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Electricity Business Sector Collaboration on Climate Change 29 May 2007 Gail Kendall CLP Holdings Ltd. Electricity Sector and Climate Change Electricity is at the heart of global energy dilemma How to provide energy necessary for social and economic development, yet avoid serious climate change Electricity sector Generates 60% output from coal, natural gas and oil Accounts for 40% of global emissions of Carbon Dioxide (CO2) Plays a vital role in development and implementation solutions for climate change Solutions must be applied in concert to tackle the challenge 2 Stabilizing / Reducing Global Emissions Climate “Stabilization Wedges” Activity to reduce GHG emissions: • starts at zero today • increases linearly over time • avoids one Gigatonne of carbon per year after 50 years (S Pacala and R Socolow, 2004) 3 Stabilizing / Reducing Emissions in the Electricity Sector Wedges in the Electricity Sector Energy efficiency and conservation Renewable energy Clean coal technology with carbon capture and storage Natural gas Nuclear power Plant efficiency Substitution of electricity for direct use of fossil fuels 4 Types of Collaboration in the Electricity Sector Technology Development Technology Deployment Voluntary Emissions Reporting & Reduction Targets Policy Advocacy and Debate 5 Technology Development 6 Technology Development Large scale and high capital cost of energy infrastructure Pooling of resources for development was a practical means of achieving shared objectives in the pre-competitive stage Research programs Central Research Institute of the Electric Power Industry (CRIEPI), Japan Electric Power Research Institute (EPRI), US 7 Technology Development Needs Plant Compatible with Carbon Capture: Coal-fired Integrated Gasifier Combined Cycle (IGCC) Oxy-fuel / oxy-firing pulverized fuel plant Fluidized Bed combustion Carbon Sequestration (CCS) Geological sequestration Ocean sequestration Lower Emitting Power Generation Renewables (solar photovoltaic and thermal, ocean power) Capture-ready plants & Enhanced plant efficiency Fuel Cells 8 Plants with Carbon Capture FutureGen Project 275 MW zero-emission prototype plant Produce electricity and hydrogen from coal Capture and store CO2 Operation expected to begin in 2012 Digital images of FutureGen (Artist Concept) (Source: US DOE) GreenGen Project Project done in phases Final demonstration of 240 MW will integrate a fuel cell for higher efficiency Major partners: Huaneng and other 4 large China gencos 9 Other Developments on Clean Coal Canada – Canadian Clean Power Coalition Business-led initiative of over $1 billion; require government support Phase I Feasibility Study – CCS is feasible in Canada, with cost 50% higher than conventional power Governments – led collaborations with business Australian Cooperative Research Centre for Coal in Sustainable Development (CCSD) – 7 year A$61 million project Canadian CANMET Energy Technology Centre Japanese New Energy and Industrial Technology Development Office (NEDO) 10 Carbon Sequestration CASTOR 4-year initiative; to enable the capture and geological storage of 10% of CO2 emission of Europe Involving 6 power companies, 24 other business, and research and academic partners from 11 European countries March 2006 – CO2 capture industrial pilot unit inaugurated at 420MW Esbjerg power plant (Denmark) Esbjerg Power Plant Source: ELSAM Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC) Focus on CO2 capture and geosequestration in Australia Launched in 2003; received funding of A$140 million Developed plans for a demonstration project in the Otway Basin 11 Carbon Sequestration Potential US Department of Energy Program of 6 regional partnerships for carbon sequestration Phase I – characterisation of potential sequestration sites and technologies Phase II – conduct 25 field tests 12 Technology Deployment 13 Technology Deployment Support is needed in the early stages of technology deployment Business collaboration plays an important role in accelerating deployment of new large and small scale energy technologies Coal-fired Integrated Gasifier Combined Cycle, Oxy-fuel, etc ultimately with Carbon Capture and Storage Generation III Nuclear Power Gas or Biomass-fired Combined Heat and Power (CHP) Renewable Energy Systems (biomass, wind, geothermal, solar, ocean, …) Energy Efficiency (heat pumps, time-of use pricing, performance standards, …) 14 Large Scale Power Plants IGCC EPRI’s CoalFleet 21 project – develop capability to assess the feasibility of an IGCC plant Nuclear Power High cost overruns with unpredictable permitting requirements Roadmap to deploy nuclear power developed in the US in 2001 NuStart initiative – leading members of the nuclear power industry uniting their efforts to restart the industry 15 Distributed Power Generation Combined Heat and Power (CHP) USEPA – CHP Partnership 16 Renewable Energy & Energy Efficiency Renewable Energy Systems Electricity companies set up their own renewable funds to promote and support renewables programmes Energy Efficiency Japan’s Top Runner Program – accelerate deployment of the most efficient energy-consuming products into marketplace Mandary compliance to performance of the best of its class (top runner) 17 Clean Energy Investment Carbon Trust Venture capital approach to identify and invest in early stage technologies