Renewing america s economy from crisis to opportunity
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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

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


The problem surge of new natural gas plants

The problem:Surge of new natural gas plants…

Source: EIA, Annual Energy Outlook 2004


While us gas productivity declines

While US gas productivity declines…

28% Decline in 2003

Source: Richard Levitan: IHS Energy, Petroleum Information Corp., EOG Resources


Helping to drive gas higher higher

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


High gas prices are hurting the economy

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


Increasing dependence on gas imports from overseas

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.


New lng terminals and tankers will increase our vulnerability

New LNG terminals and tankers will increase our vulnerability


Leading to new coal plant proposals and higher carbon emissions

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


Coal has other important fuel cycle impacts

Coal has other importantfuel cycle impacts

  • Mountaintop removal mining in West Virginia


Coal mining jobs declining

http://www.eia.doe.gov/oiaf/aeo/figure_105.html

Coal mining jobs declining…

Source: EIA


Renewing america s economy from crisis to opportunity

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


Myth the southeast isn t windy wind power class at 80m

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


North carolina has significant wind potential

North Carolina has significantwind potential


Offshore wind technical potential

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


Offshore wind costs are falling

Offshore Wind Costs are Falling

Source: NREL/DOE Wind Program????


Renewing america s economy from crisis to opportunity

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.


Renewing america s economy from crisis to opportunity

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


Renewable energy expected from state standards

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.


Texas wind spurs new jobs and rural development

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


Wind power creates new manufacturing jobs

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


Wind dominates under national renewable electricity standard

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


Renewable energy creates jobs

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


Renewable energy conserves natural gas supplies

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


Renewable energy saves electric natural gas consumers money

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.


All regions of the country save money

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.


Renewable energy reduces emissions and compliance costs

Renewable Energy Reduces Emissions and Compliance Costs

Reduces growth in U.S. CO2 emissions by 59%

Source: UCS, using EIA model


More votes for renewable fuels vs electricity standard

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.


Conclusions

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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