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Natural Gas & Climate Change Forum Octo October 4, 2007 Ronald Reagan Building Washington, D.C. American Gas Foundation Natural Gas and Climate Change Forum October 4, 2007 May XX, 2006 Many Different Bills to Reduce GHG Emissions One Source, Innovative Solutions 3 Economy-Wide Proposals in 110th Congress Bill Scope Emissions Cap 2010-2012 Emissions Cap 2020 Emissions Cap 2050 4 Allocation v. Auction Offsets Bingaman-Specter (S. 1766) Com. on EPW, 7/11/07. Economy-wide, upstream 2012 level in 2012. 2006 levels by 2020. 1990 levels by 2030. President may set longterm target >60% below 2006 levels by 2050. Increasing auction. Some sector allocations. 5% set-aside for ag. Sequestration $12/ton safety valve starting 2012; increasing 5%/year. Lieberman-Warner (Not introduced) Discussion principles, 8/2/07 Economy-wide “hybrid” Up: oil refineries Down: electric utilities, large sources 2005 by 2011 10% < 2005 in 2020 30% <2005 in 2030 50% <2005 in 2040 70% <2005 in 2050 Increasing auction. Some sector allocations. Borrowing up to 15%/company (on domestic and international credits and offsets) Kerry-Snowe (S. 485) Finance Com., 2/1/07. Economy-wide, downstream 1.5% <2009 in 2010 1.5%/yr reduction 2010-2019 2.5%/yr reduction 20202029 3.5%/yr reduction 20302050 Determined by the President Potential for borrowing and/or increased int’l offsets. McCain-Lieberman (S. 280) Hearings 7/24/07. Economy-wide, “hybrid” Up: transport Down: electric utilities, large sources 2004 by 2012 1990 level in 2020 20% <1990 in 2030 60% <1990 in 2050 Administrator determines 30% limit on use of int’l credits and domestic reduction or CCS Sanders-Boxer (S. 309) Intro Remarks, EPW, 6/13/06. Economy-wide, downstream N/A 1990 level in 2020 27% <1990 in 2030 53% <1990 in 2040 80% <1990 in 2050 Cap and trade not required N/A One Source, Innovative Solutions One Source, Innovative Solutions Please contact us to discuss how SAIC’s energy and climate change teams can help you: Steve Messner Contact Us Ph: 858 220-6079 Email: [email protected] Michael Mondshine Ph: 703 676-4835 Email: [email protected] Jette Findsen Ph: 202 488-6624 Email: [email protected] One Source, Innovative Solutions 5 U.S. Environmental Protection Agency Office of Atmospheric Programs EPA Analysis of The Climate Stewardship and Innovation Act of 2007 S. 280 in 110th Congress Presentation for the Natural Gas & Climate Change Forum October 4, 2007 Allen A. Fawcett The full analysis is available at: www.epa.gov/climatechange/economicanalyses.html 6 Results: S. 280 Senate Scenario Sources of GHG Abatement (ADAGE) 6,000 % of Abatement from Offsets & International Credits 2015 2030 2050 International Credits 45% 18% 3% Domestic Offsets 12% 21% 15% 5,000 Total 56% 39% 19% • S. 280 allows offsets and international credits to make up 30% of the total allowance submissions requirement. • The quantity of offsets allowed decreases as allowance submissions decrease. • Since the quantity of offsets allowed is decreasing over time and the quantity of abatement is increasing over time, offsets make up a large fraction of abatement in the early years of the policy, and there contribution to total abatement decreases over time. Credits - International Offsets - CH4 - Oil Sector Offsets - CH4 - Natural Gas Sector Offsets - CH4 - Landfills Offsets - Agriculture and Forestry SF6 - Energy-Int Man SF6 - Electricity PFC - Energy-Int Man 4,000 PFC - Other Manuf MMtCO2e HFC - Other Manuf N2O - Petroleum 3,000 CH4 - Coal CO2 - Agriculture CO2 - Coal CO2 - Natural Gas 2,000 CO2 - Services CO2 - Crude Oil CO2 - Petroleum CO2 - Other Manuf 1,000 CO2 - Energy-Int Man CO2 - Transport CO2 - Residential - Autos CO2 - Electricity 0 2015 2020 2025 2030 2035 2040 2045 2050 7 Results: S. 280 Senate Scenario U.S. Electricity Generation, mid-term results (ADAGE) S. 280 6,000 6,000 5,000 S.280 Case 4,000 7,000 6,000 3,000 5,000 4,000 2,000 3,000 2,000 1,000 1,000 0 02010 2010 Electricity Generation (billion kWh) 7,000 Electricity Generation (billion kWh) Electricity Generation (billion kWh) Reference 7,000 5,000 4,000 3,000 2,000 1,000 2015 2015 2020 2020 2025 Traditional Fossil 2025 2030 2030 2035 2040 2035 2040 2045 2050 Advanced Fossil with CCS 0 2045 2050 2010 2015 2020 Nuclear 2025 2030 Other Non-Fossil 2035 2040 2045 2050 Reference Note: Other non-fossil includes hydro, geothermal, wind, solar, biomass and municipal solid waste. 8 Results: S. 280 Senate Scenario Global CO2 Concentration (MiniCAM) S. 280 Senate Scenario • USA adopts S. 280. • Group 1 countries (Kyoto group less Russia) follow an allowance path that is falling gradually from the simulated Kyoto emissions levels in 2012 to 50% below 1990 in 2050. • Group 2 countries (rest of world) adopt a policy beginning in 2025 that returns and holds them at year 2015 emissions levels through 2034, and then returns and maintains them at 2000 emissions levels from 2035 to 2050. • After 2050, all countries hold emissions caps constant at 2050 levels. 750 700 650 ppm 600 550 CO2 Concentration Results • In the reference scenario, Global CO2 concentrations rise from historical levels of 354 parts per million (ppm) in 1990 to 718 ppm in 2095 • In the Senate scenario, CO2 concentrations are 481 ppm in 2095. While CO2 concentrations are significantly reduced in the Senate scenario, they are not on a stabilization trajectory. 500 450 400 350 300 1990 2010 2030 2050 2070 Reference S.280 w/o International Action International Action w/o S.280 S. 280 Senate Scenario 2090 Incremental Effect of S. 280 • If the U.S. adopts S. 280 and no other countries adopt emissions caps, then CO2 concentrations in 2095 are 23 ppm lower than the reference scenario. • If the U.S. does not cap emissions, and all other countries take on the targets from the Senate scenario, then CO2 concentrations in 2095 are 25 ppm higher than the Senate scenario. • The larger incremental effect when the U.S. acts alone is, in part, due to the fact that the U.S. is able to achieve more of its carbon-equivalent emissions reductions through non-CO2 greenhouse gas abatement. • This is counterbalanced by a smaller marginal effect on ocean uptake from the U.S. emissions reductions when the U.S. acts alone. 9 Climate Change and Natural Gas: A View From EIA for Natural Gas and Climate Change Forum American Gas Foundation October 4, 2007 Impact of a CO2 Value on Energy Prices Impact of $10 per ton CO2 value Impact of $50 per ton CO2 value CO2 content per million Btu Delivered Price (2005, all sectors, per million Btu) Coal 0.094 1.57 0.94 59.9 4.70 299 Oil 0.074 18.6 0.74 4 3.70 19.9 Nat. Gas 0.053 9.65 0.53 5.5 2.65 27.5 Fuel $ percent $ percent 11 Energy-Related CO2 Emissions (million metric tons) Electric Power Residential 10,000 Transportation Commercial Industrial 9,000 8,000 2005 2030 298 393 7,000 270 395 6,000 230 368 5,000 1,020 4,000 3,000 2020 1,114 1,250 271 389 1,078 303 383 2,612 1,122 2,288 1,953 2,246 2,495 2,000 1,000 2,375 2,811 3,334 2,133 1,217 0 2005 Actual Reference S.280 • The electric power sector dominates energy-related CO2 emission reductions. Reference S.280 • Although the S.280 GHG target for covered entity emissions in 2030 is 18 percent below the 1990 level (equivalent to 34 percent below the 2005 level), total energy-related CO2 emissions in the S.280 Core Case are only about 7% below the 2005 level in 2030 due to the use of offsets and banked allowances, partial coverage and greater reduction of other GHGs. If more (less) international offsets were available, projected 2030 energy-related emissions under S.280 would be higher (lower). 