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The National Academies Summit on America’s Energy Future: Summary of a Meeting 11 Pathways to a Sustainable Future Achieving an energy regime that meets human demands while protecting the global environment will require changing the relationship between energy use and economic activity. As several speakers at the summit pointed out, these two measures are correlated (Figure 11.1). However, the correlation is not invariant. From 1977 to 1985, the U.S. economy grew 27 percent while the nation’s use of oil fell 17 percent. Oil imports fell by half, and imports from the Persian Gulf dropped by 87 percent. “It broke OPEC’s pricing power for a decade, because we customers, especially in America, … found that we could save oil faster than OPEC could conveniently sell less oil,” said Amory Lovins. As Lovins pointed out, economic theorists have assumed that energy intensity in the world will fall by about 1 percent a year because of increasing efficiency. “If we could make that about 2 percent a year, it would stabilize carbon emissions with economic projections. If we could make that more like 3 percent per year, carbon emissions would fall and stabilize the climate fairly quickly.” Reductions in energy intensity of 3 percent a year may seem high, but they are not uncommon, Lovins said. The United States has cut its energy intensity by that much or more in many recent years, including 4 percent in 2006. California’s energy intensity typically has dropped a percentage point faster than the U.S. average. China cut its intensity by more than 5 percent a year for a quarter of a century, although it recently “came off the rails” as it began using more energy-intensive basic materials. But if China were to make energy intensity a priority, as it is now beginning to do, the country could have 20 times the gross domestic product that it does today while emitting no
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.1 Annual per capita electricity use rises with the human development index to a maximum at about 4,000 kilowatt-hours. SOURCE: Adapted from Pasternak (2000). more carbon, according to Lovins. Many companies have been cutting energy intensity—and in some cases absolute emission levels—by 6 to 9 percent a year. “They all make money on it,” Lovins said. Even Japan, which has less than half the energy intensity of the United States, is finding ways in official studies to triple energy productivity To solve the energy problem, the United States must increase its energy efficiency four- to fivefold, while the developing world grows in such a way that its energy intensity does not increase dramatically, said Steven Chu (Figure 11.2). “The real question is whether the developing countries will follow in the footsteps of the United States, Australia, and Canada,” said Chu. Or will they “leapfrog past the mistakes of the developed world”? The developed world has an obligation to lead the way and to help other nations follow, Chu said. “It is not our birthright to say that we should enjoy a high standard of living and the developing countries should not.” Several speakers pointed out that stabilizing the amount of carbon dioxide in the atmosphere will require that carbon emissions be cut to a very low
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.2 As the per capita gross domestic product of the developing countries increases, carbon dioxide emissions can either rise to the level of the most energy-intensive developed countries (upper curve) or remain at the level (lower curve and dashed straight line) that the developed world needs to reach to avoid dangerous climate change. PPP, purchasing power parity. SOURCE: Based on EIA and UN data plotted by members of the Office of the Chief Scientist, BP plc. GDP per capita data from the World Bank World Development Indicators 2008 database. level—or eliminated entirely—in the United States and many other countries. “Zero [emissions] is the answer,” said Robert Marlay. “Zero is a very inspiring technological goal, which has permeated all the thinking in the R&D agencies. This is what we need to imagine is possible. This is what we need to craft our vision and our programs to do. This is what we are going after.” As John Holdren said, “If you look at how long carbon dioxide stays in the atmosphere, we’re going to have to be very near zero by the end of this century or shortly thereafter if we want the impacts of climate change to be manageable. And we’re not going to avoid all of the impacts. I often say that in the climate challenge, we have only three choices—mitigation, adaptation, and suffering—and we’re already doing some of each. What’s up for grabs is the mix. If we want the suffering to be minimized, we’re going to have to do a whole lot of mitigation and a whole lot of adaptation.”
