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24
Energy Supply Systems

Energy supply can come from a wide variety of systems. Since most of them are discussed extensively in the technical literature, the panel does not attempt here to provide a comprehensive review. Rather, the panel indicates the range of possible energy supply systems in the United States and their implications for greenhouse gas emissions at the current time. The panel leaves to more specialized analyses the detailed consideration of system design and selection. Projections as to the cost and path of technological development of various energy supply systems in the future are not attempted, but are discussed generally in terms of their relevance to greenhouse warming.

Our energy supply is currently obtained in basically three ways: (1) combustion of fossil fuels such as oil, natural gas, and coal; (2) nuclear fission; and (3) other nonfossil-fuel-based sources such as biomass and hydroelectric power. The level at which we use each of these primary energy sources has a major impact on greenhouse gas emissions, primarily because of the differing levels of CO2 that these sources introduce into the atmosphere.

It is particularly relevant to examine how fossil fuels are used since they are currently our principal source of energy. One estimate of the carbon contained in fossil fuels, and hence of the potential for mankind to alter the CO2 concentration of the atmosphere, is given in Table 24.1 (Fulkerson et al., 1989). The atmosphere currently contains about 750 Gt of carbon as CO21Figure 24.1 documents the course of fossil fuel burning over the last 30 years and the simultaneous increase in the mass of atmospheric CO2.

The mass of carbon in the recoverable resources of conventional oil and natural gas (250 Gt C, see Table 24.1) is notably smaller than the mass of carbon in the atmosphere (750 Gt C, where 1 ppmv of CO2 in the atmosphere is equal to 2.13 Gt C). Consequently, the CO2 doubling so often



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Page 330 24 Energy Supply Systems Energy supply can come from a wide variety of systems. Since most of them are discussed extensively in the technical literature, the panel does not attempt here to provide a comprehensive review. Rather, the panel indicates the range of possible energy supply systems in the United States and their implications for greenhouse gas emissions at the current time. The panel leaves to more specialized analyses the detailed consideration of system design and selection. Projections as to the cost and path of technological development of various energy supply systems in the future are not attempted, but are discussed generally in terms of their relevance to greenhouse warming. Our energy supply is currently obtained in basically three ways: (1) combustion of fossil fuels such as oil, natural gas, and coal; (2) nuclear fission; and (3) other nonfossil-fuel-based sources such as biomass and hydroelectric power. The level at which we use each of these primary energy sources has a major impact on greenhouse gas emissions, primarily because of the differing levels of CO2 that these sources introduce into the atmosphere. It is particularly relevant to examine how fossil fuels are used since they are currently our principal source of energy. One estimate of the carbon contained in fossil fuels, and hence of the potential for mankind to alter the CO2 concentration of the atmosphere, is given in Table 24.1 (Fulkerson et al., 1989). The atmosphere currently contains about 750 Gt of carbon as CO21Figure 24.1 documents the course of fossil fuel burning over the last 30 years and the simultaneous increase in the mass of atmospheric CO2. The mass of carbon in the recoverable resources of conventional oil and natural gas (250 Gt C, see Table 24.1) is notably smaller than the mass of carbon in the atmosphere (750 Gt C, where 1 ppmv of CO2 in the atmosphere is equal to 2.13 Gt C). Consequently, the CO2 doubling so often

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Page 331 TABLE 24.1 Estimated Remaining Recoverable World Resources of Fossil Fuels and Their Potential Effect on Atmospheric CO2       Energy Content Carbon Content CO2 Concentration Increase (ppmv) Fuel Quantity (1018 Btu) (Gt) ƒ=0.4 ƒ=0.55 ƒ=0.7 Oil 1.25 × 1012 barrels 7 130 24 34 43     (0.2 × 1012 m3)           Natural Gas 8,200 TCF 8 120 23 31 39     (232 × 1012 m3)           Coal 5,500 Gt 153 3,850 723 994 1,265   TOTAL (rounded off) 168 4,100 770 1,060 1,350 NOTE: Abbreviations: ppmv = parts per million by volume, TCF = trillion cubic feet, and ƒ = fraction of CO2 retained in the atmosphere. In addition to these amounts of carbon, comparable or larger amounts may be available in other fossil resources such as heavy oils, oil shale, tar sand, and lower grades of coal. Thus the quantity of carbon ultimately released to the atmosphere as CO2 could conceivably be 1.5 to 2 times the total shown in the table. SOURCE: Fulkerson et al. (1989). image FIGURE 24.1 Cumulative emissions of CO2 from fossil fuel burning since 1959 and observed increases in the atmosphere at Mauna Loa. SOURCES: Data are from Keeling et al. (1989); Marland (1990).

