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Surviving In A De-Carbonizing World. Strategies for Success For The Power Sector. Jim Sims Western Business Roundtable. Political Waters of Climate. Today’s Topics. Climate Forecast Action Strategies Consumer Education Practicum. Climate Forecast. Long-Term : Deal on carbon
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Surviving In A De-Carbonizing World Strategies for Success For The Power Sector Jim SimsWestern Business Roundtable
Today’s Topics • Climate Forecast • Action Strategies • Consumer Education Practicum
Climate Forecast • Long-Term: Deal on carbon • Short-Term: More fog of uncertainty
Long-Term Forecast • Carbon Regulation Paths • Grand Compromise • Clean Air Act Amdts. of 1990 • Incremental Policy • Energy bills • No deal on carbon • Renewables / conservation only
Long-Term Forecast • Carbon Deal Timeline • 10 years / 5 Congresses (CAAA) • 4-6 years / 2-3 Congresses (energy bill) • 1 Congress (lightning strike) • Never (ESA reform, tort reform, RCRA reform)
Long-Term Forecast • The Deal Itself • Cap-and-Trade • Carbon tax • Clean energy purchase requirement + efficiency mandates
Predictions 1. Carbon tax is non-starter 2. Cap-and-trade: possible only if in next 1-2 Congresses • Controversial issues like carbon get stinkier the longer they sit • Organized consumer opposition will only grow
Predictions • Enviros will over-reach and a grand compromise will not be unachievable • Carbon “solution” will be a combo of: • Clean energy mandates • Efficiency mandates / incentives • Man-on-the-moon investment effort in generation / distribution technologies
Action Strategies • Be seen on the cutting edge of the technology curve both on generation and distribution.
Action Strategies • Package generation / distribution needs within a larger “American energy independence” message
Action Strategies • Position yourself on the right side of the coming consumer price rebellion
Action Strategies • Tell your story before the other side does.
1. We Love Technology • Americans love “we can do it” messaging • Clean energy technologies enjoy stratospheric support • 87 – 10 back more gov’t support for wind and solar power.
1. We Love Technology • Will accept higher costs for renewables if wrapped within high tech / clean energy message. • Will accept “we need clean coal” message if wrapped within high tech message. • Will accept conservation mandates if wrapped within high tech message
1. We Love Technology • Politicians will go where “new technology” leads them. • Technology focus helps drive advocacy for man-on-the-moon level of funding from feds
2. We Love American Energy • Enjoys stratospheric levels of public support • Energy security - national security tie will only strengthen • Current focus on OCS can be translated to other resources
2. We Love American Energy Quinnipiac Survey • 62 – 32 percent in favor of offshore drilling; • 56 – 35 percent in favor of building new nuclear plants; • 51 – 42 percent back drilling in the Alaskan National Wildlife Refuge;
2. We Love American Energy • American Energy Initiative • Joint effort by American Energy Independence Council / Southern States Energy Board / NextGen Energy Council • Synthesis of high tech + American energy messaging • Studies on electricity, CO2, transportation and resources modules • Policy / funding recommendations • State Capital Briefings on next generation power technologies
3. Consumer Rebellion • Congress of Racial Equality • Consumers for Affordable Energy • Veterans for Energy Security • Seniors Energy Network • Education Funding Alliance • Latinos for Affordable Energy
4. Tell Our Story Better Unless we educate consumers properly, anti-industry groups will.
4. Tell Our Story Better And these groups HATE virtually everything that industry stands for.
4. Tell Our Story Better Consumers arebeing told theycan have it alland it won’tcost them anymore
4. Tell Our Story Better Consumers are unreasonable • Endless and secure energy supplies • Low prices • No pollution • Less global warming • No new power plants • No new oil and gas drilling near people or pristine places
4. Tell Our Story Better • We need more of everything -- renewables / efficiency can’t do it all • We face near-term threats to system reliability • Greater American energy independence means more drilling, mining, power plants, pipelines and power lines • Climate “solutions” will be very costly • Government regs cannot be allowed to outpace technological capabilities
Education Practicum If you could construct the U.S. energy system, what choices would you make?
A Case Study: Colorado • Colorado’s need for electricity will increase significantly by 2025 – by4,900 MW
Building Your Own SCENARIO 1 4,900 megawatts total need 980 MW (20% efficiency) 980 MW (20% rps) - 637 MW (35% capacity factor) 1,323 MW REMAINDER: 3,577 MW of need beyond efficiency gains / renewables
Building Your Own SCENARIO 2 4,900 megawatts total need 1,255 MW (25% efficiency) 1,470 MW (30% rps) - 956 MW (35% capacity factor) 1,769 MW REMAINDER: 3,131 MW of need beyond efficiency gains / renewables
Building Your Own SCENARIO 3 4,900 megawatts total need 1,470 MW (30% efficiency) 2,450 MW (50% rps) - 1470 MW (40% capacity factor) 2,450 MW REMAINDER: 2,450 MW needed beyond efficiency gains / renewables
Lesson #1 Renewables can’t meet all our needs because most are not baseload resources.
Lesson #2 Intermittent renewables need fossil resources likeNatural Gas • Natural gas-fired plants are used to offset the variability of wind. • Some n-gas plants cycle several hundred times a month to offset a nearby wind farm. • Cancelled coal plant in KS killed wind farm
Lesson #3 Options Are Limited For New Baseload Generation • Coal • Natural Gas • Nuclear • Hydropower • Imports • Demand Destruction
Option 2: Natural Gas If we want to continue to benefit from natural gas for electricity generation and other uses, we need to continue to drill and produce natural gas.