12 100 $ per megawatt-hour Fuel Cost For Current Coal and CC Gas w/ Carbon Value 80 Existing CC w/ $ 8 gas 60 Existing CC w/ $ 6 gas 40 Existing P ulverized Coal 20 0 0 10 20 30 40 50 60 70 Carbon Value ($ / ton CO2) 160 Total Le v e lize d Costs -- Ne w Plants in 2025 w/Carbon Value $ per megawatt-hour 140 120 P ul Co al IGCC 100 CC - $ 8 gas CC - $ 6 gas 80 Wind 60 Nuclear , Bio mass 40 20 0 0 10 20 30 40 50 60 Carbon Value ($/ton CO2) in 2025; 5% annual growth after 2025 70 www.eia.doe.gov GHG Legislation and Implications for the Natural Gas Industry Natural Gas & Climate Change Forum Joel Bluestein October 4, 2007 U.S. GHG Emissions – 2004 Total = 7,074 MMTonnes Total 2004 GHG Emissions=7,075 MMTonnes CO2 from Electricity Generation 34% Oil 1% Gas 4% Coal 29% HFC, PFC, SF6 2% N2O (Soil Mgmt, Combustion) 5% CO2 from Transportation 26% Methane (Landfill, Ag, Mining, Gas) 8% CO2 from Process and Non Energy Use 4% CO2 from Industrial Combustion 13% 16 CO2 from Residential Combustion 5% CO2 from Commercial Combustion 3% U.S. GHG Emissions by Fuel and Sector 2004 U.S. GHG Emissions by Fuel and Sector - 2004 2,500 2,000 Emissions related to electricity generation are shown twice in this chart: once in the "Power" sector and once as reallocated to the sector in which the electricity is used. MMT CO2eq 1,500 Reallocated Electricity HFC, PFC, SF6 Methane N2O Non-Energy CO2 CO2 from Coal CO2 from Oil CO2 From Gas 1,000 500 0 Residential Commercial Agriculture Industrial Sector 17 Transportation Power S. 280 Cap Compared to BAU 10,000 9,000 8,000 Non-Covered Other GHG Commercial Residential MMTonnes CO2 7,000 6,000 5,000 S. 280 Cap Capped Sectors 4,000 Electric Power 3,000 Transportation 2,000 Industrial 1,000 0 2004 Covered Other GHGs 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 18 Data source: EIA analysis of S. 280 – McCain/Lieberman Bill 2030 EIA Projection of S. 280 Response 19 EIA Projection of Offset Usage 1,200 International Offsets 1,000 MMTonnes CO2 800 600 400 Domestic Ag/Forestry Sequestration 200 Non-Covered Gases 2012 2014 2016 2018 2020 2022 20 2024 2026 2028 2030 CO2 Prices Shift New Technology Choices EIA Case 21 Capital Costs Also Shift Technology Choices Capital Cost - $/kW $110 PC Gas CC Nuclear IGCC/CS Wind $2,400 $835 $4,000 $3,675 $1,900 $100 $/MWh $90 $80 $70 PC IGCC IGCC/CS Gas CC Nuclear Wind $60 Current “High Cost” Case $50 $40 $0 $20 $40 $60 $/metric ton CO2 22 $80 $100 $120 NGC Modeling of Gas Consumption 34 32 30 Quads 28 26 EIA Ref 280 EIA S 280 EIA No New Nuke NGC 30% Offsets NGC 15% Offsets 24 22 20 2004 2006 2008 2010 2012 2014 2016 2018 23 2020 2022 2024 2026 2028 2030 Contact Information Joel Bluestein ICF International [email protected] 703-528-1900 24 U.S. Greenhouse Gas Emissions: The Importance of Methane Methane is potent greenhouse gas (GHG) with 100-year global warming potential of 23; atmospheric lifetime of ~12 years The 2nd most important GHG accounting for ~18% of total climate forcing A primary constituent of natural gas and a valuable, clean-burning energy source Landfills 24% CO2 84% CH4 8% N2O 6% HFCs, PCs, & SF6 2% Oil & Natural Gas Systems 26% Other 19% Coal Mining 10% Enteric