Public Power - October 2008 - (Page 20)

The Future of Fuels in a Carbon-Constrained World Alternative Resource 2 ergy efficiency or the effects of rising electricity prices. Most importantly, EPA assumes that two key technologies, nuclear and carbon capture and storage, will be the solution to the carbon problem, even though nuclear suffers from lack of popular social acceptance and carbon capture and sequestration may or may not be ultimately available. So let’s look more broadly at this resource mix. What if either or both carbon capture and storage or nuclear power are not available in the quantities projected by EPA—or at all? What is the impact of reducing load growth through energy efficiency? What happens if we adopt a 20 percent renewable portfolio standard? How do changes in the amount of generation provided by these resources affect the ability to meet the carbon emissions target and how much natural gas might have to be burned? With these conditions in mind, let’s pose some hypothetical resource mix and load scenarios. For each, we will need to achieve the objective of reducing CO 2 emissions in the electricity sector by the required 39 percent over the next 30 years; that is, from 2,800 million tons per year in 2006 to 1,700 million tons in 2036. The point of casting these hypothetical scenarios is not to focus on the very real debates swirling around Washington over the level of the cap, rates of reduction, and costs, but simply to look at the macro feasibility and implications of the playing field before us. Mix number one hypothesizes higher load growth than EPA’s core scenario. While still lower than the 1.5 percent experienced over the last 10 years, this mix assesses a mid-point between 1.5 percent and the 0.8 percent from the core scenario. In essence, we assume price-response energy efficiency results in load growth higher than what EPA came up with. We selected a midpoint of 1.1 percent. The next change focused on renewables. Given the renewable portfolio standard discussion, we were curious to see what the impact would be of a 20 percent renewable portfolio standard. Thus, this scenario increases renewables from the EPA-projected 13 percent of load to the 20 percent level. The next step was to explore appropriate levels of coal and carbon capture and storage. The scenario uses the same available carbon capture as EPA’s core scenario through 2025. However, were the rapid growth in carbon capture projected by EPA to continue after 2025, all existing coal capacity would have to be retrofitted and converted to carbon capture and storage. Instead, the scenario slows carbon capture growth to more realistic levels that match the rate of load growth. The result, nevertheless, was that the scenario could not meet the 1,700-ton carbon goal. To meet that goal, the scenario was forced to increase nuclear’s contribution until it served 30 percent of load (compared to 19 percent of the mix today and 24 percent under EPA’s core scenario). The end result is that natural gas use drops from 20 percent of the mix today to only 8 percent. This implies a decrease in the amount of natural gas used to generate electricity from 6.9 tcf to 4 tcf, relieving pressure on gas prices. Mix number two was designed to test the impacts of a dramatic decrease in load growth. In this scenario, load growth drops to 0.3 percent per year, through aggressive measures nationwide to promote and invest in energy efficiency. The other key inputs were initially set to the values of the EPA’s core scenario. Accordingly, nuclear was set at 24 percent of the resource mix, and renewables were set to reach only 13 percent of the mix by 2036. Coal-fired generation was also set to match the core scenario (the percentage of coal in the resource mix looks higher than in the “core” scenario, but that’s Petroleum 2% Hydro 6% Natural Gas 26% Nuclear 19% Renewables 13% Coal 21% Coal CCS 14% Alternative Resource 1 Natural Gas 8% Coal CCS 12% Petroleum 2% Hydro 5% Nuclear 30% Coal 24% Renewables 20% a function of the lower load growth). Mix number two, in fact, over-achieved the carbon target as carbon emissions fell lower than the 1,700 million ton limit—an unexpected result. To achieve only the needed carbon emissions, we eliminated the new nuclear generation, reducing it back to today’s 19 percent level. But now the scenario had a gap between total demand and total supply. Gas was used to make up the difference. So backing down the nuclear generation meant that gas burns must increase —to 9.6 tcf in 2036. One key conclusion from this scenario is that controlling load growth has a large impact on carbon emissions. Another key conclusion is that even with phenomenally reduced load growth, we can back off certain technologies and still reach the carbon goal. But when that occurs, gas burns increase. The upshot is that a combination of technologies—carbon capture and storage, nuclear and renewables—will be needed to take the burden off gas. Mix number three is the “scare scenario,” in which critical new technologies, such as carbon capture and storage fail to emerge, or for some reason are taken off the table. In this scenario, load growth returns to the 0.8 percent per year used by EPA. Recall that this growth rate is about half the historical rate of growth experienced over the last 10 years. Renewables are set to 20 percent, consistent with a nationwide renewable portfolio standard. Carbon capture and storage is eliminated, as it is assumed to not be available. And conventional coal-fired generation must be decreased in order to achieve the 1,700 million tons emission target. Nuclear PUBLIC POWER 20 OCTOBER 2008

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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