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Southern States Energy Board

Southern States Energy Board. “Sustainable Energy Challenges and Climate Change in the South: The Road Ahead” Presented to: The EPA Region IV Clean and Sustainable Energy Conference Embassy Suites Atlanta at Centennial Olympic Park December 11, 2007 Presented by: Kenneth J. Nemeth

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Southern States Energy Board

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  1. Southern States Energy Board “Sustainable Energy Challenges and Climate Change in the South: The Road Ahead” Presented to: The EPA Region IV Clean and Sustainable Energy Conference Embassy Suites Atlanta at Centennial Olympic Park December 11, 2007 Presented by: Kenneth J. Nemeth Secretary Southern States Energy Board

  2. Southern States Energy Board Through innovations in energy and environmental policies, programs and technologies, the Southern States Energy Board enhances economic development and the quality of life in the South. - SSEB Mission Statement • Established 1960, expanded in 1978 • 16 U.S. States and Two Territories • Each jurisdiction represented by the governor, a legislator from the House and Senate and a governor’s alternate • Federal Representative Appointed by U.S. President

  3. Significant Global Energy Events 1970 OPEC Sets 55 percent Minimum Tax Rate (1970) U.S. Institutes Price Controls (1971) Arab Oil Embargo Against U.S. (1973) Kissinger Announces “Project Independence” (1974) EPCA Authorizes Strategic Petroleum Reserve (1975) Windfall Profits Tax (1980) Iran/Iraq War – Oil Prices Doubled (1978-1980) World Oil Glut - $29 BBL Oil – U.S. Synfuels Shutdown (1983) Chernobyl Nuclear Accident (1986) Alaska’s Prudhoe Bay Production Peaks (1988) Iraq Invades Kuwait – Prices Soar ($36 BBL) (1990) Clean Air Act – Changes Gasoline & Diesel Fuels (1990) U.S. Imports More Oil & Refined Product Than It Produces (1993) Asian Financial Crisis – Oil Prices Plummet (1997-1998) German Government/Utilities Agree to Phase Out of Nuclear Power (2000) U.S. Petroleum Consumption – All Time High (19.7 Million BPD) (2001) Terrorist Attacks on the U.S. (2001) Photo: Jerry Gay, Seattle Times, 1974 1983 2001

  4. Recent Global Energy Events 2004 Foreign Oil Dependence Rises to 65 percent (2004) Northeast Blackout Leaves 50 Million People in the Dark Natural Gas Prices Triple from 1990 Levels Oil Passes $50/Barrel Gasoline Exceeds $3/Gallon Hurricanes Damage Oil/Gas Rigs Russia Halts Natural Gas to Ukraine Venezuela Moves to Nationalize Resources Oil Breaks $75/Barrel Nigeria Kidnaps Oil Workers Bolivia Secures Oil Fields Experts State Oil Production May Have Peaked Iran Threatens Nuclear Capabilities Saudis Talk of Propping Up $55 Oil Chad Orders Chevron to Leave BP Forced to Repair Pipeline Leaks China Extends Credit to Oil Nations Iran, Russia, Others Discuss Gas OPEC Texas Utilities Cancel 8 of 11 Coal Plants Oil Breaks $83/Barrel 2005 2007

  5. Facts and Figures • World Population = 6.8 billion in 2010; 8.2 billion in 2030 • World GDP = $88 trillion in 2010; $154 trillion in 2030 • World Electricity Demand= 9,000 billion KWH in 2010; 31,000 billion KWH in 2030 • World number of Vehicles = 812 million in 2002; 2.1 billion in 2030 • Energy Consumption – will increase 50% in the next 25 years • Energy Sources and Increases by 2030; • Coal Production = 74% • Oil Production = 43% • NG Production = 64% • Nuclear Power = 38% • Renewables = 61% Not Smoke and Mirrors!

  6. Why the Concern About Sustainability and American Energy Security? • Crude Oil Production will “Peak” • Growth and Use of Resources by Other Nations • Global Competition • World Oil Demand Exceeds Supply…and Growing • Excessive Dependence on Imported Oil • Supply Disruption by Natural Disasters, Terrorism • Global Warming Threats • GHG Emissions Dictate Technologies and Risk • Natural Gas Price Volatility • Liquid Transportation Fuels Crisis • Social Injustice of High Priced Energy – Elected Officials Will Pay the Price • Congressional Inaction

  7. American Energy Security • Military expenditures tied to defending Persian Gulf oil ($100+ billion) • Lost employment/investment from diversion of financial resources ($160 billion) • Cost of periodic “oil shocks” ($85 billion) • Erosion of U.S. industrial base (830,000 jobs lost) • 2006 U.S. Trade Deficit ($764 billion)

  8. North American Electric Reliability Council Finds More Power Is Needed +19% • U.S. baseload generation capacity Electricity Demand is Far Outpacing Generation Growth reserve margins have greatly declined • 30-40% in early 1990s • 17% in 2006 • Generation capacity to grow just 6% in the next 10 years while demand grows 19% • 2006 North American Electric Reliability Council study +6% Growth in U.S.Generating Capacity 2006-16 Growth in U.S. ElectricityDemand 2006-16 Courtesy: Peabody Energy, 2007

