Wednesday, July 15, 2009

Emission Adherence in 2020 and 2030 under the American Clean Energy and Security Act (ACES)

Revisiting the previous investigation of the ACES energy gap it was concluded that although the modeling and analysis itself was correct, an unrealistically high value was selected for the anticipated electricity demand, which generated a final conclusion that did not explore the entire range of growth possibilities. Therefore, it was important to conduct a second investigation using a greater range of anticipated electricity demands to generate more accurate expectations regarding renewable energy and efficiency requirements. This secondary investigation also adds an additional level of complexity by tracking emission and electricity generation expectations from 2020 to 2030 in addition to other more specific elements.

Recall from the previous analysis that the electricity generated from various sources in United States is shown in the table below. 1

* includes both Thermal and Photovoltaic
# all values are in MW-h;

Also recall from the previous analysis that it is logical to expect that a significant majority of the emission cuts in the United States will come from the transportation sector and the energy generation/use sector. The energy sector accounted for 53.6% of the total emissions in 2007 and 64.8% of CO2 emissions (3,902.3 million tons) and the transportation sector accounted for another 27.66% total emissions and 33.45% of CO2 emissions (2,014.4 million tons).2,3 Overall it would difficult to expect significant cuts from the agricultural sector not only because it is responsible for a lower percentage of emissions (most of these emissions being other GHGs, not CO2), but the emissions associated with the agricultural sector are more difficult to control than those in the transportation or energy sectors and most do not fall under any initial Phase of the ACES. In addition since the first energy gap post, reductions in agricultural emissions have become even less probable, especially leading up to 2020, due to certain concessions given to the agricultural sector to ensure passage of the ACES in the House.

General Analysis Assumptions –

The ACES is passed by the House and Senate as is (17% reduction of 2005 emission levels by 2020 and 42% reduction in 2005 emission levels by 2030)

The reason for this assumption is that the analysis must have an emission reduction target and the one provided by the ACES makes the most logical sense to use because it currently has the highest probability of actually becoming reality.

By a given target year, carbon emissions will be reduced to 100% of the cap.

What is the point of even conducting the analysis if the emission cap is not successful at reducing emissions? On the other side it is probably unrealistic to expect a significant emission reduction beyond the cap.

Economic considerations are ignored.

Initially one might view this assumption as unrealistic and irresponsible, but the purpose of this analysis is to identify possible solutions for bridging the energy gap while meeting the emission cap, not to investigate the most economically efficient solutions. In addition it is difficult to make cost estimates for certain energy sectors over a decade into the future due to changing technology and demands.

One of the biggest problems with ACES discussion is the economic distraction. So many people are debating about the total cost of meeting the caps they seem to forget the critical question is can the caps actually be attained in the first place and if so, what are the necessary expectations to do so? Economics are meaningless if the goal is not attainable because improper decisions are made.

No offset considerations were included in this analysis.

The goal of this analysis was to develop a strategy where one would have a level of rational confidence regarding the energy requirements for both the successful acquisition of the emission cap as well as bridging the energy gap. Offsets cannot be regarded as genuine emission reductions 100% of the time (in fact no one can really define even a genuine percentage for offsets although a range from 33 to 67% has been thrown around). Clearly due to this lack of certainty, inclusion of offsets would be counter-productive to a real analysis concerning the energy gap. Would the inclusion of offsets lessen the required growth for all other energy suppliers? It is highly probable that they would; however, it is difficult to determine an accurate assessment due to the lack of a defined percentage or even an estimate to how many will be purchased from now until 2020 or 2030; therefore it is not rational to include them in the analysis.

Emission reductions from the electricity generation sector will primarily involve reducing the amount of coal burned.

Coal is commonly regarded as the ‘dirtiest’ form of energy. For every 1 MW-h of coal approximately 1 ton of CO2 is released into the atmosphere whereas natural gas and petroleum only release 0.4-0.5 and 0.75 tons of CO2 per every MW-h of energy produced.4 Therefore, an optimized emission reduction scheme would remove the highest polluting entities first. Also petroleum only produces »1.5% of the energy in the United States, thus any petroleum cuts would be merger anyways.

Any changes in atmospheric methane, sulfur dioxide and nitrogen oxides (NOx) concentrations are insignificant.

This assumption is probably not very accurate because realistically it is highly probable that concentrations of methane and various nitrogen oxides will increase, but estimating additional requirements is not easily identified and could skew the analysis. Basically this assumption hopes for a favorable outcome with regards to other GHGs. Overall under all 3 early phases of the ACES a very small percentage of CO2 equivalent GHGs are capped;5 a measly drop in the bucket.

