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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 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 Primary source of global warming pollution Acid rain Criteria air pollutants Dangerous underground mining Impact of transport on roads Nuclear Power 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 Subsidy policies designed to encourage latestage- CTs face the following problems 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 Safety? Performance Rebound effect Fuel Switching 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 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 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