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Southern States Energy BoardSouthern States Energy Board
““Sustainable Energy Challenges and Climate Change Sustainable Energy Challenges and Climate Change in the South: The Road Ahead”in the South: The Road Ahead”
Presented to:Presented to:The EPA Region IV Clean and Sustainable Energy ConferenceThe EPA Region IV Clean and Sustainable Energy Conference
Embassy Suites Atlanta at Centennial Olympic ParkEmbassy Suites Atlanta at Centennial Olympic ParkDecember 11, 2007December 11, 2007
Presented by:Presented by:Kenneth J. NemethKenneth J. Nemeth
SecretarySecretarySouthern States Energy BoardSouthern States Energy Board
Southern States Energy BoardSouthern States Energy Board
Established 1960, expanded in 1978 16 U.S. States and Two Territories Each jurisdiction represented by the
governor, a legislator from the House and Senate and a governor’s alternate
Federal Representative Appointed by U.S. President
Through innovations in energy and environmental policies, programs and technologies, the Southern States Energy Board enhances economic development and the quality of life in the South.- SSEB Mission Statement
Significant Global Energy EventsSignificant Global Energy Events
OPEC Sets 55 percent Minimum Tax Rate (1970) U.S. Institutes Price Controls (1971) Arab Oil Embargo Against U.S. (1973) Kissinger Announces “Project Independence” (1974) EPCA Authorizes Strategic Petroleum Reserve (1975) Windfall Profits Tax (1980) Iran/Iraq War – Oil Prices Doubled (1978-1980) World Oil Glut - $29 BBL Oil – U.S. Synfuels Shutdown (1983) Chernobyl Nuclear Accident (1986) Alaska’s Prudhoe Bay Production Peaks (1988) Iraq Invades Kuwait – Prices Soar ($36 BBL) (1990) Clean Air Act – Changes Gasoline & Diesel Fuels (1990) U.S. Imports More Oil & Refined Product Than It Produces (1993) Asian Financial Crisis – Oil Prices Plummet (1997-1998) German Government/Utilities Agree to Phase Out of Nuclear Power (2000) U.S. Petroleum Consumption – All Time High (19.7 Million BPD)
(2001) Terrorist Attacks on the U.S. (2001)
1970
2001
1983Photo: Jerry Gay,
Seattle Times, 1974
Recent Global Energy EventsRecent Global Energy Events
Foreign Oil Dependence Rises to 65 percent (2004) Northeast Blackout Leaves 50 Million People in the Dark Natural Gas Prices Triple from 1990 Levels Oil Passes $50/Barrel Gasoline Exceeds $3/Gallon Hurricanes Damage Oil/Gas Rigs Russia Halts Natural Gas to Ukraine Venezuela Moves to Nationalize Resources Oil Breaks $75/Barrel Nigeria Kidnaps Oil Workers Bolivia Secures Oil Fields Experts State Oil Production May Have Peaked Iran Threatens Nuclear Capabilities Saudis Talk of Propping Up $55 Oil Chad Orders Chevron to Leave BP Forced to Repair Pipeline Leaks China Extends Credit to Oil Nations Iran, Russia, Others Discuss Gas OPEC Texas Utilities Cancel 8 of 11 Coal Plants Oil Breaks $83/Barrel
2004
2007
2005
Facts and FiguresFacts and Figures
• World Population = 6.8 billion in 2010; 8.2 billion in 2030• World GDP = $88 trillion in 2010; $154 trillion in 2030• World Electricity Demand = 9,000 billion KWH in 2010; 31,000 billion KWH in 2030• World number of Vehicles = 812 million in 2002; 2.1 billion in 2030• Energy Consumption – will increase 50% in the next 25 years• Energy Sources and Increases by 2030;
» Coal Production = 74%» Oil Production = 43%» NG Production = 64%» Nuclear Power = 38%» Renewables = 61%
Not Smoke and Mirrors!
Why the Concern About Sustainability and Why the Concern About Sustainability and American Energy Security?American Energy Security?
Crude Oil Production will “Peak” Growth and Use of Resources by Other
Nations Global Competition World Oil Demand Exceeds Supply…and
Growing Excessive Dependence on Imported Oil Supply Disruption by Natural Disasters,
Terrorism Global Warming Threats GHG Emissions Dictate Technologies and
Risk Natural Gas Price Volatility Liquid Transportation Fuels Crisis Social Injustice of High Priced Energy –
Elected Officials Will Pay the Price Congressional Inaction
American Energy SecurityAmerican Energy Security
Military expenditures tied to defending Persian Gulf oil ($100+ billion)
Lost employment/investment from diversion of financial resources ($160 billion)
Cost of periodic “oil shocks” ($85 billion)
Erosion of U.S. industrial base (830,000 jobs lost)
2006 U.S. Trade Deficit ($764 billion)
North American Electric Reliability Council North American Electric Reliability Council Finds More Power Is NeededFinds More Power Is Needed
U.S. baseload generation capacity Electricity Demand is Far Outpacing Generation Growth reserve margins have greatly declined– 30-40% in early 1990s– 17% in 2006
Generation capacity to grow just 6% in the next 10 years while demand grows 19%– 2006 North American Electric
Reliability Council studyGrowth in
U.S. ElectricityDemand2006-16
Growth in U.S.Generating
Capacity2006-16
+6%
+19%
Courtesy: Peabody Energy, 2007
Global Energy Forms Face Limits in Global Energy Forms Face Limits in Supply & PriceSupply & Price
ENERGY EFFICIENCY/DEMAND-SIDE MANAGEMENT/CONSERVATIONAn important resource but insufficient to power the future
OILConsistently above $50/barrel; declining reserves; risky sources
NUCLEARValuable but constrained due to safety and waste disposal concerns
HYDRONo growth in supply
WINDLimited availability; grid disruptions; erratic supply
ETHANOLClean but energy inefficient; strains food supplies; cellulosic key
NATURAL GASConsistently above $6/mcf; declining reserves; risky sources
COALFaces GHG, climate change, regulators,environmental organizations challenges
All Energy Forms Needed for Diversity of Supply
Is Coal a Low Cost Option?Is Coal a Low Cost Option?
