Download Cool It - Ning.com

Reducing Greenhouse Gas Emissions:
How and at What Cost?
Robert L. Hance
President/CEO
Midwest Energy Cooperative
Climate Change
• Greenhouse Gases (GHG) in atmosphere
that absorb and emit radiation – water
vapor, carbon dioxide (CO2), methane,
nitrous oxide and ozone
– Real and human caused
– Impacts often wildly exaggerated
– Need simpler, smarter and more efficient
solutions
– More important issues – hunger, poverty,
disease, etc.
Climate Change Information
• United Nations International Panel on Climate
Change (IPCC)
• http://en.wikipedia.org/wiki/Climate_change
• http://masterresource.org/
• Cool It by Bjorn Lomborg
10
8
Cap and Trade Basics
Baseline
6
4
Declining Cap
2
0
Time
How Cap and Trade Works
• Step #1 – Set Goal
– 17% below 2005 CO2 emissions by 2020
– 83% below 2005 by 2050
• Step #2 – Establish Cap
– Total emissions of GHGs from designated
group of emitters (e.g., power plants,
manufacturers, smelters, transportation) is
capped based on current totals or reduced
totals
How Cap and Trade Works
• Step # 3 – Cap is allocated among
emitters
– Total cap is allocated among regulated facilities as
allowable emissions permit that allow GHG emissions
by ton per year
– Or, part of the cap is allocated “free” and part is
auctioned by government with proceeds used to:
• Invest in research and development
• Reduce individual income taxes or provide energy
rebates
• Reduce corporate taxes
Federal Climate Change Proposals
• HR 2454 – The American Clean Energy and Security Act
(Waxman-Markey) passed U.S. House of
Representatives in June – 219-212
– Section One: Consumer Protection (now there’s a
clue)
– Caps CO2 emissions 17% below 2005 level by 2020
(adjusted for growth in electricity demand could mean
a 24% reduction)
– 83% below 2005 by 2050 (estimated to reduce global
temperature by a mere 0.05 degree Celsius)
– Price of carbon permits could reach $48-$61 per
metric ton of CO2 by 2020
Federal Climate Change Proposals
• Obama Administration budget projects $624
billion revenue from carbon cap & trade tax over
2012-2019. More than 80% earmarked for tax
credits – not clean energy development
• “Under my plan, of a cap and trade system,
electric rates would necessarily skyrocket.”
• Candidate Barack Obama in January 2008 (view on
YouTube)
• EPA greenhouse gas endangerment finding
CO2 Intensity of Distribution Co-ops*
Source: 2007 EIA-906 Generation & Emissions data
Strategic Analysis Unit
May 2009
CO2 emissions in pounds per kWh
WA
0.02
OR
0.02
MN
2.21
ID
0.02
WY
1.89
CA
0.50
NV
0.99
UT
1.93
AZ
1.91
ME
0.72
ND
1.98
MT
0.47
WI
2.02
SD
1.82
PA
0.72
IA
1.60
NE
1.80
IL
2.22
CO
2.02
KS
1.71
OK
1.89
NM
1.71
MO
1.94
OH
2.00
IN
2.00
KY
2.29
WV
1.84
AR
2.04
AL
1.71
DE 1.23
MD 1.71
VA
1.14
GA
1.17
SC
1.90
CO2 emissions in pounds per kWh:
High 1.70 and above
LA
1.82
AK
1.06
Medium 1.00 to 1.69
Low 0 to 0.99
FL
1.79
HI
0.59
*based on fuel mix of co-op-owned generation and other known co-op power suppliers (TVA, BPA, Santee Cooper etc);
any other co-op power purchases were assumed to be at an emissions rate typical of the NERC sub region.
NJ
0.72
NC
0.89
TN
1.41
MS
1.57
TX
1.62
NY
0.28
MI
1.84
VT
0.72NH
0.72
With Cap-and-Trade, the devil is in the details…
Program design requires choices among dozens of
alternatives
– Choices will create winners and losers among
stakeholders
– Costs to Michigan consumers could be billions of
dollars depending on how the cap and trade program
is designed
– Congressional Budget Office estimates HR 2454 will
raise a family’s electric bill $175 per year. Does not
include impact on costs of other fuels, food and
consumer goods
the devil is in the details…
– Heritage Foundation estimates by 2035
• An average of 844,000 jobs will have been lost
each year
• Electric rates up 90% (inflation adjusted)
• Gasoline prices up 74%
• Residential natural gas up 55%
• Average family’s energy bill up by $1,500 a year
– At $20/ton price on CO2, a residential electric co-op
consumer in MI could see a 16% increase – at
$50/ton a 40% increase
Copenhagen Consensus Consulting
• Expert panel of five top economists including
three Nobel Laureates concluded that greater
resources should be spent on research into
climate engineering and green energy.
• Panel scrutinized 21 ground-breaking research
papers by top climate economists that analyzed
the costs and benefits of different responses to
global warming.
• Based on analysis of the research, they created
a prioritized list that outlines the best and worst
ways to respond to climate change.
RATING
“Very Good”
“Good”
“Fair”
“Poor”
“Very Poor”
SOLUTION
CATEGORY
1
Marine Cloud Whitening Research
Climate Engineering
2
Energy R&D
Technology
3
Stratospheric Aerosol Insertion Research
Climate Engineering
4
Carbon Storage Research
Technology
5
Planning for Adaptation
Adaptation
6
Research into Air Capture
Climate Engineering
7
Technology Transfers
Technology Transfers
8
Expand and Protect Forests
Forestry
9
Stoves in Developing Nations
Cut Black Carbon
10
Methane Reduction Portfolio
Cut Methane
11
Diesel Vehicle Emissions
Cut Black Carbon
12
$20 OECD Carbon Tax
Cut Carbon
13
$0.50 Global CO2 Tax
Cut Carbon
14
$3 Global CO2 Tax
Cut Carbon
15
$68 Global CO2 Tax
Cut Carbon
Michigan Capacity Need Forum
• January 2006 findings:
– Peak electric demand is projected to increase at an annual rate of about
2.1%.
– The average age of Michigan’s power plants is 48 years. Demand
growth, coupled with the expected retirements of some of Michigan’s
existing base load power plants, will necessitate the addition of one or
two base load plants by 2014. Build time on a base load plant is at least
six years.
– By 2009, unless enhancements to existing supplies are undertaken,
growing demand will cause existing electric generation and transmission
capacity in the Lower Peninsula to be insufficient to maintain reliability
standards.
– Resource enhancements available could include a wide variety of nearterm options, including additional demand-side options (energy
efficiency improvements, load management, and demand-response
programs) and generally faster-to-complete supply-side options such as
transmission improvements, natural gas combustion turbines or
combined cycle generators, renewable energy, and combined heat and
power systems.
Lower Peninsula Forecast Demand and Supply
Questions?