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Page 332 examined in climate models could not be accomplished even if all of the conventional oil and gas were burned. The world recoverable resources of coal, on the other hand, are very large. Over the long term, if mankind is to produce perturbations of atmospheric CO2 up to and beyond a doubling, it will be because of the oxidation of large quantities of coal and low-grade, unconventional fuels such as oil shale. Estimates of ultimately recoverable resources are, of course, very uncertain. As currently understood, world recoverable resources of coal are heavily concentrated in three large northern hemisphere nations: the United States, the former USSR, and the People's Republic of China. These three nations contain an estimated 87 percent of world recoverable resources of coal. As primary sources of usable energy, fossil fuels release heat through the exothermic reaction of atmospheric oxygen with the carbon and hydrogen of fuel. The consequent release of CO2 is fundamentally different from many traditional pollutant releases in which a low grade (e.g., trace metal) or otherwise unintended (e.g., CO or SO2) by-product is released to the environment or a purposeful product reaches beyond its intended application (e.g., pesticides). The emission of CO2 is an essential consequence of burning fossil fuels. Largely because the carbon to hydrogen ratios of fossil fuels differ, their rate of CO2 production per unit of useful energy differs. Natural gas is principally CH4, with a 1:4 ratio of carbon to hydrogen, and it releases 13.8 kg C per gigajoule (GJ). Although coal has a wide range of chemical compositions, it contains less hydrogen than natural gas, and to a first approximation the heating value varies with the carbon content. The value 24.1 kg C/GJ can be used to estimate the CO2 release on combustion for most coals, although for very low grade coals this ratio increases slightly. Liquid petroleum products fall somewhere in between natural gas and coal. The CO2 release for average world crude oil (and hence the average for a mixture for all products) can be taken at about 19.9 kg C/GJ. For a discrete refined product, the value differs: for example, 18.5 is appropriate for automotive gasoline (Marland, 1983). While CO2 can be intimately and accurately related to fossil fuel combustion, there are other, less well characterized, greenhouse gas emissions from the fossil fuel cycle. The production, processing, and distribution of natural gas inevitably allow some CH4 to escape to the atmosphere, and the natural gas that is associated with petroleum production can result in venting (as CH4) or flaring (to produce CO2). Methane also exists dispersed in coal seams and is generally released to the atmosphere during coal mining. Nitrous oxide (N2O) emissions from fossil fuel combustion may be very small. Recent studies (Muzio et al., 1989) have cast doubt on all earlier measurements, and it is not now clear how much N2O is released during combustion processes. (Note that N2O is different from the more common oxides of nitrogen (NOx)—NO and NO2—associated with fuel combustion.)

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Page 333 Recent Trends An initial step in looking at recent trends is to review the sources of the U.S. energy supply, and these are shown in Figure 24.2. Oil is the largest source of energy supply at 41 percent, and coal is second at 23 percent. Renewables account for 8 percent, with hydropower providing almost half image FIGURE 24.2 National energy supplies and the renewable contributions. SOURCE: Solar Energy Research Institute (1990).

