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Energy Policy and
The Environment
Energy at the center of the
environment…
Heat and Power
 Transport
 The current picture 
 The alternatives: CT Options?

Energy Consumption per Capita,
International Comparison
I. Heat and Power Options
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Demand-side mgmt=energy efficiency
Coal--48%
Nuclear--20%
Natural gas--20%
Hydroelectric Power--6%
Fuel Oil--2%
Other renewables--4% (wind, solar,
geothermal, biofuels)
Demand-Side Management

Demand-side management (DSM)
 Promote technologies that use energy more
efficiently
 “Produce” energy by freeing up supply
 Cogeneration
 Energy efficient industrial motors and cooling
and cleaning appliances
Potential for Electricity Savings
Through DSM
The Dominance of Coal

Reasons for coal’s dominance
 Reliable, low-priced fuel source
 Well-developed technology
 Abundant domestic resources

Problems with coal
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Primary source of global warming pollution
Acid rain
Criteria air pollutants
Dangerous underground mining
Impact of transport on roads
Nuclear Power
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110 plants operating in the US
No new plants since the mid-1970s
Is it cost-competitive?
Is it “clean”?
Worst-case disaster in US might cause
100,000 deaths (Nuclear Regulatory
Commission)
Nuke Economics
No one knows… no new plants in 30
years!
 Currently Heavily subsidized:

 A large share of R&D
 Waste disposal: Govt pays
 US Govt caps accident damage liability

What about security?
Nuke environmental impacts
Low global warming impact
 Radiation releases and meltdowns

 Chernobyl, Three-mile Island

Waste Disposal
Nuclear Waste Disposal

High-level waste
 Remains toxic for hundreds of thousands of
years
 Spent fuel rods
 Waste from weapons production

Low-level waste
 Contaminated clothing
 Wastes from medical and pharmaceutical
facilities
Storage of High-Level Waste
Burial in geologically stable formations
 Above-ground storage
 Political opposition to siting of waste
facilities has halted nuclear power

Nuke Bottom Line

Nuclear power requires a significant
level of ongoing government subsidy
and regulatory dollars:
 Safety regulation
 Waste Disposal
 Bailouts in the event of a meltdown
Natural Gas
Cleanest of fossil fuels
 Yields 70% more energy for each unit of
CO2 emitted than does coal
 Likely to increase its share of the electric
power and heating markets
 Three drawbacks

 Relatively small supply
 Uneven geographic distribution
 Still a greenhouse gas
Hydroelectric Power
Half of the nation’s potential hydro sites
have been developed
 Dam projects can have significant
environmental impacts

 Flooding of ecologically valuable lands
 Negative impacts on aquatic life
Solar Power

Active solar
 Photovoltaic power--produces electricity
directly from solar cells
 Solar thermal power--focuses the sun’s energy
to heat a liquid and drive a steam turbine

Passive solar
 Produces heat– mostly used for heating
houses and pre-heating water
Wind Power
The most promising renewable electric
technology
 2010: global capacity > 100,000 MW; about
the same as 100 nuclear power plants
 Cost competitive: $.04 KWh
 Major environmental impact is noise and
aesthetics

Wind Power:
Storage and Transport
Major obstacle to wind power is storage
and transmission
 Produces power on an intermittent basis
 Current solution is to use electricity grid

 Grid transport and storage are limited
Policy Options:
Electricity and Heat
1.
2.
3.
Pick the clean, low-cost technology
Increase CT profitability by eliminating
subsidies and/or internalizing social costs
for competitor technologies
Promote the technology directly
Picking Winners
Low-hanging fruit are efficiency and wind
power
 Photovoltaics and solar thermal have the
best chance of being competitive with coal
in the long-run
 Solar, efficiency, and wind probably offer a
more feasible, cleaner and cheaper option
than nuclear

Level the Playing Field

Cut Dirty Subsidies
 Tax breaks
 Expenditures supporting industry
Oil subsidies
Federal Energy Subsidies by Sector
Source: Koplow
The Subsidy Pie, 2005
8%: efficiency and non-hydro renewables
 78%: nuclear and fossil fuels

 Provide bulk of country’s power
 Important political constituencies
 Reduce conventional pollutants from coal
plants

Renewable share increased in 2008, with
“green stimulus”. Similar shift in 1978 was
short-lived.
Highlights of
Subsidy Policy

Energy markets are not free markets
 Substantial government intervention
 Our current energy mix is not a “natural”
outcome

Federal policy currently tilts the playing
field against renewables and energy
efficiency
Direct Promotion of CTs
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Subsidy policies designed to encourage latestage- CTs face the following problems
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Equity issues
Strategic behavior
Free-riding
Rebound effects
Requiring recipients to pay at least a portion
of the cost should reduce these problems
Promoting CTs

Promoting early-stage CTs like
photovoltaics can be done in two ways
 Develop better technology through R&D
 Capture cost savings through economies of
scale
II. Transport Options:

In developed countries, motor vehicles
account for
 Half the nitrogen oxide
 Half the volatile organic compound emissions
 Two thirds of the carbon monoxide emissions

Autos account for
 14% of global CO2 emissions
 31% of US CO2 emissions
Social Costs of Oil
Taxpayer subsidies
 Environmental externalities
 Energy security
 US monopsony power in oil market

Fuel Efficiency
Increased fuel efficiency comes closest to
being a simple CT
 Hybrid vehicles
 Concerns about fuel-efficient cars
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 Safety?
 Performance
 Rebound effect
Fuel Switching
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Biofuels:
 Fuel from crops can be justified as a transition
technology only
 Medium run goal is “cellulosic” ethanol: fuel from
woody matter.

Hydrogen: Direct Combustion/Fuel cells
 Requires clean electricity to produce hydrogen
 Fuel cells require further R&D

Electric vehicles
 Require clean electricity
 Battery disposal
Mode Switching

Environmental benefits of urban mass
transit
 Energy-efficiency
 Reduce both local and global air pollutants
 Slows growth in total miles traveled

Cars still have an edge in convenience
and greater mobility
Policy Options:
Transport
Tighter CAFE standards: easily justified
on efficiency grounds
 Gas taxes
 Auto emissions tax
 Feebates
 Pay-by-the-mile auto insurance

Policy Options for
Mode Switching
Remove subsidies for private transport
 Internalize externalities (associated with
congestion)
 Toll systems on highways
 Congestion or peak-load pricing
 Dedicated traffic lanes
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Slowing Global Warming at a
Profit?

Optimists
 Global warming can be reduced while yielding a
net economic benefit

Pessimists
 Technology-forcing standards generate self-
defeating problems
 Government must bear real marketing costs
 Easy efficiency measures will soon be exhausted
 Renewable energy options do not have promise
Direction of Government Policy

Optimists and pessimists generally agree
that government should
 Increase commitment of R&D funds to clean
energy sources
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Disagreement over whether
 Government should support market diffusion
of clean energy sources
Lessons from Wind and
Solar-Thermal
1. Government subsidy policy can be effective.
2. Takes 25 years to move from R&D to commercial
competitiveness
3. Moral: to stop global warming, we need to invest
today in a suite of clean energy technologies