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The National Academies Summit on America’s Energy Future: Summary of a Meeting Several speakers at the summit described plans that would substantially reduce U.S. emissions of carbon dioxide. This chapter describes two of those plans. Steven Specker presented an analysis done by the Electric Power Research Institute (EPRI) that would reduce carbon dioxide emissions to levels below those for 1990 by the year 2030. Jon Creyts and Ken Ostrowski summarized a McKinsey & Company analysis (2007) that looked at more than 200 options for reducing carbon dioxide emissions. Although neither plan would reduce carbon emissions to anywhere near zero, both would “bend the curve” of U.S. emissions so that they begin to decline rather than continuing to increase. ELECTRICITY TECHNOLOGY IN A CARBON-CONSTRAINED FUTURE In plotting the future of electricity technologies given future constraints on carbon dioxide emissions, EPRI set out to answer three questions: What is the technical potential for reducing U.S. electric sector carbon dioxide emissions? What are the economic impacts of different technology strategies for reducing U.S. electric sector carbon dioxide emissions? What are the key technology challenges for reducing electric sector carbon dioxide emissions? The EPRI analysis focused on the period between now and 2030, since that is the period when technologies will have to be deployed to bend the curve of growing carbon dioxide emissions, Specker said. Using projections from the EIA of carbon dioxide emissions over that period—which were recently modified to reflect the impact of the 2007 energy legislation—the EPRI study looked at the potential of seven technology areas to reduce emissions (Figure 11.3). The first area is efficiency. EPRI set a target of 0.75 percent growth for consumption in the electricity sector until 2030. That target is “aggressive but doable,” said Specker. “If we can do better, that’ll be fantastic, but we think that’s a significant technical challenge.” The best thing about efficiency improvements is that they can be started immediately. “You don’t have to pour concrete. You don’t have to build … new plants. There’s a lot we can do with efficiency right now.” The second area EPRI considered is renewable sources of energy. The EIA has forecast that 60 gigawatts of such power would be available by 2030. The technology challenge set by EPRI is for 100 gigawatts. Together, efficiency improvements and additional sources of renewable energy “get pretty close, at least for a while, to flattening out carbon dioxide emissions in the electricity sector if we can achieve these targets.”
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.3 Emissions of carbon dioxide by the U.S. electric generation sector could drop below 1990 levels by 2030 through the use of seven categories of technologies. NOTE: CCS, carbon capture and sequestration; PHEV, plug-in hybrid electric vehicle; DER, distributed energy resources. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute.
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The National Academies Summit on America’s Energy Future: Summary of a Meeting The third technology challenge is greater use of nuclear energy. Compared with the EIA forecast of 20 gigawatts of new nuclear capacity by 2030, EPRI has set a target of 64 gigawatts of new nuclear power by then. The first new advanced light-water reactors would come on line in 2016. Creating 64 gigawatts of new capacity would require 40 to 45 new advanced light-water reactors by 2030. When new nuclear capacity is added to efficiency and renewables, the curve of carbon dioxide emission starts to bend downward. Advanced coal generation without carbon capture and sequestration is the fourth area. Two opportunities exist in this area. About half of the existing coal plants in the United States have the potential for efficiency improvements of 1 to 3 percent. That’s the “quickest, easiest way to get carbon dioxide reductions in the existing installed base,” Specker said. The second opportunity is to improve the technology of plants through higher temperatures and pressures to get efficiencies as high as 49 percent by 2030. This goal poses “lots of materials challenges,” said Specker, but it is an important component of the overall plan. The EIA reference case does not assume any carbon capture and sequestration because it is based on existing laws and regulations without a price on carbon. EPRI has set a goal of wide-scale deployment of advanced coal with carbon capture and sequestration by 2020—its fifth technological focus—that would require all new coal plants coming on line after 2020 to have up to 90 percent carbon capture and storage. This is “a very daunting technology challenge,” said Specker, “but we think [it is] absolutely essential.” The sixth area is the widespread use of plug-in hybrid electric vehicles, an area in which EPRI has focused considerable attention in recent years. And the seventh and final area is the use of distributed energy resources, mostly solar photovoltaic energy, which could expand significantly in the latter part of the period EPRI considered. With these areas of emphasis, carbon dioxide emissions can be reduced below 1990 levels by 2030, and the curve of increasing emissions can start to bend in the 2012 to 2015 time period, according to the EPRI analysis. “It’s all about efficiency and renewables in these early years,” Specker said. “But that’s not going to be enough to do what we need to do long-term.” The EPRI analysis took a second approach to considering carbon dioxide emissions. It assumed that emissions would be limited in the future and asked how electricity production would have to change given those limits. The scenario considered most thoroughly by EPRI assumed that emissions would be capped from now until 2020 and then be required to decline at 3 percent per year starting in 2020, which would produce a 50 percent reduction in emissions by 2050. It also considered two possible technology scenarios: a full portfolio in which all of the technologies considered earlier meet their assumed targets, and a limited portfolio in which carbon capture plus sequestration does not occur and nuclear capacity remains what it is today (Table 11.1). These are “arbitrary
