Clean Energy Technology, R&D and Innovation

1. Clean Energy Technology, R&D and Innovation Dr. Harlan Watson Senior Climate Negotiator and Special Representative U.S. Department of State Climate Change and Sustainable Development: An international workshop to strengthen research and understanding Session 5: “Options for Response Measures” Magnolia Hall, Indian Habitat Centre New Delhi, India April 8, 2006

2. Overview Stabilization of greenhouse gas [GHG] concentrations in the atmosphere—the “ultimate objective of the UNFCCC confronts several realities, including: Reality 1—Stabilizing GHG Atmospheric Concentrations Is a Long-Term Issue. Reality 2—Fossil Fuels Will Remain the Dominant Energy Source for Decades. Reality 3—Can’t Expect Developing Countries to Reduce Energy Consumption for the Foreseeable Future. Reality 4—No “Silver Bullet”: Broad Portfolio of Technologies Required. Reality 5—Challenge is Formidable U.S. domestic and international efforts to develop and deploy cleaner technologies.

3. Reality 1—Stabilizing GHG Atmospheric Concentrations is a Long-Term Issue Stabilizing atmospheric concentrations of GHGs is a very long-term issue—decades to a century or more time scale. Stabilization means that GLOBAL emissions must peak in the decades ahead and then decline indefinitely thereafter. Source: Jae Edmonds (Battelle)

4. Reality 2—Fossil Fuels Will Remain the Dominant Energy Source for Decades Scenarios World Energy Demand Projections World Energy-Related CO2 Emissions Projections Plentiful Fossil Fuels Means Problem Will Not Go Away On Its Own.

5. 7 000 7 000 6 000 6 000 5 000 5 000 4 000 4 000 Mtoe Mtoe 3 000 3 000 2 000 2 000 1 000 1 000 0 0 1970 1970 1980 1980 1990 1990 2000 2000 2010 2010 2020 2020 2030 2030 World Primary Energy Demand IEA World Energy Outlook 2004 Reference Scenario: Oil Natural gas Coal • Fossil fuels account for almost 90% of the ~60% growth in energy demand between now and 2030. Other renewables Nuclear power Hydro power Source: Fatih Birol (IEA)

6. World Energy-Related CO2 Emissions IEA World Energy Outlook 2004 Reference Scenario: 2 • Global emissions projected grow 62% between 2002 & 2030, and developing countries’ emissions overtaking OECD’s in the 2020s. Source: Fatih Birol (IEA)

7. Coal 5,000 to 8,000 GtC Plentiful Fossil Fuels Means Problem Will Not Go Away On Its Own Coal Unconventional Fossil Fuels: 15,000 to 40,000 GtC Unconventional Liquids and Gases Sources: Jae Edmonds (Battelle) and Nebojša Nakićenović (IIASA)

8. Reality 3—Can’t Expect Developing Countries to Reduce Energy Consumption for the Foreseeable Future Overriding priority for developing countries, is poverty reduction => Economic growth => Increase in Energy Consumption => Increase in Emissions. In 2030, if no major new policies are implemented, there will still be 1.4 billion people without electricity. Source: Fatih Birol (IEA)

9. Reality 4—No “Silver Bullet”: Broad Portfolio of Technologies Required • Assumed Advances In • Fossil Fuels • Energy intensity • Nuclear • Renewables Global Carbon Emissions Atmospheric GHG Concentrations Stabilized • “Gap” Technologies • More of All of the Above • Biological Sequestration • Carbon Capture and Disposal • Hydrogen and Advanced Transportation • Biotechnologies The “Gap” Source: Jae Edmonds (Battelle)

10. Reality 5—Challengeis Formidable Actions that Provide 1 Gigaton/year of Mitigation Coal: Carbon capture and storage at 800 1 GW coal power plants. Nuclear: 700 GW (twice current capacity) displacing coal power Geologic Sequestration: 3,500 Sleipners @1 MtCO2/yr (~100 x U.S. CO2 injection rate for EOR). Biofuels: Two billion 60 mpg cars running on biofuels 250 million hectares of high-yield crops (one sixth of world cropland) Efficency: 2 billion cars at 60 mpg instead of 30 mpg. Wind: One million 2-MW windmills displacing coal power. (Today~50,000 MW). Solar PV: 2000 GWpeak (700 times current capacity) and 2 million hectares of land. Source: Rob Socolow (Princeton)