Global warming emissions are attributed to coal, oil, gas 35% - deforestation, livestock, soils,
landfills, waste repositories 65% - electricity and heat, industrial
processes, transportation, other fuel combustion, fugitive emissions
NRDC– Coal – carbon intensive– Double amount of carbon in natural gas– 50% more than petroleum
CTL Plants produce two streams of CO2
– Production plant– Vehicle exhaust
Coal/biomass co-firing – carbon neutral event BUT requires mining and water resources
Is Coal a Low Cost Option?Is Coal a Low Cost Option?
• Carbon sequestration– Carbon capture and storage– Regional Carbon Sequestration Partnerships– Add 20-40% to cost of Plants– Add 25% to electricity costs (EPRI test)– Carbon “footprint” reduction
• Requiring coal plants to meet new standards will impact “dispatch” of plants in future
The Energy Technology “Train Wreck”The Energy Technology “Train Wreck”
• Electricity rates – 19% increase over past 3 years– Maryland – 72% increase– Delaware – 60% increase
• Cost of new power plants– Coal - $3-7 billion– Nuclear - $4-8 billion
• Rising costs = higher rates• Life cycle costs – CO2 and greenhouse gases• Rates will increase for new baseload plants• Congressional Inaction
State Regulators in the MistState Regulators in the Mist
• Carbon plan• Carbon capture ready• Carbon capture & sequestration• Escalating costs for materials and plants• Technology choices• Water supply/consumption• Regional Greenhouse Gas Initiatives• Cap & trade (carbon price)• Carbon registry
Selected State Actions in a Congressional Selected State Actions in a Congressional StalemateStalemate
Gov. Joe Manchin, WV: Declaration of Energy Independence Gov. Ernie Fletcher, KY: Comprehensive Energy Strategy Gov. Charlie Crist, FL: Greenhouse Gas Initiative Gov. Tim Pawlenty, MN: Biodiesel Portfolio Enhancements Gov. Arnold Schwarzenegger, CA: Regional Greenhouse Gas
Initiative Gov. Rick Perry, TX: Carbon Capture & Sequestration Governor Rod Blagojevich, IL: Carbon Capture & Sequestration Governor Mike Easley, NC: Renewable Energy and Energy
Efficiency Portfolio Standard
More than 500 energy and environmental bills
passed by legislatures in southern states in 2007
What about Energy Efficiency?What about Energy Efficiency?
Utilities
– How can utilities make money on energy efficiency? Duke Energy “Save a Watt” Plan – Make EE the 5th Fuel
– Verifiable load reductions– Audits of homes and businesses– Subsidize purchases of compact fluorescent light bulbs– Subsidize purchase of high efficiency heating and cooling
systems– Advanced metering systems– Interruptible service on air conditioning, heating, freezers– Retire coal plants as energy savings emerge– Customers pay for 90% of power plants not built
grow demand build supply sell power = profit
““Tweaking” Energy EfficiencyTweaking” Energy Efficiency
California – EE Program in 1980s “Decoupling” – Severs link between utility sales & profits
– Regulators smooth revenue (15 states) 2001 – The “loading order” =
– 1) EE– 2) Renewables– 3) Fossil Energy
2007 – Package of financial incentives – utilities earn profits on efficiency
Delaware/Vermont – “Sustainable Energy Utility”
Reducing Energy Demand:Reducing Energy Demand:The Low Hanging “Fruit”The Low Hanging “Fruit”
Renewable portfolio standards Efficiency standards for boilers,
appliances, electronics Building code upgrades Tax incentives for “green” buildings Expedited permits Weatherization Improve energy performance in
government buildings Alternative fueled government
vehicles
Path ForwardPath Forward
Policy decisions at federal and state levels
Advanced Technologies Financing/Investment Regulatory certainty Workforce revitalization Smart grids
– Communication infrastructure for end use efficiency, demand response
– Capacity to operate with 20-30% intermittent renewables
– Distributed generation– PHEV’s
Path ForwardPath Forward
Nuclear generation with viable spent fuel strategy
Coal generation with 90%+ CO2 capture/storage
Indigenous liquid transportation fuels (coal, biomass, oil shale) with carbon sequestration to eliminate dependence on imported oil
Modernized infrastructure (pipelines, expanded refineries, transmission, roads, bridges, etc.)
Energy
Economic Development
Environment
Prosperity
““Sustainable Energy Challenges and Climate Change Sustainable Energy Challenges and Climate Change in the South: The Road Ahead”in the South: The Road Ahead”
Presented by:Presented by:Kenneth J. NemethKenneth J. NemethSecretary & Executive DirectorSecretary & Executive DirectorSouthern States Energy BoardSouthern States Energy Board6325 Amherst Court6325 Amherst CourtNorcross, Georgia 30092 USANorcross, Georgia 30092 USAPhone: (770) 242-7712Phone: (770) 242-7712Fax: (770) 242-9956Fax: (770) 242-9956wwwsseb.orgwwwsseb.orgwww.americanenergysecurity.orgwww.americanenergysecurity.orgnemeth@[email protected]