Electricity: Reliability, Affordability and a Cleaner Environment

1. Electricity: Reliability, Affordability and a Cleaner Environment Frank Clemente Ph.D. Professor of Social Science Penn State University fac226@psu.edu

2. Energy is Good People in Societies with Greater Access to Electricity: 25% 90% average percent of population with access to electricity

3. The Scale of Global Electricity Deprivation: 2,000 million 1,500 million America— 306 million Full access No electricity at all Partial access to electricity

4. Coal’s Ever Growing Role Population of Countries that depend on coal for at least 40% of electricity 4,113 Million 3,002 Million 2,361 Million 1990 2010 2030

5. “China is an example for the developing world” IEA, 2007 5

6. China’s Progress in Efficiency Means Significantly More Power and Reduced Emissions Over 114,000 MW of small units will be decommissioned. China is proceeding with construction of 112,000 MW of Supercritical plants

7. WHERE WILL THE INCREMENTAL ELECTRICITY COME FROM IN THE UNITED STATES? 7

8. The Critical Role of Electricity in the Quality of American Life EIA,2010

9. What an 80% Reduction Requires “Gas doesn't get us there” Dave Hamilton, Director for Global Warming, Sierra Club 9

10. We Have Cancelled most Planned Coal Plants 35 plants 19 20 Cancelled 2007 2008 2009

11. Built natural gas power plants –and more are on the horizon More coming • 45,000 More Megawatts Planned • Push for coal plants to convert to natural gas • Wind generation must have major gas back up • Climate legislation means more natural gas consumption "in every case analyzed" by the EIA • New EPA regulations could lead to 35% increase in gas used for generation U.S Generating Capacity by 2013 in Gigawatts

12. Despite the fact that Gas Supply is Projected to Decline4% over next decade Source: EIA at http://www.eia.doe.gov/oiaf/aeo/index.html--2010

13. And despite warnings from third parties • National Regulatory Research Institute: “The difficulties in forecasting natural gas prices, in addition to  their inherent price volatility, make gas-fired facilities less economically attractive” (2010) • 2. National Academy of Sciences: [gas] can be one of the lowest cost – or one of the highest cost – sources of electricity" (2009) • 3. North American Electric Reliability Corporation (NERC):"Continued high levels of dependence on natural gas for electricity generation in Florida, Texas, the Northeast, and Southern California have increased the bulk power system’s exposure to interruptions in fuel supply and delivery." (2010) • 4. California Energy Commission: "... past efforts to forecast natural gas prices have been highly inaccurate ... greenhouse gas policies will further complicate these efforts, likely rendering future natural gas price forecasts even less accurate and uncertain" (2009)

14. And despite experience that more gas generation means higher electric rates “natural gas price spikes...have significantly contributed to the U.S. manufacturing sector losing over 3.7 million jobs." Dow Chemical

15. Price Matters—and has a price Manufacturing Jobs 17.3 Million Manufacturing Jobs 11.8 Million

16. The High Volatility of Industrial Gas Prices in Illinois over the Past Decade as an Example “We believe in volatility… Volatility has value… Our company makes additional money when we sell those calls” Chesapeake Energy, 2009

17. States particularly vulnerable to natural gas spikes EIA,2010

18. Our Staggering Bet on Shale Gas as the Source of New Supply New supply from: 18 EIA,2010

19. But Shale Gas is not projected to even offset declines over next decade EIA,2010

20. Shale gas: the resource is there but unknowns predominate: • Long term price ? • How much can be delivered in timely fashion? • Environmental impacts– water,air,land,waste • Requires Carbon Capture and Storage • Life cycle analyses required to account for methane releases • Bridge to what– more stranded investment?

21. Water Footprint of Shale Gas “…the Marcellus water is the worst water on the planet“ Mark Wilson, GE Water Technologies Benzene, a known carcinogen, was found in 14 of 29 wells tested in WV and PA “studies on chemicals in frack fluids in Colorado indicate 43% may be Endocrine Disrupting Compounds or have EDC potential ” National Park Service “Every activity in natural-gas drilling poses a risk to the water supply” Paul Rush, New York City Deputy Commissioner of Water Supply Up to 7 million gallons of water per well 320,000 pounds of chemicals per well Toxins such as hydrogen sulfide leached from bedrock Only about 30-50% of the fracking water is typically recovered Naturally occurring radioactive materials (NORM) leached from bedrock

22. 30,000 of these in NY,PA, WV? “Marcellus shale.. will require drilling tens of thousands of wells” The Wall Street Journal

23. "Industrialization" of rural areas Depletion rate of 70% in first year creates a never ending treadmill of drilling One well becomes 6,000 160 tons of chemicals expands to one million tons of chemicals 1,200 truck trips escalates to 7.2 million truck trips

24. We need improved monitoring of methane releases from gas production Naked eye Infra-red • Methane is such a powerful GHG that it “is responsible for 75% as much warming as carbon dioxide measured over any given 20 years” Robert Watson, Chair of the Intergovernmental Panel on Climate Change (IPCC) from 1997 to 2002 • Methane Emissions from Gas and Oil Systems are greatly under reported due to lack of infra-red equipment

25. Methane Emissions from Shale Gas Should Not Continue to Be Ignored • “Natural gas is being widely advertised and promoted as a clean burning fuel that produces less greenhouse gas emissions than coal …society should be wary…” • 2 “The leakage of methane gas during production, transport, processing, and use of natural gas is probably a far more important consideration.. Since methane is such a powerful greenhouse gas…” • 3. “total emissions from coal are probably quite similar to those for natural gas obtained from shale formations such as the Marcellus Shale” Robert W. Howarth Atkinson Professor of Ecology & Environmental Biology, Cornell University

26. Clean Air and Shale Gas These air pollutants may be released from natural gas flares: benzene, formaldehyde, naphthalene, acetaldehyde, propylene, toluene, xylene, ethyl benzene and hexane

27. A Six Nation Cartel Could Control Over 60% of the World’s Natural Gas "We are creating something similar to OPEC but with gas” --Hugo Chavez on the formation of a gas cartel (September, 2009) Source: British Petroleum, 2009

28. The Globalization of Natural Gas Prices:LNG prices will be linked to oil prices

29. WE NEED CARBON CAPTURE AND STORAGE (CCS) • Capture CO2 • Use some beneficially (e.g. 2-3 million b/d EOR) • Store most underground • Must be applied to both natural gas and coal to meet climate change goals “We must make it our goal to advance carbon capture and storage technology to the point where widespread, affordable deployment can begin in 8 to 10 years”- Steven Chu, Secretary of Energy

30. Because Coal will remain the cornerstone foundation of electricity + + = United Kingdom France Germany + Coal Based Electricity: 2,300 Billion Kilowatt Hours in 2035 + + New York California Florida

31. National Academy of Sciences: "the entire existing coal power fleet could be replaced by CCS coal power” 2009 “Natural gas generation of electricity could be expanded to meet a substantial portion of U.S. electricity demand—if there were no concerns about the behavior of world natural gas markets and prices and about further increasing CO2 emissions and U.S. import dependence.” NAS, July 2009

32. National Coal Council findings based on National Academy CCS deployment pattern- Construction Related Job-Years by Decade National Coal Council, 2009

33. GDP Increases Will Benefit Generations of Americans Billion 2007 dollars National Coal Council, 2009