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Page 334 of that. Biomass used in the industrial, buildings, and electricity sectors provides roughly the same amount of energy as hydropower. Very little energy currently comes from solar, wind, geothermal, or other sources of renewable energy (Solar Energy Research Institute, 1990). Table 24.2 shows electricity generation and the carbon emissions from generation in the United States in 1988. Coal is the largest generation source of U.S. electricity at 57 percent, with nuclear second at 19.5 percent. Renewables represent only a small portion of U.S. electric power generation. Electricity generation in the United States is responsible for approximately 35 percent of U.S. CO2 emissions and 8 percent of worldwide anthropogenic CO2 emissions (Edmonds et al., 1989). To contrast the various energy systems and their greenhouse gas implications, it is necessary to inventory full fuel cycle costs. For a gasoline-powered automobile, for example, CO2 emissions are not simply those discharged from the engine but also those CO2 (and other trace gas) emissions discharged during petroleum exploration, production, refining, and product distribution. Although there are many difficulties in detail with using a CO2 accounting, in theory comparisons can be made. One estimate is that for every direct use of liquid fuel, CO2 emissions equivalent to those that would result from the use of an additional 11.8 percent of petroleum products are produced in activities upstream from the final products at the refinery. Under this accounting system, these greenhouse gas emissions should be charged TABLE 24.2 Electric Power Generation in the United States, 1988 Fuel Carbon Emissions (Million tons)a Generation (Bk Wh)b Percentage of Generation Coal (758 × 106 short tons) 398 (85%) 1,538 57.0 Oil (248 × 106 barrels) 31 (7%) 149 5.5 Gas (2634 billion ft3) 39 (8%) 252 9.3 Nuclear — 526 19.5 Hydroelectric — 223 8.3 Renewables Negligible 12 0.4   TOTAL 468 2,700 100.0 aThese are net emissions at the point of power generation and do not include emissions related to system capital or other portions of the fuel cycle. The assumption is made that biomass fuels are raised in a sustainable manner so that combustion releases are balanced by photosynthetic capture. Tons are metric. bBk Wh = billion kilowatt-hours. SOURCE: National Research Council (1990).

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Page 335 at the point of product use. Similar values for natural gas and coal are less well established but have been estimated at 18.8 percent for gas delivered to the customer and 2.2 percent for coal at the minehead (Marland, 1983). In the 1987 global economy, 95 percent of total commercial energy (energy that is traded in commercial markets but not including ''traditional fuels" such as wood) was produced from fossil fuels. This varied from virtually 100 percent in some resource-poor countries largely dependent on imported petroleum, to 62 percent for France (where 77 percent of electricity is from nuclear plants) and 29 percent for Norway (where hydroelectric plants contribute a large fraction of the total energy). The value was 89 percent in the United States. (These fractions are based on numbers from the United Nations, but they count nuclear power and hydroelectricity at their conventional fuel equivalents by assuming fuels could be converted to electricity at a 33 percent net plant conversion efficiency.) On the global scale, petroleum contributes the largest share (44 percent) of the energy from fossil fuels, with coal (32 percent) and natural gas (24 percent) following, but coal is the dominant fuel in a number of countries (China, India, and the former German Democratic Republic). In the United States, 83 percent of coal is used in electric power plants and another 5 percent is used in the iron and steel industry (Organization for Economic Cooperation and Development, 1987). The transportation sector is the largest user of petroleum in the United States (62 percent), with the remainder spread over many applications, including nonfuel applications (some of which do not emit greenhouse gases). Twenty-five percent of U.S. natural gas is used in residences, with another 17 percent used for electric power generation and the remainder scattered throughout the commercial and industrial sectors (U.S. Department of Energy, 1988). Emission Control Methods A number of alternatives are available for reducing net greenhouse gas emissions from the production of energy. In this chapter, the discussion is divided into two major topics. Energy supply systems purely for electricity generation are discussed first. Then energy supply systems on a broader basis are examined. Some examples of existing efficient energy systems are given, and a concept called integrated energy systems is discussed. The relevance of new fuel supply and conversion options is treated in this context. Following the descriptions of the technical options, a separate section illustrates how the cost-effectiveness of different options can be compared. Because of the number and complexity of options available, it is not possible to make this discussion comprehensive and all-inclusive. Rather the attempt here is to convey a picture of the technological options available and the methodology employed.

