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Profitably Reducing Carbon Emissions in Maine
Presentation to Governor Baldacci’s
Energy Efficiency Summit
Thomas R. Casten Chairman, Recycled Energy Development, LLC
April 3, 2008
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Thoughts on Global Warming Global Warming threatens life as we know it.
Overwhelming evidence that human actions are causing climate change.
Conventional wisdom assumes energy system is optimal. We know this is not true
Electricity is protected from competition, but pundits assume free market principles prevail. We know this is not true
The world must improve electric generation efficiency to mitigate climate change
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Presentation Summary: Profitably Mitigating Climate Change
Describe economic and environmental inefficiency of electric generation
Show how to reduce US carbon emissions by 20% and save $70 billion/year
Describe Recycled Energy Development’s Approach
Propose Maine Actions to promote profitable greenhouse gas reductions
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Homer Simpson’s Power Plant (Springfield, ?)
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Electric Generation Plant (Craig, CO)
Two-thirds of the fuel’s energy is vented to atmosphere.
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Year
Eff
icie
ncy
U.S. Delivered Electric Efficiency
Wasted Energy
Excess Costs
Excess Pollution
Inefficient US Electric Generation
Related Headlines:
Energy Costs Push Consumer Prices Higher”
-Associated Press
“US Manufacturing Jobs Fading Away Fast”
-USA Today
“Recent Warming of Arctic may Affect World Climate”
-NASA
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Electric Generation’s Increasing Contribution to Domestic CO2
Emissions
0%
10%
20%
30%
40%
50%
Year
Perc
ent o
f Tot
al U
S C
O2
Emis
sion
s
US Electric Power Sector’s CO2 Emissions
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Electricity42%
Thermal27%
Other Transport12%
Cars19%
US Carbon Dioxide Emissions, 2005
Breakdown of Emitting Sources:
Heat & Power;
69% of all fossil fuel CO2 emissions
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U.S. Electric System Efficiency Since 1960
Pollution
Fuel
100 units
Power Plant
=
67 units Waste Energy
33 units Electricity
End User
Waste Heat Transmission Line Losses 3 units (9.0%)
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Combined Heat and Power Options
Pollution
Recycle Waste Heat
CHP Plant
End User Site
33 units
Waste Energy
=66
units Useful Work
33 units Electricity
33 units Thermal Energy
Fuel
100 units
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Recycling Industrial Energy Even Better
ElectricitySteam
Hot Water End User Site
Energy Recycling
Plant
Electricity
Process Fuel
Finished Goods
Waste Energy
SavedEnergy Input
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US Energy Recycling Potential
EPA and DOE studies identify 200,000 megawatts CHP & waste energy recycling potential
(750,000 MW US peak load)
Capital investment of $350 billion
Society could save $70 billion per year
Energy Recycling can profitably eliminate 20% of U.S. CO2 emissions (1.4 of the 7.2 gigatons)
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US Electric I ndustry Fuel-Conversion Efficiency
0%10%20%30%40%50%60%70%80%90%
100%Recovered Energy
U.S. Average Electric Only
CHALLENGE & OPPORTUNITY
• ~$70 billion potential energy savings if U.S. returned to 1920s model
• 1.4 gigaton GHG reduction/year
U.S. Grid is Less Efficient than 100 Years Ago
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US Energy Recycling (CHP) Potential
EPA and DOE studies identify 200,000 megawatts CHP & waste energy recycling potential
Capital investment of $350 billion
Society could save $70 billion per year
Profitably eliminate 1.4 gigatons of CO2 emissions
Many other benefits including: Improve manufacturing competitiveness, add jobs
Reduce need for transmission wires
Reduce vulnerability to extreme weather and terrorists
Improve balance of payments
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Examples of Local Generation Projects that Recycle Waste Energy
Projects RED and its predecessor companies have developed
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Year
Eff
icie
ncy
U.S. Delivered Electric Efficiency
Efficiencies of Energy Recycling Projects
Steam Pressure Recovery (190 Projects)
Combined Heat & Power (56 Projects)
Industrial Waste Heat Recovery (6 Projects)
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95 MW Recycled from Coke Production (Gary, IN)
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Silicon Production, Alloy WV
Plant uses 135 MW
$60 million investment
Recycles exhaust into 44 megawatts
Plant will use power to expand production by 20%
We are taking silicon production back from China!