No Carbon Capture and Sequestration/Storage (CCS) technology is implemented.

The fact is that development of CCS technology is more than likely not going to provide any real benefit in the quest to reduce CO2 emission due to its low probability of success. Even if CCS technology is successfully administered in the near future it is unlikely to be incorporated into a significant number of coal derived electricity generation systems.

All reductions in the transportation sector come from either increased fuel efficiency or use of gasoline/biofuel blends where the biofuel is derived from an algae source.

This assumption is a little stretch, but a vast majority of the early reduction in transportation emissions is going to come from increased fuel efficiency and incorporation of gas/biofuel blends. Although hybrids, plug-ins and electricity vehicles have a significant amount of attention, until an automotive infrastructure supporting them is better established, it is difficult to conclude that their impact will be significant through widespread incorporation. Overall as determined in the previous analysis regarding reductions due to the White House’s new fuel economy policy, increases in electricity demands due to electric and hybrid cars would be small.

The analysis consisted of two parts. First, re-examining the information from 2007 to 2020 using more realistic anticipated electricity demands to determine the necessary natural gas growth rate to meet required energy needs as well as adherence to the emission cap. Second, extending the analysis from 2020 to 2030 to determine the required growths in renewable energy providers, especially wind, to meet required energy needs as well as adherence to the emission cap.

Based on previous information acquired both in the first energy gap analysis and the transportation analysis certain restrictions were placed on the possible scenarios applied to both portions of the investigation. For instance instead of utilizing three scenarios of transportation emission reduction (10%, 20% and 30%) like in the first analysis, this second analysis abandoned the 30% scenario for the 2020 analysis and the 10% scenario for the 2030 analysis. Therefore, only two transportation reduction scenarios were used in the investigation 10% and 20% for 2020 and 20% and 30% for 2030. The reductions were connected in logical succession for the second linked analysis, a 10% reduction in 2020 lead to a 20% reduction in 2030 where a 20% reduction in 2020 lead to a 30% reduction in 2030.

Once again the energy providers that were explored to fill the gap consisted of nuclear, wind, solar, biomass, geothermal and natural gas. It was assumed that there would be no significant growth in the petroleum or hydroelectric sectors. Petroleum was excluded because similar to natural gas, petroleum is not a trace/zero-emission energy provider so any increases would not result in a significant enough emission reduction vs. coal. Also petroleum only makes up approximately 1.5% of the total energy generation anyways so any increase or decrease in petroleum as a electricity provider to successfully adhere to the 2020 cap would be rather insignificant vs. the other reductions that have to be made. Hydroelectric was excluded because the overall growth rate of hydroelectric stations has pretty much peaked and energy generation has largely cycled within a range of 240,000,000 MW-h to 290,000,000 MW-h since 2000.1 Any tide based hydroelectric power was considered insignificant based on its growth potential and total electricity generation potential.

The 2020 and 2030 emission caps outlined in the ACES are 17% and 42% of the total carbon dioxide equivalent of 2005 identified in Section 721, subsection e, Part 2, Section A, subsection i of the ACES as 7,206 million tons respectively. Therefore, the emission cap would be 5,980,980,000 tons of carbon dioxide equivalent for 2020 and 4,179,480,000 tons of carbon dioxide equivalent for 2030.

In addition to the energy gap that is generated from removing coal and natural gas from the electricity grid to meet emission caps, it is reasonable to anticipate that additional electricity will be demanded for both 2020 and 2030. According to the EIA the electricity demand for 2007 could be averaged to approximately 3,904,400,000 MW-h.6 The EIA estimates low, average and high additional demand scenarios for 2030 where additional demand is approximately 16%, 26% and 36% respectively. From this information, assuming an 55%/45% ratio of progression from 2007 to 2020 vs. 2020 to 2030, additional demands were calculated and are shown in the table below.

Again due to the efficiency measures outlined in the ACES in addition to increased public awareness to the importance of efficiency different efficiency scenarios were explored for both the 2020 and the 2030 analysis. Five linked efficiency scenarios were applied to the investigation: 0% to 30%, 30% to 50%, 30% to 80%, 50% to 100% and 80% to 100% representing progression from 2020 to 2030.

The EIA low, average and high electricity demand scenarios are predicated on two elements. The demand required for existing infrastructure and the demand required for future infrastructure with weighting on the demands of future infrastructure. Most of the immediate reductions in electricity demand will come from efficiency applications to existing buildings and later be distributed to new buildings. However, although increases in efficiency will reduce electricity demand, it will not eliminate all of the electricity demanded by new infrastructure; therefore, it is reasonable to believe that from 2007 to 2030 the total electricity demand will not drop below 2007 levels.