11. U.S. Climate Change Policy Components Address climate change within a broader development agenda—one that promotes economic growth, reduces poverty, provides energy security, reduces air pollution, and mitigates greenhouse gas emissions. • Laying the Groundwork for Current and Future Action: Investments in Science and Technology. • Climate Change Science Program (~$2 billion/year) • Climate Change Technology Program (~$3 billion/year) • Promoting International Cooperation. Slowing the Growth of Net Greenhouse Gas (GHG) Emissions. National Goal: Reduce GHG Intensity by 18% Over 10-Year Period (2002-2012).

12. Near-Term Domestic Actions More than 60 Federal mandatory, incentive-based, and voluntary programs designed to help reduce emissions by more than 500 million metric tons of carbon-equivalent from BAU through 2012. Examples of mandatory and incentive-based programs include: Fuel Economy Standards  Clean Air Rules Energy Efficiency Standards  Biological Sequestration Renewable Energy/CHP Tax Incentives  Nuclear Plant Relicensing Hybrid/Fuel Cell Vehicle Tax Incentives  Nuclear Power 2010 Numerous U.S. Department of Energy (DOE) and U.S. Environmental Protection Agency (EPA) voluntary programs to help consumers and corporations reduce their GHG emissions, such as: ENERGY STAR  Methane Programs CHP* Partnership  SmartWay Transport Partnership Climate Leaders Climate VISION U.S. Fiscal Year 2007 budget request of about $5 billion for climate change programs plus energy tax incentives: Supports the near-term objective and future actions through major investments in science and technology. *Combined Heat and Power

13. Domestic Clean Air Policy • CLEAR SKIES: Reduce Power Plant Pollution (Sulfur Dioxide, Nitrogen Oxides, and Mercury) by 70% below 2003 levels by 2018 • Market-Based Cap and Trade System • US Fleet of Coal-Fired Power Plants — 1,300 Nationwide • Two Phases Provides Regulatory Certainty for Capital Planning Decisions • Promotes Technology Innovation and Cost Reduction • Promotes Clean Coal and Relieves Pressure On Natural Gas Usage • $50+ Billion in Pollution Controls, Efficiency Upgrades • $100+ Billion Health Savings • High Compliance — Low Bureaucracy • Minimal electricity price impact (~ 1,7-3%) • CLEAN DIESEL RULES — Reduce Diesel Engine Pollution by 90%+ • Performance Standard — Promotes Innovation • Fuel Sulfur Dioxide Reduced 99+% in 2007 • New Engine Nitrogen Oxide Reduced 90% • Large Trucks, Construction and Farm Equipment, Locomotives, Marine Vessels • Commercially Feasible Timelines • Assures Reliability and Affordability of New Engines • Enables Larger U.S. Market in Fuel Efficient Vehicles (up to 30% improved fuel economy)

14. Energy Policy Act of 2005Tax Incentives Incentives: $14.5 billion Offsets: $3 billion Total: $11.5 billion

15. Climate Change TechnologyProgram (CCTP) • ~ $3 Billion/Year • Goals • Reduce Emissions from Energy End-Use and Infrastructure • Reduce Emissions from Energy Supply • Capture and Sequester CO2 • Reduce Emissions of Non- CO2 GHGs • Improve Capabilities to Measure and Monitor GHG Emissions • Bolster Basic Science Contributions to Technology Development. • CCTP Vision & Framework provides: • Overall Guidance and Strategic Direction • Vision, Mission, Goals and Approaches • Groundwork for Portfolio Prioritization • “Next Steps” for CCTP • Oversight & Management Controls www.climatetechnology.gov

16. Mid-Term CCTP Goals Near-Term Long-Term Roadmap for CC Technology Development

17. Fiscal Year 2007 Budget Request:CCTP Portfolio CCTP Fiscal Year 2007 Budget Request* Portfolio of RD&D and Deployment: $2.987 Million ($322 M) ($649 M) ($321 M) ($25 M) ($137 M) ($395 M) ($397 M) ($103 M) ($320 M) ($319 M) *All CCTP Federal Agencies Fiscal Year 2007 Budget Request ** Deployment is 79% Energy Efficiency