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Page 336 Electricity Generation Electricity can be generated from coal, oil, natural gas, nuclear energy, and a variety of renewable forms of energy including hydraulic resources, wind, geothermal, solar thermal, and solar photovoltaic energy. With the exception of oil, each is discussed below. Although oil historically has been used for power generation in some regions of the United States (principally in the Northeast), its use has declined dramatically in the past decade and no significant increase is foreseen. The primary use of oil for electricity and steam generation in the United States is in the industrial sector, which is discussed in Chapter 22. The power generation technology options discussed below for coal and natural gas also are applicable to oil in many instances. Coal Coal is the most abundant fossil fuel resource in the United States and is the principal fuel powering the economies of several other nations including China and the former USSR. Coal is used primarily for electric power generation, but also for industrial process heat and, in some cases (mostly in developing countries), domestic heating and cooking. Barring severe environmental repercussions, coal is likely to continue to be a major energy source for power generation and other energy needs well into the twenty-first century. From the point of view of greenhouse gas emissions, the principal issues are the quantities of coal that will be used and the efficiency of coal combustion and energy conversion. Conventional pulverized-coal-fired power plants now being built are capable of overall thermal efficiencies (the efficiency with which coal is converted to electricity) of about 38 percent without scrubbers (the SO2 removal systems that reduce emissions of acid rain precursors but also reduce net power plant efficiency). The average for all coal-fired power plants now in place in the United States, however, is about 33 percent (U.S. Department of Energy, 1989). Several technological developments hold promise for continued improvement in coal-based electric power generation (Rubin, 1989). Table 24.3 summarizes performance estimates by the Electric Power Research Institute (EPRI) for several power generation options, which range from improvements in current technology to newer systems not yet commercially demonstrated (Electric Power Research Institute, 1986). Overall, efficiency improvements on the order of 10 percent or more are expected from technological advances over the next decade. The most promising near-term options include integrated gasification combined cycle (IGCC) systems and pressurized fluidized-bed combustion (PFBC) systems. The latter technology is planned for demonstration in the United States

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Page 337 TABLE 24.3 Efficiency of Coal-Based Power Generation Systems Technology Heat Rate (Btu/kWh)a Conventional coal-steam with wet limestone flue gas desulfurization:     Supercritical boiler 9,660   Subcritical boiler 10,060 Advanced pulverized coal-steam with flue gas desulfurization 8,830 Atmospheric fluidized-bed 10,000 Pressurized fluidized-bed combined cycle 8,980 Coal gasification combined cycle:     Current turbine 9,775   Advanced turbine 9,280 Gasification fuel cell combined cycle 7,130 Gasification combined cycle methanol co-product 12,875 aThe annual average heat rate, which is a reciprocal of efficiency, is the performance measure most commonly used for utility systems. Data are for an Illinois bituminous coal and a plant size of approximately 500 MW. SOURCE: EPRI (1986). under the Department of Energy's (DOE's) Clean Coal Technology Program, and other PFBC demonstration plants are being constructed in Europe. Integrated gasification combined cycle technology has been demonstrated at the 100-MW scale at the Cool Water Facility operated by Southern California Edison. Although a number of U.S. utilities are studying the feasibility of building additional IGCC capacity, that technology in most cases is not yet economically competitive with conventional pulverized coal combustion. Advanced IGCC designs employing the concept of "hot gas cleanup" (i.e., removing pollutants without having first to cool the flue gas) hold promise of greater efficiency gains and lower cost (Bajura, 1989). Such technologies are currently under development. In the near term, boiler repowering, in which an older existing unit is replaced with a more efficient new one, is another method by which the overall efficiency of coal utilization can be improved. In this type of application, atmospheric fluidized-bed combustion (AFBC) units may be attractive because of their compact size and fuel versatility. Several repowering projects are now under way in the United States using AFBC boilers.

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Page 338 As mentioned above, a negative impact on CO2 emission can result from the flue gas desulfurization (FGD) systems, or "scrubbers," used to remove SO2. Because the energy needed to operate the scrubber reduces overall power plant efficiency, CO2 emissions per unit of useful electricity increase proportionately. Modern FGD systems require only 1 to 2 percent of the power plant output for operation, down by a factor of 2 from systems built in the early 1980s. This improvement has resulted from more efficient scrubber designs and the elimination of stack gas reheat systems. Fluidized-bed combustion systems have a comparable loss of thermal energy when limestone is used for SO2 control. The SO2 removal systems using lime or limestone reagents (whether in scrubbers or fluidized beds) release additional CO2 directly through the chemistry of sulfur removal. This additional CO2 stream is small, however, in comparison with the CO2 emissions from coal combustion. There are small differences in CO2 emissions due to differences in coal quality. In general, coals with higher sulfur content emit less CO2 per unit of energy, complicating any policy designed to reduce both CO2 and SO2 emissions. High-rank bituminous coals produce 5 to 10 percent less CO2 than do lower-rank subbituminous and lignite coals (Winschel, 1990); however, most coals actually burned at the present time fall within a narrower range of 2 to 3 percent. Thus the differences in CO2 emissions resulting from the combustion of different coal types are roughly the same order of magnitude as the reductions anticipated from near-term combustion efficiency improvements. For the immediate future, perhaps the most cost-effective means of CO2 reduction from existing coal-fired power plants lies in heat rate (efficiency) improvements achievable by improved plant maintenance and operation. EPRI estimates that such measures could result in a 2 to 4 percent reduction in current CO2 emissions at a very small cost (Gluckman, 1990). The resulting efficiency improvements have the potential for saving roughly 2 to 4 percent in fuel consumption, offsetting the small costs that are incurred (and perhaps even generating net additional revenues and thus yielding a net negative cost of CO2 abatement). Heat rate improvements are actively being pursued by many utilities today. Finally, future developments for coal-fired power plants conceivably could include control technology for the removal of CO2 from flue gases. This option, which could apply generally to fossil fuels, is discussed later in this chapter. Natural Gas As pointed out previously, the combustion of natural gas emits less CO2 than the combustion of coal because of the higher ratio of hydrogen to