World Bank Prototype Carbon Fund Invest in Clean Development Mechanism (CDM) projects to produce Certified Emission Reduction Credits (CERs) 18 Voluntary Emissions Reporting and Reduction targets 19 Developing Reporting Schemes Different jurisdictions – differences in reporting schemes Differences in schemes may create: Confusion due to differences in reported totals for a single entity Omissions and/or double-counting arising from different scopes of reporting coverage Higher costs of reporting Effort to unify emissions accounting WBCSD & WRI – Greenhouse Gas Protocol 20 Voluntarily Reporting to Governments & Others Provide business a platform to communicate with their stakeholders about their emission reduction goals and progress Canadian GHG Challenge Registry 17 Electricity company participants California Climate Action Registry 34 Electric Power registry members Carbon Disclosure Project (CDP) 112 Electric Utilities responded to CDP4 questionnaire (42% of 265 of the largest publicly quoted Electric Utilities globally by market capitalisation) 21 Voluntary Accreditation / Qualification of Renewables Australian Green Power Accreditation Program Government standards to which renewable electricity can be certified for sale as such to customers 21 and 19 GreenPower providers selling different GreenPower products to businesses and to homes respectively Canadian Environmental Choice Program Offers qualification for various kinds of products, including renewable electricity 71 companies provides electricity products licensed by the program 22 Voluntary Reduction Targets Australian Greenhouse Gas Challenge Plus Generator Efficiency Standards US EPA SF6 Reduction Partnership 81 electric utilities participate Climate Leaders Program More than7 electric power companies participate US DOE Climate Challenge Program Chicago Climate Exchange (CCX) Trade emissions to achieve least cost emissions reductions 8 electric power generation members 23 Emissions Reductions Targets Power Sector Reference Year Target Year Target Exelon USA 2001 2008 8% decrease in total emissions All Power Utilities Japan 1990 2010 20% decrease in emissions intensity Scottish Power United Kingdom 1990 2010 25% decrease in total emissions Endessa Spain 1990 2007 30% decrease in total emissions Contact Energy New Zealand 2006 2014 40% decrease in total emissions 24 Policy Advocacy 25 Regulatory Risk and Policy Advocacy Electricity sector – heavily exposed to risks of new regulations limiting GHG emissions Electricity business groups – advocate sensible climate policy and call for government action 26 Electricity Industry Associations Edison Electric Institute (EEI), US EEI Global Climate Change Principles Federation of Electric Power Companies of Japan (FEPC) Emphasise on importance of nuclear energy Union of the Electricity Industry (EURELECTRIC), Europe Call for a roadmap to improved energy and environment regulations 27 International Organisations e8 World Business Council for Sustainable Development (WBCSD) Business Action for Energy (BAE) 28 e8 Organisation of 9 leading electricity companies from member countries of the G8 Aims to promote development of joint policy framework and implement related initiatives in domestic and international markets Two key recommendations on international policy frameworks: Flexible mechanisms should recognise all forms of electricity generation Policy should take into account the full costs and benefits for reducing energy-related GHG emission regardless of their origin 29 WBCSD Strong voice of the business community in international climate policy debates Focus Area: Energy and Climate Policy papers (trilogy) Electric Utilities Sector Project 8 electricity sector companies Complements the general work of Energy and Climate Focus Area 30 WBCSD (cont’d) Electric Utilities Sector Project “Powering a Sustainable Future” Agenda for action: 1. Secure investments in infrastructure 2. Get more power to more people 3. Use end-use efficiency as a resource 4. Diversify and decarbonise the fuel mix 5. Accelerate research and development 6. Reinforce and smarten the grids 31 Diversify and Decarbonise the Fuel Mix 32 Accelerate Research and Development 33 Incentives & Regulatory Certainty for Investments in new Infrastructure 34 WBCSD Energy and Climate Focus Area “Policy Directions to 2050” Key concepts of a flexible and diverse climate change policy framework Global 50-year target for GHG emissions Development and deployment of leading-edge, low-carbon, new technology projects. Building upon lessons learned and national policies Building upon sector participation Progressively including all countries and sectors 35 Conclusions Business collaborations on climate change issues in the electricity sector Have shown some early signs of success, but the greater challenges lie ahead Further & faster progress on wedge implementation will require new policies and international frameworks that promote uptake of energy efficiency; take into account the costs and benefits of reducing or avoiding GHG emissions in all energy-intensive sectors world-wide; take into account the responsibility of prior emissions of industrialized countries, and the development needs of emerging economies of China, India, and others; provide increased support for research, development and deployment of low-emission and energy-saving technologies. 36