In the report “International Energy Outlook 2009” the EIA estimates various growth trends for various forms of energy and fuels up to 2030 for a variety of countries including the United States. Using the growth estimates from this report and other available EIA information, will enough energy be generated to bridge the gap? From the information an annual growth rate from 2006 to 2020 can be estimated for wind, nuclear and geothermal.7,8,9 In the first analysis a biomass growth rate was assumed instead of calculated from prognosticated data. For this analysis a biomass growth rate was calculated from EIA projection estimates.6 Solar photovoltaic and solar thermal growth rates were also calculated, but because EIA information on 2007 electricity generation does not differentiate between the two the larger of the two calculated growth rates was used to model the growth of the solar power sector.10 Calculated annual growth rates were 8.165%, 0.65%, 2.94%, 6.71% and 11.17% for wind, nuclear, geothermal, biomass and solar respectively.

However, the annual growth rates calculated above are different from the growth rates that were experienced between 2006 and 2007 as shown in the first table. Most of the growth rates between 2006 and 2007 exceed those that are calculated from the long-term EIA estimations. The electricity generation potential of trace/zero emission sources was also examined using these growth rates. Recall in the first energy gap analysis that the continuation of a 29.56% annual growth rate for wind was viewed as unreasonable and a maximum hypothesized annual growth rate of 20% was utilized. Renewable growth rate scenarios were labeled as either standard (EIA estimates) or 06-07.

Inclusion of natural gas complicates emission adherence to the cap because natural gas is not a trace/zero emission source. Natural gas does release about a ton of CO2 per about 2.5 MW-h of energy generated (assuming the most efficiency energy generation process). In order to compensate for these emissions, a necessary step to ensure adherence to the emission cap in 2020 or 2030, a coal masking reduction rate of 20% was assigned. For instance suppose natural gas produces an additional 30,000 MW-h of electricity from year x to year y. That new electricity would produce 12,000 tons of additional CO2 emissions. Utilizing the aforementioned coal masking reduction rate, 20% of those new emissions, 2,400 tons of CO2, would be masked by removing an additional 2,400 MW-h of coal-generated electricity from the grid (coal generating approximately 1 ton of CO2 per MW-h). The coal masking rate of 20% was selected to create a controlled rate of decline in coal derived electricity production in order to limit the probability of potential brownouts.

In addition to the transportation and electricity generation sectors CO2 originates from other sources as well, especially manufacturing. In fact there are still approximately 1,600 - 1,700 million tons of CO2 (due to some overlap between sectors) that can be reduced from other sectors that eventually fall under the ACES cap during one of the three phases (Phase 1 begins in 2012, Phase 2 begins in 2014 and Phase 3 begins in 2016). Based on when a particular emission element fell under the cap, estimates of reduction were calculated from this group of emission elements for 2020 and 2030. For the 2020 cap it was assumed that 17% of the emissions would be reduced by 2020 if the sector was 100% capped under Phase 1, 12.5% if 100% capped under Phase 2 and 8.5% if 100% capped under Phase 3. For the 2030 cap it was assumed that 35% of the emissions would be reduced by 2030. The reason 35% was selected over 42% is it was hypothesized that it would be easier to make emission reductions in the electricity and transportation sectors over the manufacturing and other specialty sectors. Overall an additional 210,171,166 tons of CO2 were removed from these sectors in 2020 for the 2020 cap and 596,015,000 tons of CO2 were removed from these sectors in 2030 for the 2030 cap. The table below illustrates the total emission assumptions made for each sector from available cap information.5

* Values are in tons of CO2; Also the 2020 total is off by 1 due to rounding;

One of the primary goals of the analysis was to determine the minimum required growth rate for natural gas to cover the energy gap created due to adherence to the emission cap in the assigned scenarios. The results of the 2020 analysis are shown in the table below –

* Growth Rates are listed as annual growth rates pertaining to the time period between 2007 and 2020;
** NG Increase = % Increase in energy generated by natural gas utilized for electricity from 2007 levels; 100 = multiplying the 2007 amount (896,590,000 MW-h) by 2;

First, the scenarios are categorized as followed: [Efficiency; Renewable Growth Rates; Transportation Reduction; Anticipated Electricity for 2020]. Second, only four complete scenarios are listed in the table because the 30% efficiency scenario was repeated twice, in prospect for the 2020 to 2030 investigation. (30% to 50% and 30% to 80%);

As expected the required natural gas growth rate decreases as efficiency, transportation reduction or renewable growth rates increase. The optimal scenario generates a meager natural gas growth rate of only 1.80% whereas the worst-case scenario requires a natural gas growth rate of 10.99%. From a cursorily glance at the results transportation reduction appears to be the least significant factor influencing natural gas growth rate. The most influential factor appears to be the use of 06-07 renewable growth rates vs. standard as 06-07 rates generate 2-4% lower natural gas rates vs. standard when all other factors remain the same.