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Page 339 carbon. There are a number of ways natural gas can be used in place of coal for electricity generation. Combined Cycle Systems In a gas turbine combined cycle (GTCC) system, the exhaust from a gas turbine is fed into a residual heat boiler that generates steam for a bottoming steam turbine cycle. If natural gas is used to fuel the gas turbine, the overall efficiency of the system can be slightly more than 50 percent. The capital cost of such a system is about $500/kW. Combined cycle systems have not been considered a serious option in the planning of future power generation until very recently, largely because of the uncertainty in the availability of natural gas and the poor reliability of GTCC systems in the past. The latter was not due to inherent technical barriers but to a lack of attention from the industry. Two recent events changed the situation. First, EPRI, in cooperation with Southern California Edison and Texaco, proposed the organization of a consortium to develop a $300 million IGCC system—the Cool Water project. For the first time, the issue of the reliability of combined cycle systems received serious attention. Second, Japan, in an effort to diversify energy sources, ordered several gigawatts of combined cycle systems to use liquefied natural gas. Further, as discussed in a number of reports (e.g., Tabors and Flagg, 1986), GTCC is competitive economically with alternative forms of energy supply. The attractiveness of GTCCs, therefore, has been broadly recognized both in its economics and in its potential contribution to the reduction of greenhouse gases. Other Natural Gas Options One of the most difficult issues in the global greenhouse warming problem is how developing nations can participate in mitigation efforts without damaging their economic development. Some of these nations might require options with capital costs even lower than those of GTCC. Steam injection in aircraft-type gas turbines might be an option to consider, even though the efficiency may be slightly lower (Williams, 1989). For small plants, El-Masri (1988) has proposed a regenerative system that is attractive from the viewpoints of both cost and efficiency. This system has not yet been tried, but the technical and economic basis is sufficiently sound to warrant consideration. In addition, the Kalina cycle, a type of steam cycle used in conjunction with a natural gas turbine, can have an efficiency of more than 55 percent with today's commercial gas turbines (Exergy Inc., 1989). Nuclear Energy Apart from the CO2 emitted in the exploration, production, and enrichment of uranium, nuclear plants do not emit CO2. Reactors based on nuclear fission have operated for many years and provide a significant contribution

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Page 340 to the production of electric power in many countries of the world—19 percent in the United States. In the United States, however, the nuclear reactor market is, for all practical purposes, moribund, in spite of industry's efforts to reactivate it. There are five concerns: • safety, • economics, • waste disposal, • proliferation, and • resources, The lack of acceptance of nuclear power in the United States is a complex issue. Utilities are no longer willing to order new nuclear plants, principally because of economics and perceived financial risk. The unattractive economics of nuclear energy is due to a host of problems. Another concern is the current lack of radioactive waste disposal facilities in the United States. Utility companies argue that the present generation of reactors is safe enough and can be improved further by the ongoing development work on advanced light water reactors both in and outside the United States. Nonetheless, passively safe reactors have been proposed by others as alternatives. By definition, a passively safe reactor requires no action by any component or subsystem to prevent an accident. This is different from the "defense in depth" concept of present reactors, in which, if there is a malfunction, other systems will intervene. However, whether any specific reactor technology is passively safe is often a subject for debate. Appendix G provides a description of some of the proposed new technologies. These descriptions are not intended to be a comprehensive and critical analysis of the technological options for future development of nuclear power nor an endorsement of particular technologies. Such an analysis will be provided in a forthcoming report by a committee of the National Research Council's Energy Engineering Board. Proliferation may be the ultimate problem of nuclear energy. There will always be the fear that an irresponsible party may develop a nuclear weapon capability with the help of plutonium from recycled power reactor fuel. Proliferation is an international issue. Whether greenhouse warming will stimulate a new international cooperative effort on proliferation, only time will tell. A long-term commitment to nuclear power would also confront the resource issue. Is there enough uranium for nuclear energy to have a significant impact? To give some perspective on this issue, Weinberg (1989) proposed the following assumptions: • In the year 2040 the world will require 500 quads of energy (the current figure is 300 quads); 2

