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Profitably Reducing Carbon Emissions in Maine

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.

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Profitably Reducing Carbon Emissions in Maine

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  1. Profitably Reducing Carbon Emissions in Maine Presentation to Governor Baldacci’sEnergy Efficiency SummitThomas R. CastenChairman, Recycled Energy Development, LLCApril 3, 2008 RED | the new green www.recycled-energy.com

  2. 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 RED | the new green www.recycled-energy.com

  3. 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 RED | the new green www.recycled-energy.com

  4. Homer Simpson’s Power Plant (Springfield, ?) RED | the new green www.recycled-energy.com

  5. Electric Generation Plant (Craig, CO) Two-thirds of the fuel’s energy is vented to atmosphere. RED | the new green www.recycled-energy.com

  6. Wasted Energy Excess Costs Excess Pollution 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 U.S. Delivered Electric Efficiency Inefficient US Electric Generation Related Headlines: RED | the new green www.recycled-energy.com

  7. Electric Generation’s Increasing Contribution to Domestic CO2 Emissions US Electric Power Sector’s CO2 Emissions RED | the new green www.recycled-energy.com

  8. US Carbon Dioxide Emissions, 2005 Breakdown of Emitting Sources: Heat & Power; 69% of all fossil fuel CO2 emissions RED | the new green www.recycled-energy.com

  9. Pollution Waste Heat Transmission Line Losses 3 units (9.0%) Fuel 100 units 67 units Waste Energy = 33 units Electricity U.S. Electric System Efficiency Since 1960 End User Power Plant RED | the new green www.recycled-energy.com

  10. Pollution 33 units Thermal Energy = 66 units Useful Work Fuel 100 units 33 units Electricity End User Site Combined Heat and Power Options 33 units Waste Energy CHP Plant Recycle Waste Heat RED | the new green www.recycled-energy.com

  11. Saved Energy Input Energy Recycling Plant Electricity Finished Goods Process Fuel Waste Energy End User Site Recycling Industrial Energy Even Better Electricity Steam Hot Water RED | the new green www.recycled-energy.com

  12. 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) RED | the new green www.recycled-energy.com

  13. U.S. Grid is Less Efficient than 100 Years Ago CHALLENGE & OPPORTUNITY • ~$70 billion potential energy savings if U.S. returned to 1920s model • 1.4 gigaton GHG reduction/year RED | the new green www.recycled-energy.com

  14. 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 RED | the new green www.recycled-energy.com

  15. Examples of Local Generation Projects that Recycle Waste Energy Projects RED and its predecessor companies have developed RED | the new green www.recycled-energy.com

  16. Industrial Waste Heat Recovery (6 Projects) Steam Pressure Recovery (190 Projects) Combined Heat & Power (56 Projects) U.S. Delivered Electric Efficiency Efficiencies of Energy Recycling Projects RED | the new green www.recycled-energy.com

  17. 95 MW Recycled from Coke Production (Gary, IN) RED | the new green www.recycled-energy.com

  18. 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! Silicon Production, Alloy WV RED | the new green www.recycled-energy.com

  19. Operating Maine Projects by RED Subsidiary Turbosteam Livermore Falls, ME • 2002 • 2,980 kW • 4,713 tons CO2 saved annually • Colby College Waterville, ME • 1998 • 600 kW • 480 tons CO2 saved annually • Huhtamaki Waterville, ME • 2004 • 605 kW • 1,043 tons CO2 saved annually RED | the new green www.recycled-energy.com

  20. Potential Clean Energy Project:University of Maine at Orono Profitably 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 | the new green www.recycled-energy.com

  21. 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?” RED | the new green www.recycled-energy.com

  22. 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 RED | the new green www.recycled-energy.com

  23. 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. RED | the new green www.recycled-energy.com

  24. 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 RED | the new green www.recycled-energy.com

  25. 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. RED | the new green www.recycled-energy.com

  26. 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 RED | the new green www.recycled-energy.com

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

  28. Thank You RED | the new green www.recycled-energy.com

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