The initial lack of influence from the transportation reductions was surprising, so a specific breakdown analysis was conducted to identify how single percent changes in a given factor influenced the natural gas growth rate. The comparison was made between the transportation reduction rate per percent change vs. the wind energy growth rate per percent change. Wind was selected because outside of natural gas wind typically accounted for 60 – 85% of the new electricity generation from renewable sources in the investigation due to its large initial baseline (34,450,000 MW-h) and its large annual growth rate range (typically larger than all other growth rates sans solar which has a 56 times lower baseline). The only other relevant selection for exploration of renewable influence would have been nuclear and it is difficult to expect significant growth in nuclear in the coming decade. The results of this analysis are illustrated in the graphs below, the first one representing changes in transportation reductions and the second representing changes in the wind growth rate.

From the above information when broken down to a percentage aspect, transportation is slight more or slight less influential than the wind depending on the circumstances, although most of the time transportation is more influential. The reason the renewable growth rates appear to be more influential in the 2020 analysis is because the percentage range between different transportation reductions is smaller than the percentage range between wind growth values and there are other elements contributing to the renewable influence besides wind.

A somewhat troubling factor from these results was the rate of increase in natural gas electricity generation that will be required in the next decade. With the exception of the most favorable scenarios, most scenarios anticipated at least a 100% increase in natural gas requirements. Unfortunately due to the significantly high annual growth rates utilized in most of the favorable scenarios, these scenarios are not probable in reality. Another concern is that even at an efficiency of 80%, without significantly high renewable growth rates the required natural gas growth rate still ranges from 6.22% to 8.13%. The reason that such values should be a concern will be discussed later.

Finally looking at the rate of coal loss and the total amount of coal removed from producing electricity; the reduction rate of coal is important because despite what some may want to believe, it would be difficult to rapidly remove coal from electricity production without significant economic costs and rolling brownouts. Therefore, the optimal scenario solutions involve a reasonable reduction rate. Unfortunately it is difficult to ascertain what a reasonable reduction rate is, but something in single digits seems manageable.

In this vein it is important to look at the masking rate, which has a significant influence on the rate of coal loss. The graphs below document the influence of the masking rate on the natural gas growth rate under specific scenario elements. The baseline assigned for this investigation was 50% efficiency, 10% transportation reduction, Standard renewable growth rates and average anticipated future electricity demand.

* Note that the small hump before the equilibrium point is a visual error in the creation of the graph. The equilibrium point is the highest natural gas growth rate generated from the data;

The minimum required annual natural gas growth rate increases almost linearly with the masking rate until equilibrium. The equilibrium point occurs when all existing coal reserves utilized for electricity production have been expended. The reason the natural gas growth rate increases with an increasing masking factor is when coal is removed from electricity generation it increases the existing electricity shortfall, thus more natural gas needs to be burned for electricity to cover that portion of the gap. Granted the more natural gas that is substituted for coal the greater amount of CO2 emission reduction occurs, but the size of the emission cushion is irrelevant for this portion of the analysis. However, the cushion would play a role in aiding any future required emission reductions. Overall for the masking rate it was important to avoid generating an equilibrium value, but also select a value that would result in the reduction of enough coal to cover the natural gas emissions to adhere to the cap, thus why 20% was selected in the first place.

The second portion of the investigation was to identify the necessary elements to adhere to the emission cap of 58% for 2030 (or a 42% reduction from 2005 levels) and bridge the resultant energy gap. The analysis was conducted by stringing together a 2020 analysis to a 2030 analysis while assuming a natural progression in both efficiency and transportation. For example suppose a 2020 analysis scenario consisted of a 30% efficiency and 20% transportation reduction. In the linked 2030 analysis the efficiency would either be 50% or 80% with a 30% transportation reduction. In order to optimize the ability to meet the emission cap, all increased growth in natural gas stopped after 2020. An additional wind growth rate was assigned for the 2020 to 2030 time period. Assigned natural gas growth rates carried over from the 2020 investigation to the appropriate linked 2030 investigation. The design was facilitated so that all coal use in electricity production was eliminated by 2030. Note that realistically a 30% reduction in transportation 2007 level emissions is fairly optimistic.

The table below outlines the results of the 2030 portion of the analysis.