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Page 365 (Table 24.6 continued from page 364)   Infrastructural Integration of bio-derived gas into existing gas delivery systems Demonstration and tax credits     Lack of developer/architect interest Design guides and technical transfer   Perceptual/infrastructural Lack of awareness (public or developers) Technical transfer   Perceptual Consumer preferences and aesthetics Education, technical transfer Facilitators       Storage Regulatory Difficulty in siting or developing hydro storage Same as for hydropower   Financial Long lead time development mean high risk Develop improved tools for licensing Transmission Infrastructural/perceptual Need access to transmission and distribution systems Policy decisions regarding access; development and technical transfer of tools and procedures; education Wind Regulatory Capacity value Analyses to develop equitable approaches (continued on page 366)

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Page 366 (Table 24.6 continued from page 365) Sector/Technology Category Constraint Opportunity     Land use issues Public education   Financial High front-end costs Financial incentives on energy supply   Infrastructural/regulatory Lack of utility participation Allow utility ownership under PURPA SOURCE: SERI (1990).

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Page 367 • Hydropower facilities are licensed and relicensed under the Energy Policy and Conservation Act. • Siting of waste-to-energy facilities in municipalities is problematic. Financial • Capital markets generally perceive the deployment of emerging technologies as involving more risk than established technologies. The higher the perceived risk, the higher is the rate of return demanded on the capital. • The perceived length and difficulty of the permitting process are an additional determinant of risk. • The high front-end financing requirements of many renewable technologies often present additional cost-recovery risks for which capital markets demand a premium. Infrastructural • Fragmentation and lack of standardization in the building construction industry can hinder the adoption of many cost-effective solar buildings technologies. • The existing automobile production and gasoline marketing and delivery infrastructure may retard development and integration of biomas-derived alternative fuels. • The longer-term biofuels contribution may be limited if sufficient land and resources are not devoted to appropriate biomass production, unless the production of biofuels becomes attractive to farmers. Perceptual • Aesthetic problems exist, such as the visual impact of a large ''farm," or array of wind turbines, or residential active solar heating systems. • Environmental issues, such as the damming of wild rivers and streams for hydropower development or effluents from waste-to-energy plants, are problematic. Also listed in Table 24.6 are opportunities for overcoming these barriers. Policy Options In Chapter 21, one potential supply-side option, least-cost utility planning (LCUP), was discussed as a policy option for conservation. Additional supply-side options that should be evaluated include • regulatory and economic incentives to increase the capital turnover rate. • carbon or greenhouse gas taxes, and • technology or emission standards (U.S. Department of Energy, 1989). The capital turnover rate can be increased through a number of actions.

