, (10 percent by 2020 RES) New England: $1.4 billion Northwest: $1.7 billion West North Central: East North $1.8 billion Central: Mid-Atlantic $6.1 billion Mountain: $4.0 billion $2.8 billion East South South Atlantic: Central: West South California: Central: $1.6 billion $4.0 billion $4.3 billion $10.5 billion All regions of thecountry save money Total cumulative savings = $38 billion by 2025 Source: UCS, 2004.

  26. Renewable Energy Reduces Emissions and Compliance Costs Reduces growth in U.S. CO2 emissions by 59% Source: UCS, using EIA model

  27. RES** - 52 Votes **Votes in favor of the Bingaman/Coleman amendment. Two Votes No Votes One Vote More votes for renewable fuels vs.electricity standard Both policies require a percentage of energy from renewable sources…but they have received different levels of support at the federal level: Senate votes to amend the 2005 Energy Bill: RFS* - 70 Votes *Votes in favor of the Domenici amendment. The RFS by 2012 was passed with the final Energy Bill. The RES was rejected by the House in conference committee.

  28. Conclusions • Wind and other renewable energy sources can conserve natural gas supplies and provide a hedge against future prices increases and supply shortages • Wind power can provide insurance against future limits on greenhouse gas emissions • Wind power can provide significant energy diversity and security benefits • Wind power can strengthen the US economy and rural areas • Renewable energy can meet a significant portion of US electricity needs and save consumers money • Efficiency AND renewables = best combination. UCS Clean EnergyBlueprint: up to 31% less natural gas; 27% reduction in gas price • Any policy evaluation of RE should extend beyond the power sector, to include gas sector impacts as well

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