* Relates to the specific wind growth rate assigned between 2020 and 2030;
** Relates to the difference between the maximum amount of electricity generated from natural gas in 2020 to the amount of electricity generated from natural gas in 2030;

One thing that can be immediately recognized when looking at the results is the considerable difference in the natural gas reduction rate and the total remaining natural gas levels used for electricity production between the 20% and 30% transportation reduction scenarios. The primary reason that the transportation reduction factor has such a dramatically pronounced influence on the 2020-2030 reduction over the 2007-2020 reduction is the general lack of available coal.

During the 2007-2020 investigation there was plenty of coal that could be removed from the grid to contribute to the emission reductions required to meet the cap. In fact there was a total of 2.016 billion tons of CO2 that could be removed to meet a cap that demanded a reduction of approximately 1.301 billion tons (recall 2007 emission data is being used because it is the most relevant data to use). Replacing all of that coal with natural gas would generate a net savings of 1.2096 billion tons of CO2 meeting approximately 92.9% of the cap. Add in the 200+ million CO2 cut from manufacturing and any transportation reductions were technically not required, although they were important in the sense of complimenting the level of natural gas and renewable growth to cover the electricity lost from coal loss. However, during the 2020-2030 investigation 40-90% of the coal had already been removed from the equation, leaving most of the electricity-based reductions revolving around the reduction of natural gas. The difference between 20% and 30% transportation reduction is approximately 201 million tons of CO2. That difference is equivalent to 502.5 million MW-h of electricity produced by natural gas, which ranges from 19.5% to 214% of the total required additional amount of natural gas production in 2020 over the multiple scenarios, clearly a significant difference maker. Although transportation and other non-electricity emission reductions are important, again the size of renewable growth rates also play a role in controlling the natural gas reduction rate as using the 06-07 growth rates resulted in a 2-5% reduction in the required natural gas reduction rate.

Another conclusion that may seem unusual at first is the fact that at 100% efficiency all of the 2020-2030 wind growth rates are identical regardless of the assumed anticipated growth when the natural gas reduction rate was not 0%. This result occurred because at 100% efficiency all of the anticipated growth is eliminated, so the size of the anticipated growth is meaningless, therefore the required energy is equal to the energy lost from reductions in output from coal and natural gas.

The natural gas reduction rate is an interesting element because reducing the amount of electricity generated from natural gas is much easier than increasing the amount of electricity generated from natural gas. However, the higher the value of reduction the greater perceived economical consequences because the larger the required drop, the more radical the transition from natural gas to renewable energy which will result in a greater level of job loss and electricity interruption.

Another piece of useful information that was acquired from the secondary investigation is the importance of the 2007-2020 study on the anticipated natural gas reduction rate. For example when looking at the difference between the natural gas reduction rate in the 50% and 80% efficiency scenarios in the 2020-2030 analysis there is no difference. The reason for this lack of difference is because with all things remaining the same, the 30% efficiency scenario for 2007-2020 analysis that linked into the 50% and 80% 2020-2030 analysis established the same natural gas growth rate. In the first portion of the second investigation, natural gas and coal contributions to the grid were reduced to meet the emission cap. This reduction has nothing to do with increased efficiency because those reductions are required. Efficiency would only matter in this situation if said efficiency exceeded 100%. However, the efficiency did influence the resultant wind growth rate from 2020-2030.

A final point regarding the second portion of the investigation is that four specific scenarios actually generated a condition where no natural gas reductions were required to adhere to the both the energy requirements and the proposed emission cap. The reason for such a result is that emission reduction from non-electricity sectors was considerably higher than required due to the lower initial requirement of natural gas due to the high level of renewable growth in the 2007-2020 time period. In fact these scenarios actually demonstrated a significant reduction required wind growth due to the lack of natural gas loss.

All of the above investigations sought to generate a workable range of information pertaining to the relationship between any energy gap and the emission caps generated by the ACES. However, generating a realistic single scenario would go a long way to understanding what needs to be done, if anything.