Fermentation 21% Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990 – 2005, USEPA, April, 2007 25 Methane Emission Reduction Technologies & Practices Gas Production & Processing Reduced Emission Well Completions Install Plunger Lifts on Gas Wells Identify, Measure & Fix Leaks in Processing Plants Install Flash Tank Separators on Dehydrators Producing Wells Gas Transmission Transmission Lines Gathering Lines Processing Plant Compressor Stations LNG or Propane/Air Plant Identify, Measure & Fix Leaks in Compressor Stations, Pipelines Use Pipeline Pumpdown Replace High-Bleed Pneumatics Underground Storage City Gate (Regulators/Meters) Oil Production Install VRUs on Crude Oil Distribution Mains (Lines) Storage Tanks Route Casinghead Gas to Gas Distribution VRU or Compressor for Identify, Measure & Fix Leaks in Recovery & Use or Sale Pipelines & Surface Facilities Use Pipeline Pumpdown Techniques to Minimize Venting Large Volume Customer Regulator/Meter Residential Customers Commercial Customer Picture courtesy of American Gas Association 26 Natural Gas STAR Partner Accomplishments (1990 – 2005) 200 8,000 7,000 150 Total U.S. greenhouse gas emissions (left axis) 6,000 100 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 5,000 1990 U.S. Oil & Natural Gas sector methane emissions are 10% under the 1990 level emissions Units in teragrams of CO2 equivalent (TgCO2E) U.S. oil & natural gas sector methane Emissions (right axis) Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990 – 2005, USEPA, April, 2007 27 Natural Gas – a Premium Fuel Goal is to meet our expanding energy needs while preserving the environment Natural gas is part of the solution – Use it wisely – Ensure adequate supplies Over the long term, a bridge to a low carbon future….28 Super Boiler – Breakthrough Technology 29 Revolutionary Melter Helps Glass Industry Compete > 40 bcf/yr of natural gas demand > Improved capital cost, efficiency, and productivity > Supported by consortium of glass manufacturers: Corning, Johns Manville, Owens Corning, PPG, Schott 30 Gasification – Pathway to Secure, Clean Energy Supply Liquefaction Carbon Management Opportunity Transportation Fuels Gasification Syngas Pipeline Quality Gas / Chemical Feedstock Pipeline / Chemical Plant Excellent Environmental Performance Power Plant Fuel Power Plant 31 Flex-Fuel Test Facility at GTI for Next Generation Fuels 32 Bio-Methane (Bio-gas) Renewable methane from biomass, landfills, wastewater treatment 33 Congressman Peter Roskam Fuels a Hydrogen Vehicle 34 Engineering Responses to Climate Change - Carbon Management Natural Gas & Climate Change Forum Ah-Hyung Alissa Park Earth and Environmental Engineering Columbia University October 4, 2007 Research Clusters in Academia Columbia University Earth Institute Lenfest Center for Sustainable Energy MIT Stanford MIT Energy Initiative The Global Climate and Energy Project Berkeley Berkeley Institute of the Environment Carbon Management CO2 Removal Separation Transportation Sequestration US DOE target: $10 per ton of carbon avoided Necessary Characteristics Capacity and price Environmentally benign fate Stability Carbon Sequestration Technologies Different Geological Sequestration Options [Source: http://esd.lbl.gov/GEOSEQ] Example: Statoil's Sleipner West gas reservoir in the North Sea: 106 ton/year CO2 are injected into a brine formation [Source: “Demonstrating Carbon Sequestration” Geotimes, March 2003] Sources: DOE Carbon Sequestration Technologies Mineral sequestration http://www.princeton.edu/~chm333/co_two/minerals/ Ocean sequestration Air capture Sources: DOE Sources: DOE