Electricity, coal and wood chips melt quartz in a large furnace
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Operating Maine Projects by RED Subsidiary Turbosteam
Livermore Falls, ME
2002 2,980 kW 4,713 tons CO2 saved
annually
Colby CollegeWaterville, ME
1998 600 kW 480 tons CO2 saved
annually
HuhtamakiWaterville, ME
2004 605 kW 1,043 tons CO2 saved
annually
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Potential Clean Energy Project:
University of Maine at OronoProfitably reduce greenhouse gas emissions by
recycling waste energy with a backpressure steam turbine.
• The University currently generates steam at 150 psig and distributes at 50 psig
• A Turbosteam backpressure steam turbine could generate 684 kW of electricity for roughly 3 cents per kWh and avoid 540 tons per year of CO2/year
• RED offers greater savings and emission reductions could by replacing oil boilers with biomass
• Project delayed by interconnection agreement with Bangor Hydro
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RED’s Goals with Respect to Climate Change Mitigation
Deploy $1.5 billion to profitably reduce greenhouse gas emissions
Cause a societal ‘tipping point’, with public demanding removal of all barriers to efficiency
Change the debate from “Who pays to mitigate climate change?” to
“How can we induce profitable climate change mitigation?”
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Maine Actions to Spur Profitable Carbon Reduction
Enact a Clean Energy Standard Offer Program (CESOP)
Allow all clean energy to qualify for Maine renewable portfolio standard rules
Remove barriers to efficiency
Treat clean energy projects as ‘Pollution Control’ devices for environmental permitting
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Clean Energy Standard Offer(CESOP)
Calculate delivered cost of electricity from best new base load central electric-only plant
Include generation and T&D capital amortization, fuel & O&M, line losses, utility profits and expected carbon costs
Offer 20 year contracts for CESOP power at 80% of the delivered cost from the best new base load central station.
Define ‘Clean Energy’ as all power plants with 60% or better annual fossil efficiency, and include power from recycling waste energy
Contract for up to projected 10-year net load growth
Distribution utility keeps retail load, but buys power
Distribution utility designs and installs interconnection to Clean Energy Projects, puts capital in rate base.
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CESOP Advantages
Guarantees improved efficiency - requires 60% overall efficiency versus 33% grid average
Guarantees savings – contract prices 80% of delivered cost of new central generation
But calculation includes full avoided long run marginal costs, including transmission, line losses and carbon
Utility keeps customers and its historic profits from distribution of electricity
No standby rates to slow or discourage Clean Energy
Utility manages interconnection at their expense, adds to rate base, just like central generation
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Effects of CESOP Induces power industry to build clean energy plants of
all types Government does not pick technology or fuel, just forces
economic and environmental efficiency
Gives local clean energy projects benefit of low cost financing, comparable to financing costs of less efficient central plants
All renewable energy qualifies along with all projects that recycle industrial waste energy
Maine never builds another inefficient electric-only fossil fueled plant unless CESOP response falls short of needs.
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Possible Objections to CESOP Some clean energy projects will make extraordinary
profits. Public can cry all the way to the bank
Fossil fueled CHP could push out more expensive renewable projects
CESOP keeps economic pressure on all technologies to reduce costs and at least double fossil efficiency
The distribution utilities cannot control generation
This is a soluble technical problem, worth the gain in efficiency
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Other Actions to Speed Clean Energy Deployment in Maine
Broaden Maine RPS to all clean energy
Include all power from renewable energy sources and all power that meets ‘clean energy’ definition in RPS and rename ‘Clean Energy Portfolio Standard”
Strengthen percentages of Clean Energy required, but include new power under CESOP contract
Treat clean energy project as a ‘pollution control’ permit application for environmental approvals, greatly reducing time and cost of developing projects
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Thank You
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