For the 2020 portion of the specific analysis, based on the previous analysis regarding reductions in the transportation sector it is reasonable, albeit a little optimistic, to anticipate a 12.5% reduction in emissions from 2007 to 2020. Also due to increased efficiency it is reasonable to assume an anticipated electricity demand that is the average of the low and average scenarios provided by the EIA, which would require an additional 447,903,500 MW-h of electricity. Energy savings due to efficiency increases was assumed to be approximately 1.07 quadrillion Btus. Finally the same non-electricity and transportation reduction scheme that was used in the broader above analysis was used in this specific example (210,171,166 tons of CO2).
Annual renewable growth rates were typically estimated based on general trends. Wind was assumed to grow at 17%, slightly smaller than the previously estimated maximum growth of 20%, a value used in the 06-07 scenario of the above analysis. Solar was estimated slightly higher at 18% growth annually due to the much lower initial baseline of provided electricity; however, it can be argued that growth in solar power has far and away the largest possible standard deviation based on potential future costs. Overall an annual growth of anywhere from 10% to 35% would not be out of the question. Nuclear growth was limited to 0.8% due to the already high capacity rates of currently operating plants (90%+) and the trend that it is improbable that a significant number of new plants will be constructed and fully functional by 2020 due to the high capital costs and general lengthy construction times. Similar to the nuclear growth rate, increases in geothermal-based electricity were considered small, 1% annual growth, due to similar concerns over plant construction times and lack of attention because geothermal is not as hyped or flashy as wind or solar. Finally the growth rate for biomass was estimated at a conservative 2.5% due to concerns that significant new barriers to its expansion would be created with the reduction of co-firing in coal plants due to coal loss and questions about feedstock supply. Similar to solar, biomass is difficult to gauge because of its wide range of growth potential. The results for the 2007-2020 analysis using the above scenario assumptions are shown in the table below.

In a scenario that could very well be witnessed in reality, natural gas growth is manageable, but higher than most growth in the past, especially on a consistent basis. Recall that since 1996 until 2007 the highest year to year growth in natural gas as an energy source was 10.82% from 1997 to 1998.11 2006 to 2007 produced the second highest year to year growth with the previously illustrated 9.81%. In addition the future annual growth rate of natural gas from 2006 to 2020 can be calculated at 0.78% with 96.5% of that growth coming in the last 5 years (from 2015 to 2020).12 Also this growth requires a total natural gas volume of 7.01 trillion cubic feet be devoted to electricity generation, (4.04 trillion cubic feet more natural gas than used 2007), a result that will require a significant number of new national gas acquisition projects or considerable increase in natural gas importation. Remember that the 4.04 trillion cubic feet of additional natural gas is only applied for a single year, 2020. For most of the investigated scenarios, from 2010 to 2030 an additional 25-60 trillion cubic feet of natural gas will be required (this specific analysis required an additional 42.24 trillion cubic feet). One bright spot is the amount of coal loss is significant, but controlled at only 8.94% annually with a total reduction of 71%.

For the 2020-2030 portion of the specific scenario investigation, another 10.5% in reduction of transportation emissions was anticipated along with an efficiency which resulted in a savings of 2.94 quadrillion Btus or an additional 1.87 quadrillion Btus from 2020 to 2030. The non-electrical and transportation emission reductions were also carried over from the broad investigation.
Assuming no change in any non-wind renewable annual growth rates from 2020 to 2030, the results from the 2020-2030 investigation are shown in the table below.

Regarding the results of the 2020-2030 portion of the investigation, the natural gas reduction rate is manageable, but higher than desired. Unfortunately the biggest problem is the accelerated increase in the required annual wind growth rate to fill the energy gap. The reason this increase is a problem is outlined below.

The electricity demand from wind in 2030 in the most immediate analysis is 2,636,171,979 MW-h (approximately 76.5 times the amount produced in 2007). Based on the information provided by the EIA the total MW potential of wind power in the United States rose between 2006 and 2007 from 11,603 to 16,818. Using that information an average full potential of operation can be calculated at approximately 2170 hours per year or a capacity of 24.8%.

The largest wind farm in the United States is Horse Hollow Wind Energy Center in Taylor and Nolan Counties in Texas, which produces 735 MW of peak power from 421 turbines, covers a land mass of 47,000 acres or approximately 64 acres/MW.13 Using this information how much land and total capacity will be required to generated the anticipated wind derived electricity in the above analysis? First, it is reasonable to assume that wind technology will not remain stagnant, but will steadily improve. A 30% increase in turbine efficiency from now until 2030 seems reasonable with the ability to retrofit older models. With this increase the ratio of acres per MW drops to 49.19. Next assume that the average full potential of operation increases by 2% per year from 2007 to 2030 due to administration of offshore wind turbines and even the possibility of aerial suspended turbines capturing higher velocity winds more frequently. Even with those increases in efficiency and power generation, a total of 770.4 GW will still be required covering a total land area of 59,210 square miles to attain the required wind-based electricity in the above scenario, a result that falls far short of the extremely ambitious 300 GW scenario proposed by the EERE.14

The sobering reality of the above wind requirements leads to the obvious conclusion that clearly if significant reductions are going to come from the electricity generation sector other trace/zero emission renewables will need to be cultivated. Unfortunately as previously mentioned such a scenario does not look promising. One of the best options, nuclear power is struggling because of high capital costs, extended plant construction times and a lack of technological development in the United States due to continuing concerns about terrorism and nuclear waste. Biomass is a huge question mark. Solar could grow at 30% annually over the next two decades and still be a relative non-factor in electricity production (255,533,901 MW-h in 2030). Hydroelectric is pretty much tapped out outside of some small pickings made through tidal generation. Geothermal has potential, but may need new geological mapping and a lot more attention. Include in all that uncertainty the fact that support and mandates for renewable energy growth continue to be weakened with every new draft of the ACES and things do not look promising.