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The National Academies Summit on America’s Energy Future: Summary of a Meeting TABLE 11.1 Comparison of Two Possible Technology Scenarios Full Portfolio Limited Portfolio Supply Side Carbon capture and storage Available Unavailable New nuclear Production can expand Existing production levels ~100 GW Renewables Costs decline Costs decline more slowly New coal and gas Improvements Improvements Demand Side Plug-in hybrid electric vehicles Available Unavailable End-use efficiency Accelerated improvements Improvements NOTE: The full technology portfolio assumes that all technologies meet their development objectives, while a limited portfolio assumes slower progress. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute. assumptions,” said Specker, designed to “understand the role of nuclear and coal with and without those resources in the future.” In the full technology portfolio, coal without carbon capture and sequestration phases out by 2040 and is replaced by coal with carbon capture and sequestration (Figure 11.4). Natural gas is used more to meet peak electricity demands than as a baseload source of energy. Consumption is reduced somewhat due to higher prices (as shown by the cross-hatched area at the top of the graph). By 2040, according to this plan, the electricity sector is basically decarbonized, according to Specker. “By 2040 we will have caught up with France in the electricity sector,” Specker said, since France already gets most of its electricity from nuclear power and renewable energy sources. “That’s always something to keep in mind as we talk about the daunting challenge of decarbonizing the electricity sector—at least one industrialized country has done it.” The situation is very different with the limited technology portfolio (Figure 11.5). According to EPRI’s model, to meet the same constraints on carbon dioxide emissions, coal has to be largely phased out by 2040. Reliance on natural gas is much increased. Hydroelectric power, wind power, and other renewables play a much larger role. And the consumption of electricity must be significantly decreased. “You basically are forced to reduce electricity demand because you cannot generate electricity in a low-carbon way.” One consequence of such a scenario is that electricity is likely to be much more expensive to dampen demand. Electricity prices could go up an estimated 260 percent to drive down the use of electricity, compared to a 50 percent increase for the full technology portfolio (Figure 11.6). The cost to the U.S. economy of adopting carbon constraints depends on which technologies are developed (Figure 11.7). With the limited technology portfolio (the left-hand bar on Figure 11.7), the cost of the policy, discounted
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.4 The full technology portfolio results in the decarbonization of most of the electricity sector by 2040. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute. through 2050, is about a trillion and a half dollars, according to the EPRI model’s estimates. With the full technology portfolio (the right-hand bar), the cost is about a half trillion dollars. “If we have a carbon dioxide policy in the next few years, which we very likely will, how we then implement that policy with technology is the trillion-dollar question,” Specker said. “Technology is critical to managing the cost of a carbon dioxide policy.” For each of the major areas considered in its analysis, EPRI laid out the key technologies that need to be developed to reduce carbon dioxide emissions. These technologies fell into four categories (Figure 11.8). EPRI has created development and deployment roadmaps for each of these technologies showing what is going on now and what will need to be done at various points in the future, “Everyone is very focused about getting things done,” said Specker. “We have to get on with [meeting] these challenges.” Funding will have to come from the private as well as the public sector. “We’re trying to keep the ball in play and keep it moving forward. That’s the pragmatic approach.”
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.5 The limited technology portfolio would require a substantial decrease in electricity use below the business-as-usual scenario. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute. REDUCING U.S. GREENHOUSE GAS EMISSIONS McKinsey & Company, a business consultancy firm that advises corporations and governments, recently conducted a comprehensive analysis of options to reduce greenhouse gas emissions (McKinsey & Company, 2007). The analysis considered both proven, commercialized technologies and four emerging technologies: carbon capture and sequestration, cellulosic biofuels, plug-in hybrids, and LED lighting. It did not examine more speculative technologies in detail. “It’s not because we don’t believe those will happen,” said Ken Ostrowski. “In fact, we’re quite encouraged, and we know that as the United States and other economies begin to focus on this task more seriously, there will undoubtedly be important breakthroughs. But we focused our analysis only on those that were proven or the four that I mentioned that were emerging.” The project covered seven sectors of the economy: buildings, power, transportation, industry, waste, agriculture, and forestry. Researchers conducted interviews with more than 100 leading authorities and companies. They also
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.6 With the full technology portfolio, the wholesale price of electricity would be much less than with the limited technology portfolio. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute. FIGURE 11.7 The change in gross domestic product through 2050 owing to adoption of carbon dioxide reduction policies becomes substantially smaller as more new energy technologies become available. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute.