18. International Partnerships Carbon Sequestration Leadership Forum (CSLF)―22 members: Focused on CO2 capture & storage technologies. International Partnership for the Hydrogen Economy (IPHE)―17 members: Organizes, coordinates, and leverages hydrogen RD&D programs. Generation IV International Forum (GIF)―1 members: Devoted to R&D of next generation of nuclear systems. Methane to Markets Partnership―17 members: Recovery and use of methane from landfills, mines, and oil & gas systems. ITER―7 members: Project to demonstrate the scientific and technological feasibility of fusion energy. Renewable Energy and Energy Efficiency Partnership (REEEP)―17 countries working to enhance the delivery of clean and secure energy through the use of renewable resources and energy efficiency programs in the developed and developing world.

19. Asia-Pacific Partnership on Clean Development and Climate Six Partners in 2003: (Australia, China, India, Japan, Republic of Korea, and the United States) accounted for: • 49.0% of World GDP (Purchasing Power Parities) • 45.4% of World Population • 46.2% of World Total Primary Energy Consumption • 50.2% of World CO2 Emissions from the Fossil Fuel Consumption and Flaring • 64.4% of World Coal Production • 63.6% of World Coal Consumption • 45.6% of World Petroleum Consumption • 49.3% of World Total Net Electricity Generation • 49.4% of World Total Net Electricity Consumption Sources: International Energy Agency, CO2 Emissions for Fuel Combustion: 1971-2003. 2005 Edition; and Energy Information Administration, International Energy Annual 2003

20. Focus • Voluntary practical measures taken by these six countries in the Asia-Pacific region to create new investment opportunities, build local capacity, and remove barriers to the introduction of clean, more efficient technologies. • Help each country meet nationally-designed strategies for improving energy security, reducing pollution, and addressing the long-term challenge of climate change. • Promote the development and deployment of existing and emerging cleaner, more efficient technologies and practices that will achieve practical results in areas such as: • Methane Capture/Use • Civilian Nuclear Power • Geothermal • Agriculture/Forestry • Rural/Village Energy Systems • Advanced Transportation • Hydro/Wind/Solar Power • Building/Home Construction/Operation • Energy Efficiency • Clean Coal • Natural Gas • Bioenergy • Seek opportunities to engage the private sector.

21. Organization

22. Next Steps • Policy and Implementation Committee and Task Forces will meet April 18-21 in Berkeley, California. • Task Forces to begin development of Action Plans — “blueprints” for action — for the private sector and governments. • Strategic framework for identifying opportunities (technologies and practices)and implementing priority actions to advance clean development and climate goals. • Identification of specific opportunities (technologies and practices) for cooperation and barriers to these opportunities. • Establishment of ambitious and realistic results-orientedgoals for both immediate and medium-term specific actions, with measurement systems to gauge progress toward achieving the goals. • We are seeking actions that are both broad and deep, including both technology development and deployment. • Action Plans to be completed by mid-2006, with implementation to begin at start of Fiscal Year 2007 (October 1, 2006).

23. Summary Stabilization of greenhouse gas [GHG] concentrations in the atmosphere—the “ultimate objective of the UNFCCC confronts several realities, including: Reality 1—Stabilizing GHG Atmospheric Concentrations Is a Long-Term Issue. Reality 2—Fossil Fuels Will Remain the Dominant Energy Source for Decades. Reality 3—Can’t Expect Developing Countries to Reduce Energy Consumption for the Foreseeable Future. Reality 4—No “Silver Bullet”: Broad Portfolio of Technologies Required. Reality 5—Challenge is Formidable. U.S. addresses climate change within a broader development agenda—one that promotes economic growth, reduces poverty, provides energy security, reduces air pollution, and mitigates greenhouse gas emissions. Seeks to accelerate near-term deployment of cleaner technologies through a mix of mandatory, incentive-based, and voluntary programs, and working through international partnerships, with emphasis on public-private partnerships. Seeks to develop “breakthrough” cleaner technologies through government-funded RD&D programs domestically, and working through international partnerships, again emphasizing public-private partnerships where feasible.

24. Room for Optimism: U.S. Experience with Air Pollution • Air Pollution Down 54% Since 1970: • Down 10% in 2001-2004 • Economy Up 187% • Vehicle Miles Up 171% • Energy Use Up 47% • Population Up 40%