Another concern is the apparent competition between efficiency and renewable innovation and development. The ACES Section 782 subsection g allocates permits to go into a fund labeled the State Energy and Environmental Development (SEED) from which state and local governments can draw funds for efficiency and renewable projects. 20% of the SEED money must go to renewable energy programs and another 20% must go to energy efficiency leaving the remaining 60% to be allocated freely between the two. The question is why must funds be divided between one or the other, why not devote considerable funds to both efficiency and renewable energy innovation and development? Overall if competition is required, it appears that more funds should be distributed to renewable development over efficiency because although energy efficiency represents the quintessential ‘low-hanging fruit’ of emission reduction15, efficiency can only go so far and in later years renewable energy will be far more important and will take far longer to implement. It seems that too many people are thinking too short-term due to short-term economics, but that type of thinking created these emission issues in the first place. It appears more suitable to extend efficiency improvements by 3-5 years if that same time frame can be reduced from significant renewable development.

Returning to one of the analysis assumptions regarding offsets, what if offsets were used? Offsets would provide the ability to advance towards cap adherence while not contributing additional stress on the energy gap? The problem with offsets is that it is difficult to confirm whether or not they are genuinely reducing CO2 or other GHG levels as a number of sources have demonstrated their lack of reliability.16,17,18,19 So although one may argue that numerically offsets would significantly aid cap adherence while not increasing the potential energy gap, such an argument would be an exercise in futility because the Earth only cares if those offsets are actually working in reality, not just on paper and the whole point of the cap is to generate genuine emission reduction. Also it is difficult to hypothesize the number of offsets that would be utilized. Some argue that because of European infiltration into international offset markets for a number of years now, the available number of international offsets would be far and few between and those available would have significant costs.20 If this contention is correct that leaves a cap of 1 billion tons of domestic offsets per year for substitution. However, domestic offset opportunities have not been effectively isolated and classified in the detail required to make a firm assumption regarding how prevalent their stockpiles over the coming decade and how effective they would be at contributing to emission reduction.

Anti-deforestation based offsets are a different matter. Although there are some remaining problems regarding additionality of deforestation offsets, the ACES as currently structured does provide some elements that look to reduce deforestation. However, including emission reductions from deforestation against the cap can be a little tricky. Suppose in a given year 300 million tons of CO2 are prevented from being released into the atmosphere due to anti-deforestation efforts. How does this reduction play against the cap? It would be incorrect to continuously count these savings because deforestation is a single-time release event. Therefore, it would be proper to count such a savings against the cap in year increments as the total savings divided by the difference between the target year and the year of initiation in the particular savings program. For example if that 300 million tons of CO2 was prevented from release in 2012 then 37.5 million tons of CO2 could be counted off of the 1.2 billion tons of CO2 required for removal to adhere to the 2020 cap, if the 300 million tons are not counted all at once in 2012. Anti-deforestation measures are exceedingly important and should be pursued, but it does not appear that they will provide significant relief to cap adherence vs. energy gap creation and the necessary size of renewable growth rates through procedures in the ACES.
This perceived difficulty in meeting both the emission cap as well as the resultant energy gap might invoke an interesting, if not somewhat controversial strategy. One of the questions that can be asked after looking at the results of this investigation is whether or not the 2020 cap of 17% is a good thing? Previously it was argued that the cap was too weak, that it needed to be higher to generate the necessary momentum to carry into the more difficult 42% emission reduction demanded by the 2030 cap. However, the yo-yo effect of natural gas growth and decline seen in this analysis under most of the investigated scenarios casts doubt on the benefits of the 2020 cap. Rationally it does not make logical or economic sense to increase the electricity derived from natural gas by 75-300% (over a vast number of explored scenarios) over a 10-year period then do an about-face and decrease the electricity derived from natural gas by 67-95% from the 2020 high over the next 10 years after that. For example at 50% 2020 efficiency to 100% 2030 efficiency 10% to 20% transportation reduction with 06-07 growth rates at average anticipation, the rise and fall (yo-yo effect) of natural gas electricity generation is shown in the figure below.