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.8 Reducing carbon dioxide emissions will require technological advances in the four key areas shown on the right. The seven categories of contributing technologies (left) are those shown in Figure 11.3. SOURCE: Energy Technology Assessment Center of the Electric Power Research Institute. took advantage of the internal expertise available at the company. An academic panel provided support and guidance, and the overall project was sponsored by seven corporate and environmental organizations, although the report remains an independent report put together by McKinsey & Company. “Essentially, we talked to anybody who had expertise and was open to talk with us,” said Ostrowski. “We tried to make this a very extensive, comprehensive assessment of the state of knowledge.” Using data from the EIA and other organizations, the McKinsey analysts constructed an emissions reference base from the present to the year 2030. In 2005, the United States emitted approximately 7.2 billion metric tons of carbon dioxide. Under a business-as-usual scenario—with an expanding population, a growing economy, and larger homes and businesses containing more appliances—the expected growth to 2030 was 2.5 billion metric tons, to a total of 9.7 billion metric tons in 2030, a 35 percent increase in emissions. This projection is unlikely to be completely accurate, Ostrowski noted. But it provided a defensible baseline against which to measure emissions reductions. Based on that projection, the McKinsey project considered three scenarios. In the low-range case, carbon dioxide emissions are 1.3 billion metric tons less in 2030 than in the baseline case. This figure represents a relatively “uncoordinated response to the challenge that the nation faces,” Ostrowski said. “Some might say that’s the path we’re on today, but this essentially says there are incremental improvements over the course that we would have been on otherwise.” The mid-range case, which would result in a 3-billion-metric-ton reduction in emissions, represents a more concerted and coordinated response. This would be “a fairly aggressive response,” according to Ostrowski, “but still
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The National Academies Summit on America’s Energy Future: Summary of a Meeting we would stop shy … of saying we took every single option to its maximum economic potential.” The high-range case—leading to a reduction of 4.5 billion metric tons—represents a fully committed response. As Ostrowski described it, this case would imply that “we are absolutely serious about carbon, and we’re going to hit every single option that we can to its maximum potential.” The McKinsey report focuses primarily on the mid-range and high-range cases, or a potential abatement of 3 billion to 4.5 billion metric tons. This level is on the order of the reductions called for by various bills that are being discussed in the U.S. Congress. “Only as we get well past our mid-range case and into the aggressive territory do we begin to match the levels that are currently being called for.” The authors of the McKinsey report examined 250 different options for reducing carbon dioxide emissions. They asked how each technology or approach would be developed and commercialized over time, and what level of abatement it could provide. They then aggregated the 250 options into 83 categories and calculated how much abatement each category could provide and the cost of the abatement. The result was a widely reproduced chart (Figure 11.9). The width of each bar on the chart represents the potential abatement attributable to that option in billions of metric tons, with the sum of all the bars about 3 billion metric tons of reduced emissions. “This represents essentially three times the total level of emissions by Germany,” Ostrowski said. “Still, even at this level, we would be short of the levels that are being called for today.” The height of each bar represents the cost of that option, with “cost” being the incremental capital, operating, and maintenance costs relative to what would have been spent under the baseline scenario. “If we decide to build an incremental nuclear plant, we would compare the incremental capital, operating, and maintenance costs of that additional nuclear plant relative to what it displaced, which was likely some combination of a supercritical coal plant and a combined-cycle gas plant.” One obvious aspect of the chart is that the set of abatement options is highly fragmented. The widest band represents about 10 percent of the total abatement. “There is no silver bullet,” Ostrowski said, “and if one of these options does not deliver the full potential, it does not mean that we cannot achieve near the levels that are projected here.” The second obvious aspect of the chart is that some of the bars extend below the line. These represent options that have a positive net impact on the economy. The incremental capital costs are more than offset by the operating and maintenance savings that are realized over the lifetime of that action. For example, a compact fluorescent bulb has a higher initial cost, but the lifetime and energy efficiency of that bulb are so much greater that use of the bulb results in a net savings. Furthermore, when all the options are considered together, the total savings are approximately equal to the total costs.
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.9 Eighty-three options for reducing carbon dioxide emissions could result in almost 3 billion metric tons of emissions reductions with net economic benefits (bars below the line) about equal to net costs (bars above the line). SOURCE: McKinsey & Company (2007).
