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MIT Energy Initiative

Towards a Clean Energy Future: Fracturing Some Energy Fairy Tales

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MIT Energy Initiative

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  1. Towards a Clean Energy Future: Fracturing Some Energy Fairy Tales • Melanie Kenderdine MIT Energy Initiative NESCAUM/Endicott House August 17, 2011 MIT Energy Initiative e i MIT

  2. MIT Energy Initiative • The Sky Really is Falling: Some Hard Truths e i MIT

  3. Climate Change Challenge: Global CO2 Emissions*, 2010/2030 60% of the CO2 emissions in 2010 will be from 6 countries: the US, Japan, Russia, India, Germany and China 68% of this increase will be from China, India, the US, and the Middle East 49% of this increase will be from China alone EIA forecasts a 30% global increase in CO2 emissions in next two decades MIT Energy Initiative MIT Energy Initiative e i MIT *million metric tons EIA 2009 IAEO

  4. It’s later – and more serious -- than we think Without Policy With Policy MIT Energy Initiative MIT Energy Initiative e i MIT Analysis of Climate Policy Targets Under Uncertainty, Prinn, et al 2009

  5. E.S. Figure 1. America’s electricity comes from old power plants 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s Annual per Capita Electricity Consumption MIT Energy Initiative “The world will need to consume four times as much energy by 2100 to raise the standard of living in developing nations to that of those in developed nations.” e i MIT

  6. Challenge: Global Energy Consumption 2030 MIT Energy Initiative 680 quads/yr. Source: Lawrence Livermore National Laboratory, John Ziagos e i MIT

  7. US Energy Supply Since 1850 Can We Cut Transition Time by 2/3rds? ? MIT Energy Initiative Gas Coal Wood Oil e i MIT

  8. Spinning Straw into Gold (maybe) MIT Energy Initiative e i MIT

  9. CO2 Mitigation with Carbon Price 9 Electric sector Gas Coal MIT Future of Natural Gas Study

  10. Beware the Long-term Impacts of Policy Decisions on Energy Infrastructure/Mix Use of Petroleum/Natural Gas in Power Generation Hotly Debated Post-OPEC Oil Embargo Debate has Chilling Effect on New Gas Plant Construction US Congress, 1975-1977 In 2007, roughly 27% of all CO2 emissions from the power sector came from coal plants built between 1975 and 1987. MIT Energy Initiative • Congress Repeals Fuel Use Act, Paving Way for New Gas Generation • Washington, DC, 1987 Congress Outlaws Natural Gas for Power Generation Spurs Construction of Coal-Fired Power Plants Washington DC, 1978 Embargo + Fuel Use Act + TMI = New Market Share for Coal Plants Kenderdine Market Analysis, 2010 De-regulation of Natural Gas, Wave of New Technologies Spurs US Gas Production 1978-1990 e i MIT

  11. Uprising Against the Ethanol Mandate Beware of the “Herd Mentality” Federal Reserve Chairman Alan Greenspan Declares Impending Natural Gas Crisis Fox News, June 23, 2003 ExxonMobil and Qatar Petroleum sign agreement for LNG supply Pipeline & Gas Journal, November 1, 2003 MIT Energy Initiative Exxon to Buy XTO for $31 Billion in Bet on U.S. Gas Bloomberg, December 14, 2009 “I strongly support developing new LNG capacity in the United States.” President Bush, July, 2004 election interview Exxon says N. America gas production has peaked Reuters, June 21, 2005 • Huge natural gas field 'discovered' in Texas • Major energy firms seeing benefit in developing domestic sources • WorldNetDaily, June 21, 2005 Up, Up and Away: Shale Gas Production Takes Off Oil and Gas Investor, June 15 2008 U.S. Shale Gas Plays Affecting Global LNG MarketWSJ, November 3, 2009 e i MIT

  12. Power Generation Technologies, Capacity Factors, 2007 % Nameplate Capacity vs. % Generation , 2009 MIT Future of Natural Gas Study

  13. Scale and Location of Fully-Dispatched NGCC Potential and Coal Generation (MWh, 2008) WA ME MT ND MN OR NH MA NY ID SD MI WY WI CT RI PA IA IL OH NJ MD NV WV DE IN VA CA KY MO NC TN AZ AR SC OK AL NM GA MS LA Scale: 100,000,000 MWh TX FL MWh coal generation, heat rate <10,000 MWh coal generation for pre-1987 plants with >10,000 heat rate 13 Existing NGCC capacity operating at 85% capacity factor minus 2008 actual MWh generation (FDNP) MIT Future of Natural Gas Study