  9. Global Energy Forms Face Limits in Supply & Price All Energy Forms Needed for Diversity of Supply ENERGY EFFICIENCY/DEMAND-SIDE MANAGEMENT/CONSERVATION An important resource but insufficient to power the future OIL Consistently above $50/barrel; declining reserves; risky sources NUCLEAR Valuable but constrained due to safety and waste disposal concerns HYDRO No growth in supply WIND Limited availability; grid disruptions; erratic supply ETHANOL Clean but energy inefficient; strains food supplies; cellulosic key NATURAL GAS Consistently above $6/mcf; declining reserves; risky sources COAL Faces GHG, climate change, regulators, environmental organizations challenges

  10. Is Coal a Low Cost Option? • Global warming emissions are attributed to coal, oil, gas • 35% - deforestation, livestock, soils, landfills, waste repositories • 65% - electricity and heat, industrial processes, transportation, other fuel combustion, fugitive emissions • NRDC • Coal – carbon intensive • Double amount of carbon in natural gas • 50% more than petroleum • CTL Plants produce two streams of CO2 • Production plant • Vehicle exhaust • Coal/biomass co-firing – carbon neutral event BUT requires mining and water resources

  11. Is Coal a Low Cost Option? • Carbon sequestration • Carbon capture and storage • Regional Carbon Sequestration Partnerships • Add 20-40% to cost of Plants • Add 25% to electricity costs (EPRI test) • Carbon “footprint” reduction • Requiring coal plants to meet new standards will impact “dispatch” of plants in future

  12. The Energy Technology “Train Wreck” • Electricity rates – 19% increase over past 3 years • Maryland – 72% increase • Delaware – 60% increase • Cost of new power plants • Coal - $3-7 billion • Nuclear - $4-8 billion • Rising costs = higher rates • Life cycle costs – CO2 and greenhouse gases • Rates will increase for new baseload plants • Congressional Inaction

  13. State Regulators in the Mist • Carbon plan • Carbon capture ready • Carbon capture & sequestration • Escalating costs for materials and plants • Technology choices • Water supply/consumption • Regional Greenhouse Gas Initiatives • Cap & trade (carbon price) • Carbon registry

  14. Selected State Actions in a Congressional Stalemate • Gov. Joe Manchin, WV: Declaration of Energy Independence • Gov. Ernie Fletcher, KY: Comprehensive Energy Strategy • Gov. Charlie Crist, FL: Greenhouse Gas Initiative • Gov. Tim Pawlenty, MN: Biodiesel Portfolio Enhancements • Gov. Arnold Schwarzenegger, CA: Regional Greenhouse Gas Initiative • Gov. Rick Perry, TX: Carbon Capture & Sequestration • Governor Rod Blagojevich, IL: Carbon Capture & Sequestration • Governor Mike Easley, NC: Renewable Energy and Energy Efficiency Portfolio Standard More than 500 energy and environmental bills passed by legislatures in southern states in 2007

  15. What about Energy Efficiency? • Utilities • How can utilities make money on energy efficiency? • Duke Energy “Save a Watt” Plan – Make EE the 5th Fuel • Verifiable load reductions • Audits of homes and businesses • Subsidize purchases of compact fluorescent light bulbs • Subsidize purchase of high efficiency heating and cooling systems • Advanced metering systems • Interruptible service on air conditioning, heating, freezers • Retire coal plants as energy savings emerge • Customers pay for 90% of power plants not built grow demand build supply sell power = profit

  16. “Tweaking” Energy Efficiency California – EE Program in 1980s • “Decoupling” – Severs link between utility sales & profits • Regulators smooth revenue (15 states) • 2001 – The “loading order” = • 1) EE • 2) Renewables • 3) Fossil Energy • 2007 – Package of financial incentives – utilities earn profits on efficiency Delaware/Vermont– “Sustainable Energy Utility”

  17. Reducing Energy Demand:The Low Hanging “Fruit” • Renewable portfolio standards • Efficiency standards for boilers, appliances, electronics • Building code upgrades • Tax incentives for “green” buildings • Expedited permits • Weatherization • Improve energy performance in government buildings • Alternative fueled government vehicles

  18. Path Forward • Policy decisions at federal and state levels • Advanced Technologies • Financing/Investment • Regulatory certainty • Workforce revitalization • Smart grids • Communication infrastructure for end use efficiency, demand response • Capacity to operate with 20-30% intermittent renewables • Distributed generation • PHEV’s

  19. Path Forward • Nuclear generation with viable spent fuel strategy • Coal generation with 90%+ CO2 capture/storage • Indigenous liquid transportation fuels (coal, biomass, oil shale) with carbon sequestration to eliminate dependence on imported oil • Modernized infrastructure (pipelines, expanded refineries, transmission, roads, bridges, etc.)

  20. “Sustainable Energy Challenges and Climate Change in the South: The Road Ahead” Presented by: Kenneth J. Nemeth Secretary & Executive Director Southern States Energy Board 6325 Amherst Court Norcross, Georgia 30092 USA Phone: (770) 242-7712 Fax: (770) 242-9956 wwwsseb.org www.americanenergysecurity.org nemeth@sseb.org

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