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Page 368 including allowing accelerated depreciation for investments in new generating equipment; revising rate-of-return regulations to change the risk distributing for investing in generating capacity; and expedited siting, permitting, and certification procedures. Economic incentives such as accelerated depreciation reduce the present value of capital costs and encourage investment in new capital. The actions would likely reduce federal revenue. An alternative would be to change present rate-of-return regulations to reduce the present risk burden to utility shareholders. The question here, however, is how to guard ratepayers from opportunistic exploitation by shareholders. Another regulatory improvement change might be to streamline the permitting process (U.S. Department of Energy, 1989). A carbon or greenhouse gas emission tax is a direct and flexible market incentive. A disadvantage is that setting an appropriate emission tax rate is not a simple task, and there are many problems with unilateral adoption of such taxes. There is little practical experience with emission taxes in the United States, and they have been unpopular politically because some view them as "licenses to pollute" and their effectiveness is uncertain. A disadvantage of applying the tax to the utility is related to who pays the tax. If the tax is paid by the ratepayers, there may be a stimulus to reduce energy consumption, but it might have no effect on the utility's incentive to switch fuels, improve efficiency, or invest in technologies with lower emissions (and vice versa). If a tax were targeted toward electricity only, other forms of energy (with potentially equivalent greenhouse gas emissions) might be encouraged to fill the gap (U.S. Department of Energy, 1989). This option is discussed more fully in Chapter 21. Technology or emission standards are a third alternative. Although emission and technology standards for SO2 and NOx are in place today, CO2 technology standards beyond efficiency requirements are much harder to envision (U.S. Department of Energy, 1989). Standards or limits may be based on unrealistic expectations of the potential of these technologies. If a commercial-scale experiment began immediately, it would probably still take 10 to 15 years to set the standards or limits, and it would take even longer for these regulations to have any impact on greenhouse gas emissions. The advantage of this method is that standards are a simple and direct method of reaching emission goals if they can be monitored and enforced (U.S. Department of Energy, 1989). However, standards can become obsolete because of technological changes, and the slowness in changing standards can impede progress. Other Benefits and Costs Although there are many costs associated with changing the energy supply strategy of the nation, there are a variety of benefits. First, with the

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Page 369 United States continuing to increase the amount of energy it imports, development of alternative domestic sources of energy would improve energy security. Second, actions to change to alternative sources of energy may help other environmental problems such as air and water pollution. Third, if renewable sources can be tapped, their capacity is very large and may resolve future problems of diminishing worldwide supplies of oil and gas. One concern with the analysis presented here is that the cost and benefits calculated are not "full cycle"; that is, it does not include the costs and benefits from production to consumption of the energy. For example, there are important questions even within the greenhouse gas discussion. Methane leakage could increase if natural gas consumption increased. The rate of this leakage is very uncertain, and better information on the leakage rate in existing natural gas systems is needed. Methane emissions from coal mining also constitute a factor to be considered. The costs beyond actual implementation costs in the energy sector are tremendous and difficult to enumerate. For example, a massive reduction in coal consumption could create major economic dislocations in coal mining areas and the rail transport sector. Past experience with attempts to reduce SO2 emissions under the Clean Air Act illustrates the potential distributional costs of such an effort. Research and Development Needs A recent study by the Alternative Energy Committee of the National Research Council's Energy Engineering Board entitled Confronting Climate Change: Strategies for Energy Research and Development offers a number of recommendations as to where energy research and development funds should be spent (National Research Council, 1990). A number of actions recommended by the Alternative Energy Committee under its "focused research and development strategy" are summarized below: Fossil Energy • Increase the efficiency of fossil generating equipment by using currently available, high-efficiency options such as the gas turbine/steam turbine combined cycle. • Develop substantial improvements in the combined cycle and other advanced gas-turbine-based technologies for firing with natural gas or a gaseous fuel derived from biomass. • Achieve economic recovery of gas from known domestic reserves. • Improve reservoir characterization through basic geoscience research to enable future resource recovery. • Define greenhouse gas emissions as one criterion in evaluating new approaches to coal combustion.

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Page 370 Nuclear Energy • Determine through social science research the conditions under which nuclear options would be publicly acceptable in the United States. • Conduct an international study to establish criteria for globally acceptable nuclear reactors. Conservation and Renewable Energy Utility Systems • Provide research, development, and demonstration support to new and improved technology for electric storage, and for alternating current and direct current system components. • Develop an efficient, flexible, and reliable network to operate the electric power system in the most environmentally acceptable way. Photovoltaics • Accelerate research and development on materials and module manufacturing to increase efficiency and reduce costs of photovoltaic systems. Biomass and Biofuel Systems • Expand through basic research the understanding of the mechanisms of photosynthesis and genetic factors that influence plant growth. • Perform systems analyses to define and prioritize infrastructure requirements with expanded use of biomass-derived fuels. • Assess the potential environmental impacts of biomass production (e.g., through silviculture), including impacts on biodiversity and the availability of water resources. The Alternative Energy Committee believes that these research and development activities would need to be supplemented by government actions to stimulate the adoption of these technologies and processes. The Alternative Energy Committee also discusses an "insurance strategy" to pursue research and development in energy systems that would be viable only in the presence of concerns about global climate change. These technologies, according to the committee, are not cost-competitive today and may never be feasible without federal support of research and development and market intervention. These strategies include the following: Fossil Fuel • Fund an exploratory study to ascertain if there are viable approaches (economically and environmentally) for removing and sequestering CO2. Nuclear Energy • On the strength of public acceptability and global reactor studies performed under the focused research and development strategy, fund an industry-led or industry-managed program to develop and demonstrate an advanced reactor.