  14. Coal to Gas Fuel Substitution Benefits Vary by Region • Nationwide, coal generation displacement with surplus NGCC would: • reduce CO2 emissions from power • generation by 20% • reduce CO2 emissions nationwide • by 8% • reduce mercury emissions by 33% • reduce NOxemissions by 32% • cost roughly $16 per ton/CO2 • The displacement of coal generation with NGCC generation should be pursued as the only practical option for near term, large scale CO2 emissions reductions 14 MIT Future of Natural Gas Study

  15. Spinning Gold into Straw: Unintended Consequences MIT Energy Initiative e i MIT

  16. Uprising Against the Ethanol Mandate Beware the Unintended Consequences of Mandates Senate Committee Ups Ethanol Mandate to 8 Billion Gallons by 2012 AAHSTO Journal, June 1, 2005 Gov. Schwarzenegger Praises Federal Grant to Help in Building 15 Ethanol Fueling Stations in California Governor’s Press Release, Oct 31, 2006 MIT Energy Initiative Ethanol industry balks at legislative mandate to boost production Renewable Fuels Assn., Dec 08, 2009 US Congress gives final OK to huge ethanol boost ICIS News, December 18, 2007 Ethanol's popularity wanes amid rising food prices USA Today 5.22.08 U.S. Food Industry Calls for Ethanol Mandate Waiver Reuters, June 6, 2008 Uprising Against the Ethanol Mandate New York Times, July 23, 2008 e i MIT

  17. Large Scale Penetration of Intermittent Wind in Short Term/ERCOT Gas NGCC Coal Wind • The principal impacts of increased deployment of intermittent renewable energy sources in the short term are – • the displacement of NGCC generation • increased utilization of operating reserves • more frequent cycling of mid-range or even base load • plants. MIT Future of Natural Gas Study 17

  18. Buildings: Full Fuel Cycle Energy/CO2 Energy Consumption CO2 Emissions 2.7X For buildings, a move to full fuel cycle efficiency (site vs. source) metrics will improve how consumers, builders, policy makers choose among energy options (especially natural gas and electricity). Efficiency metrics need to be tailored to regional variations in climate and the electricity supply mix. Electricity + 194% Ton CO2 per 100 MWh of Useful Energy Gas +10% Fuel Energy per 100 MWh of Useful Energy + = SourceEnergy SiteEnergy MIT Future of Natural Gas Study

  19. MIT Energy Initiative • Forgetting the Moral of the Story e i MIT

  20. Historical Overview: Coalbed Methane R&D RD&D Spending • Public and public-private funding for natural gas research is down substantially even as gas takes a more prominent role. • Consideration should be given to restoring a public-private RD&D research model – • Industry-led portfolios • Multi-year funding GRI Funding Steady over 15 years Gas produced after tax credit Federal Funding Time limited tax credit Gas produced under tax credit MIT Future of Natural Gas Study

  21. DOE Energy R&D: FY 12 Request (million $) Solar 39% Bio 29% Wind 11% MIT Energy Initiative Coal 100% DOE Budget Summary, FY2011

  22. MIT Energy Initiative • Happily Ever After? e i MIT

  23. The Changing DOE Innovation Ecosystem New structures for $1.6 billion in energy research over the next five years MIT Energy Initiative e i MIT

  24. Uprising Against the Ethanol Mandate Current DOE Organization of Energy Programs Undersecretary, Energy/Environment Undersecretary, Science Secretary, US DOE MIT Energy Initiative Office of Science Renewables/ Efficiency Advanced Research Projects Agency - E Fossil Energy (Coal, gas, oil) Can we develop a comprehensive research/policy portfolio when offices are organized around fuels? Why is efficiency in the renewables office? Nuclear Energy Where would you put an energy and water program? Is there an organizational home to migrate basic science discoveries to technology solutions? Is there any significant relationship between vehicle, building, industrial efficiency technologies? Which office is responsible for distributed generation? Relationship of electricity to fuel sources? If a fuel meets environmental specifications do we care which fuel we use? Where does transportation fit? What about transportation fuels? Electric Reliability e i MIT 24

  25. Uprising Against the Ethanol Mandate A Different Structure: A Portfolio Approach Functional model End use model Undersecretary, Science & Energy Secretary, US DOE MIT Energy Initiative Office of Fuel Office of Transportation Office of Science Advanced Research Projects Agency - E Efficiency, Carbon Mgmt., Water Embedded in Each Office of Heat Office of Buildings Office of Power Office of Industrial Energy e i MIT

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