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The National Academies Summit on America’s Energy Future: Summary of a Meeting “We would achieve 3 billion metric tons of abatement without incremental costs,” Ostrowski said. Jon Creyts pointed to some of the detailed aspects of the opportunity profile. For example, energy efficiency, which is shown primarily on the left side of Figure 11.9, accounts for roughly 40 percent of the total abatement potential. “Once you change out a light bulb, once you change to a different automobile, once you increase the insulation thickness or put on a reflective roof coating, you have essentially created a durable form of energy efficiency that you can count on,” Creyts said. There are a variety of reasons why the options with positive economic benefit are not necessarily easy to implement. For example, a landlord and a tenant may have competing interests, as may a builder and an owner. Automobile ownership is another issue. The average person owns an automobile for between 4 and 5 years and so does not benefit from the full 14- to 15-year lifespan of a typical automobile. A lack of information also may disrupt or prevent capture of some of the benefits. “Often, our work has been taken out of context, and people use it as a way to push forward the notion that this is cheap and easy to do,” Creyts said. “We have said clearly—and we maintain quite clearly—that energy efficiency is very difficult to achieve.” However, Creyts added, compared with the challenge of liquefying carbon dioxide gas coming out of the back end of a power plant, pumping it underground, and keeping it there for thousands of years, efficiency improvements deserve special attention. Ostrowski and Creyts also noted that in many cases policies have to change to enable implementation of emissions-reducing options, and the McKinsey study did not factor in the costs of those policies. “We did not want to prescribe what the policy solution should be,” said Ostrowski. “There are many ways to address this issue, and we’ll leave that up to the policymakers.” The McKinsey study looked at several categories of technologies with substantial abatement potential (Figure 11.10). In each case, it evaluated the potential under the low-range, mid-range, and high-range cases. For example, with carbon capture and sequestration, the projections started at zero in 2005, with succeedingly higher adoption in each case. In addition, within these categories substantial potential exists for emissions reductions with net benefits to the economy (Figures 11.11 through 11.15). Ostrowski and Creyts noted that where an option falls on the curve—thus representing its net cost—often depends on the sequencing of events. For example, the rate at which the electric grid or transportation are decarbonized influences a variety of energy efficiency options, such as the use of plug-in hybrids. Also, efficiency improvements could postpone the need to build additional generating capacity until more efficient power plants are developed. If plant construction was delayed, as much as $300 billion of additional investment in generating capacity could be avoided. “If we aren’t able to capture that energy efficiency early, we may very well wind up building that additional $300 billion and then idling that capacity in the longer run,” said Creyts.
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.10 Six categories of advanced technologies could produce low-, medium-, and high-range emissions reductions. SOURCE: McKinsey & Company (2007). For the mid-range case, the McKinsey study estimates that the up-front capital costs to the economy would be about $1.4 trillion. This amount is only about 1.8 percent of the total real capital investment in the economy over this period, Creyts noted. But it is concentrated in certain sectors of the economy. For example, $560 billion of that investment is within the power sector, which represents “a massive recapitalization of the power sector.” Similarly, transportation will have to undergo a significant recapitalization. Investments in emissions-reducing technologies would have substantial impacts on the energy-producing sector, Creyts observed. Conventional coal-powered energy production would decline substantially, with an increase in carbon capture and sequestration. Energy from renewable sources would increase. Counterintuitively, the use of natural gas declines quite significantly from its current role, which creates a catch 22 for the electricity industry. “If we are unable to capture energy efficiency in the near term, we would wind up building out that gas asset base and wind up essentially idling it in the long-term because gas would compete fundamentally at the margin with renewable power,” said Creyts. “That could lead to a large amount of stranded assets here in the United States.”
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.11 Improvements in buildings and appliances offer many options with net benefits to the economy. SOURCE: McKinsey & Company (2007). FIGURE 11.12 Vehicle fuel economy and lower-carbon fuels will be essential to reduce transportation emissions. SOURCE: McKinsey & Company (2007).
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.13 Options in industry and the waste sector are highly fragmented. SOURCE: McKinsey & Company (2007). FIGURE 11.14 Terrestrial carbon sinks offer substantial abatement potential at moderate cost. SOURCE: McKinsey & Company (2007).
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The National Academies Summit on America’s Energy Future: Summary of a Meeting FIGURE 11.15 Electric power generation offers large but higher-cost abatement potential. SOURCE: McKinsey & Company (2007).