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Page 371 Conservation and Renewable Energy • Stimulate production (at the rate of about 10 MW/yr each) of the three to five most promising photovoltaic technologies; the same should be done in the areas of solar thermal and wind energy conversion. • Demonstrate "new" projected storage systems such as compressed gas, battery arrays, and superconducting magnets. • Develop approaches for federal cost-sharing and utility procurements of renewable energy technologies or of electricity generated by them. Such financing mechanisms should enable manufacturers to compete in niche markets (both domestic and export) to sustain production at levels sufficient to determine the ultimate potential of the technologies. • Develop and demonstrate photovoltaic electricity resources for buildings, including lighting and water heating Biomass and Biofuels System • Develop and demonstrate promising biomass-to-fuel conversion processes, particularly for cellulose and hemicellulose. • Select and demonstrate on a large scale the use of improved plant species to enhance biomass production. • Develop strategies to mitigate the environmental impacts of large-scale use of biomass. Although one might argue about these details, they are beyond the scope of this inquiry and the panel finds general accord with these earlier National Research Council recommendations. In addition, as mentioned earlier, another report, forthcoming from the National Research Council, will focus on nuclear energy. The challenge is to develop a range of options for providing energy with maximum efficiency and minimum greenhouse gas emissions so that society can respond as it evaluates the threat of greenhouse warming. Conclusions After reviewing the various methods by which energy can be supplied and the interaction of the entire energy system, the Mitigation Panel has come to the following conclusions: • Coal is likely to remain a major source of energy for many years. Therefore efforts to improve the efficiency with which coal is burned (as well as improving end-use efficiency, as described in Chapter 21) should be pursued. This includes the development of more efficient combined cycle systems. • Natural gas can potentially replace some coal use in the near term, but concerns for availability of the supply remain. • Nuclear fission can potentially replace some coal use. However, concerns about safety, economics, waste disposal, proliferation, and resources have resulted in a lack of acceptance. To what extent the concern about greenhouse warming will induce a fresh look at the possibilities of developing "passively safe" nuclear plants and eliminating long-lived radioactive waste is not clear at this time. What is clear, however, is that research and development efforts on alternative reactor concepts should continue. Although nuclear fusion is still far in the future, research and development should proceed.

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Page 372 • Hydroelectric, wind, and geothermal energy represent a limited potential energy supply because of resource constraints. • Solar photovoltaics constitute another potential source of energy. A number of advances need to be made before the cost of photovoltaics is close to present energy prices, and storage problems still remain to be solved. To the extent that these problems are solved, solar energy can usefully replace a portion of the U.S. energy supply. • Fuels from other solar energy technologies (including direct heat) and biomass offer potential, but advances—both technical and economic—must still be made. • Carbon dioxide sequestration is a potentially viable option, but CO2 disposal is problematic. Further inquiry seems appropriate. • The many actors involved in energy supply, the low capital turnover rate, and the long lead times are major barriers to the implementation of new energy supply options. • Social and economic costs of energy systems that are not internalized should become more important considerations in evaluating future energy supply systems. Notes 1. Throughout this report, tons (t) are metric; 1 Mt = 1 megaton = 1 million tons; and 1 Gt = 1 gigaton = 1 billion tons. 2. 1 quad = 1 quadrillion (1015) British thermal units (Btu). 3. 1 EJ = 1 exajoule = 1018 joules. References Baes, C. F., Jr., S. E. Beall, D. W. Lee, and G. Marland. 1980. Options for the Collection and Disposal of Carbon Dioxide. Report ORNL-5657. Oak Ridge, Tenn.: Oak Ridge National Laboratory. Bajura, R. A. 1989. Gasification and gas stream cleanup overview. In Proceedings of the Ninth Annual Contractors Review Meeting. Report DOE/METC-89/6107, Volume 1. Washington, D.C.: U.S. Department of Energy. Blok, K., C. A. Hendriks, and W. C. Turkenburg. 1990. The role of carbon dioxide removal in the reduction of the greenhouse effect. In Proceedings of an Experts'

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