Public Power - October 2008 - (Page 19)

Today Petroleum gas and, instead, planned to meet meeting the carbon emission targets 2% their capacity requirements and would affect natural gas use. Hydro future load growth with coalWithout Lieberman-Warner, in 7% Nuclear fired capacity. But now comes a business-as-usual scenario, the 19% a new wrinkle: carbon regulaEPA projected coal use would tion. Some form of carbon rise from 49 percent of elecregulation is almost certain tricity generation to 62 Natural Gas Renewables 20% 2% by 2012. Given the mopercent by 2025. Coal, in mentum and precedent of essence, would replace gascarbon trading schemes in fired generation, which EPA the European Union, Ausforesees dropping from 22 tralia, and here in North percent to 14 percent in America by the Western Cli2025. This scenario assumes a Coal mate Initiative and the load growth of 1.4 percent. 49% Northeast Regional GreenDue to the load growth, the house Gas Initiative, it is hard to amount of natural gas increases imagine anything but a cap-andfrom today’s levels even while gastrade program emerging from the fired generation decreases as a policy debates. The only major alternaproportion of the resource mix. By 2015, tive would be a carbon tax, but given the we would burn about 0.5 tcf of natural gas Beginning in 2000, we pushed prices up enough to squeeze out industrial demand, particularly in the chemical and fertilizer industries. We then transferred that gas to the electric sector. EPA Core rancor surrounding anything involving direct taxation, passage of a tax seems remote. Coal emits twice the amount of carbon as natural gas. So once carbon regulation is implemented, we will have to rethink, yet again, our resource portfolios in deciding how to meet the new carbon goals. How we change the electricity resource mix to incorporate other fuels in order to meet the adopted carbon goals will have a massive impact on how much natural gas we burn to generate electricity. That gross uncertainty will drive the volatility of fuel prices, accelerate the race for advanced technologies in coal, nuclear and renewables, drive efforts to reduce electricity growth rates, and become the dominate factor in determining the fuel mix for electricity generation in the decades to come. In short, carbon regulation changes everything. In March, the U.S. Environmental Protection Agency released an analysis of the carbon cap-and-trade bill proposed by Senators Joe Lieberman, I-Conn., and John Warner, R-Va. While Lieberman-Warner www.APPAnet.org Petroleum 2% Hydro 5% Natural Gas 25% Renewables 13% Coal CCS 12% Coal 18% Nuclear 24% died in the Senate in June, its basic framework remains the most likely form of carbon regulation. It is the most wellknown approach and will likely be picked up in the next session of Congress. Using EPA’s analysis of the bill, we can see just how dramatically carbon constraints will impact the fuel mix for electricity generation. By taking a look at the resource mix that EPA projected, and testing alternatives to it, we can assess how different ways of more than we do today. As coal-fired units come on line after that, the gas burn decreases to approximately 6 tcf. In contrast, EPA envisions the fuel mix shifting dramatically once carbon regulation is implemented. EPA’s core scenario evaluation of Lieberman-Warner projects coal to decline from 49 percent of the resource portfolio to only 37 percent by 2025, with well over one-third of the 2025 coal-fired generation employing carbon capture and storage technologies. Nuclear and renewables also increase: nuclear climbs from 19 percent to 24 percent, and non-hydro renewables climb from 3 to 13 percent by 2025. Natural gas increases significantly in the mid-term, growing to 7.3 tcf in 2015 and 8.8 in 2020. It then declines to 7.6 tcf as nuclear power additions displace natural gas. EPA’s core scenario does not assume adoption of a 20 percent national renewable portfolio standard. Note that EPA dropped load growth to 0.8 percent. This slowing of load growth could be due to enOCTOBER 2008 19 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - October 2008

Public Power - October 2008 Contents Perspective 10 Questions The Future of Fuels in a Carbon-Constrained World An Energy Revolution Energy Policy in 2009 and Beyond A Green Reincarnation Beyond the Green Bandwagon Reliability Green Energy Community Broadband Customer Service Hometown Connections Human Resources Parting Shot

Public Power - October 2008

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