Some may argue that the necessary end point infrastructure already exists, the natural gas plants themselves, and they simply function at a low electricity generating capacity due to the low costs of coal, which in time is neutralized by the ACES. Although this seems true, one must not forget about where the supply of natural gas to increase the capacity of those plants will originate. Currently, although it can be argued that through unconventional natural gas reverses the United States has enough natural gas to generate the necessary levels of electricity, most of those reserves have yet to be explored or tapped. Both exploration and tapping cost significant capital, capital it does not make logical sense to spend for only 5-10 years of operation where instead that capital can be spent on trace/zero emission electricity generation. Therefore, it may be worth considering eliminating the 2020 emission cap altogether as the cap itself is the only element that facilitates this natural gas yo-yo effect. Clearly such a decision needs to be weighed carefully.

In a scenario that eliminates the 2020 cap, the 2012 cap would be extended from 2012 to 2020 acting as almost like an 8-year grace period for various corporations, but ensuring no increase in emissions. After 2020 the dynamics behind the progression of the 2030 cap, which could be strengthened to something like 50% instead of 42% due to the grace period, would be enforced requiring greater emission reductions and harsher penalties for those failing to comply. Realistically it is highly probable to conclude that the emission reduction from 2012 to 2020 will not attain some form of equilibrium around 97% of the 2005 value, but will progressively fall due to the impending application of the 2030 cap because even though they could, it would not make sound business sense for corporations to do nothing over the 8 year period with a significant increase in reductions in the future. The scenario differs from business as usual because in the business as usual scenario there is no emission cap in the future. It would be reasonable to expect an emission reduction between 5-12% from 2012 to 2020, smaller than the current cap at 17%, but larger than the 3% cap at 2012.
Assuming that U.S. emissions in 2012 adhere to the 97% ACES cap and a linear decrease in emissions between noted cap years, the three tables below illustrate the differences in CO2 equivalent ppm contributions to the global environment from U.S. emissions from 2012 to 2030 in three proposed scenarios: Normal 2020 Cap and Normal 2030 Cap; 8% Reduction in 2005 emissions by 2020 and Normal 2030 Cap; 2012 Cap up to 2020 and Normal 2030 Cap;

So in the result of the scenario abandoning the 2020 cap in favor of extending the 2012 cap and no strengthening of the 2030 cap the total ppm difference is 1.164. In the passive reduction scenario the total ppm difference is 0.748. However, it is currently impossible to gauge whether or not abandoning the 2020 cap is rational because no estimates exist for the capital that would be expended to generate the requisite natural gas supplies to bridge the energy gap leading to 2020.

Another question surrounding the viability of dumping the 2020 cap would be the behavior of the natural gas companies. The capital required to generate the necessary supply to meet the electricity generation needs provided by natural gas will come from natural gas companies. However, if the 2020 cap is removed the natural gas supply requirement will drop significantly leading to a significantly reduced amount of investment in creating new supply wells. Think about it this way – a pharmaceutical company spends 3-6 years developing a drug for market, sells that drug on the market for 4-6 years making a significant amount of money doing so, then the drug is banned. Under the current 2020 cap that is the highly probable existence of the natural gas industry in the generation of electricity. The question is will the pharmaceutical/natural gas company make or lose money through the entire process? Overall it is highly likely that with electricity regulation profit will not be made. Therefore, would the pharmaceutical company aim to invest in a longer-term project that would require 6-10 years of investment before payoff (trace/zero emission energy providers) or do nothing. Knowing that answer would go along way to determining if dropping the 2020 cap is a wise move. If the natural gas companies invest in renewables, then the additional 8-year grace period has meaning because when the 2030 cap takes over in 2021 a larger amount of renewable electricity generation will be in the pipeline. If the natural gas companies do nothing then the additional 8-year grace period only results in additional CO2 being put into the atmosphere.

Overall the above investigation identifies a number of important questions that need to be asked about the future of electricity production under the ACES. First, what trace/zero emission electricity providers have the ability to/need to replace coal and natural gas in the future? Second, what behavior can be anticipated from coal and especially natural gas electricity generating sectors in the future regarding investment in renewables? Third, how legitimate are offsets and how large will their role be in future emission reduction? Fourth, is the 2020 cap a benefit or an obstacle to effective emission reduction? Fifth, can the global environment afford a smaller anticipated reduction in emissions from the United States from now until 2020 with a possible larger reduction between 2020 and 2030? Without identifying high probable and honest/objective answers for each of these questions, it would be difficult to envision the ACES being effective at reducing CO2 emissions without generating large excessive costs and/or energy shortfalls over its lifetime.

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