As we think about how to price GHG emissions, it's often (and accurately) cited that having a meaningful conversation about GHG pricing first requires that we remove all the existing subsidies so that we can stop irrationally allocating capital. Clearly, we can't provide insurance liability waivers to nuclear and ratepayer guarantees to regulated utilities and then conclude that Monty Burns' access to capital represents the action of unfettered markets.
Let's ask the obvious question: how much do various technologies cost us, per ton of CO2 reduced, on an all-else equal basis? If we are already rationally allocating capital between our alternatives, then the differential addition of an actual price on CO2 ought to only help the good technologies proceed a bit further over the line. As you might imagine, we aren't. And as I alluded to here, the environmental community deserves some of the blame.
Here's my math. I'm a heat and power guy, so I did my math on those sectors of the economy. I'd welcome anyone with expertise in transportation and other sectors to number-crunch accordingly.
First, the baseline. Average retail power prices in the U.S. today are about $90/MWh. Average U.S. CO2 emissions per unit of electricity consumed are about 0.6 metric tons/MWh. Both values are on a delivered basis so that we can accurately compare central and local generation technologies.
Let's say we had a technology that could produce power with 0.3 metric tons/MWh of delivered power and that the resulting power would cost $120/MWh. That gives us a $30/MWh "cost" and a 0.3 metric ton/MWh benefit, for a net cost per ton of benefit of $30/0.3, or $100/ton. How do the usual suspects stack up?
Assumptions
If I knew how to embed spreadsheets in posts, I would. But I don't. (If anyone wants the spreadsheet, email me and I'll send it to you.) Suffice to say though that I had to make some simplifying assumptions.
Most importantly, any level playing field has to assume that all market participants have equal access to capital. This of course isn't true, but energy markets are highly regulated; to the extent one party has access to cheaper capital than the other, it is almost certainly because of a regulation that tilts the existing playing field (see the earlier comments on nuclear). So I assumed that every technology can find investors who are willing to recover their capital with 12 percent interest over 20 years, on an unlevered basis. This is faster capital recovery than regulated utilities get, but lower than private equity demands. Moreover, to the extent that our regulatory environment is allowing anyone to recover cheaper capital (whether through loan guarantees, ratepayer underwriting or some other mechanism), it is implicitly creating a public subsidy. By holding our capital recovery assumptions constant, we can ask ourselves whether the subsidy is worth paying per ton of CO2 reduction, rather than simply accepting the difference as a persistent reality.)
Other assumptions of note:
- Central generation requires $1,400/kW transmission and distribution to connect to load; local generation avoids this capital cost.
- Transmission and distribution, if required, adds 9.5 percent line losses, thus requiring 1.095 MW of installed upstream generation per MW of delivered load.
- Natural gas costs $8/MMBtu, Coal costs $2/MMBtu.
- Plants that recover waste heat displace natural gas-fired boilers
The T&D capital and loss numbers are based on U.S. averages. Natural gas and coal prices are roughly representative of current U.S. markets. The cogen assumption is pretty typical, for the simple reason that no one who is installing a modern boiler can get much besides natural gas permitted. All of these assumptions could be varied of course, but they set the baseline.
Comparative costs per ton
Let's start with coal with carbon capture and storage. For the sake of argument, we'll assume the technology works. (No small assumption, but at least consistent with the assumptions made for all other technologies.) I assume $6,500/kW for capital costs, per FutureGen. Add in T&D costs and assume appropriate line losses, and you need to recover $1,158 per kilowatt, per year in order to pay off your capital. Add in fuel and labor costs and you're up to $1,398 per kW-year. Meanwhile, an average U.S. coal plant today only runs about 72 percent of the time, meaning that this kilowatt of capacity will generate 8,760 x 72 percent = 6,307 kWh per year.
Note to non-power wonks: There are 365 days in a year, 24 hours in a day, or 365 x 24 = 8,760 hours in a year. Thus, one kilowatt can generate a maximum of 8,760 kilowatt-hours in a year.
Back to our math. $1,398 / 6,307 = 22.2 cents/kWh for power from coal with carbon-sequestration, or $222/MWh. Compare this to current retail electric rates of $90/MWh, and this implies that coal plus CCS would raise power costs by $132/MWh. Meanwhile, it would save 0.6 metric tons/MWh, giving us an overall cost of $132/0.6 = $219/ton.
In other words, if we took away every subsidy in the system and compelled coal plus carbon sequestration to compete on a level playing field, it wouldn't compete until CO2 prices exceeded $200/ton, or about 10 times what they are currently trading for in Europe. It is no exaggeration to conclude that a rational market that fully factored in the cost of CO2 emissions would never invest in coal plus CCS (at least not until it had exhausted lots of other, much more cost-effective options).
So how do other technologies compare?
Nuclear is only slightly better, requiring $157/ton. (The causes are very similar to coal plus CCS: high capital costs plus the costs of transmission and distribution.)
Combined cycle gas turbines can achieve 50 percent fuel-to-electric efficiencies, giving an overall carbon signature of 0.4 tons/MWh. That's a bit better than the grid, but they use expensive natural gas and still require wires to connect them to the load. In aggregate, they shake out at $287/ton -- even worse than coal + CCS.
Now let's look at traditional renewables.
- Central wind farms (e.g., those that still require T&D) cost $131/ton. Better than coal plus CCS, better than nukes, and better than CCGT -- but still above where most are estimating CO2 markets will settle out. (Note to wind wonks: I assume $2,500/kW for the turbine and a 40 percent annual capacity factor. I suspect the latter may be generous.)
- Sustainably harvested (e.g., CO2-neutral) biomass in a central power plant costs $108/ton.
- Solar PV requires a whopping $1,047/ton. (This assumes locally generated solar power, thus avoiding T&D costs; centrally generated solar is much worse.)
- Geothermal is the cream of the crop in the renewable space, requiring just $11/ton.
The lesson of this list? It's all about capacity factor. Intermittent renewables simply have a hard time recovering capital, because they don't run very often. (Put another way, a solar plant that runs 20 percent of the time has to cost one-fourth as much as a geothermal plant that runs 80 percent of the time to be competitive per ton of CO2 reduced.) Free fuel certainly helps (and explains why geothermal compares so favorably to biomass, where I assume $3/MMBtu fuel), but ultimately, capacity factor constraints are hard to get around.
Now how about locally-generated sources? All CHP is locally generated, since you can't move heat very far:
- 60 percent efficient, natural-gas fired cogen costs $60/ton.
- 90 percent efficient, natural-gas fired cogen saves $54/ton. (Or, if you prefer, costs negative $54/ton.)
- Biomass with waste heat recovery saves $135/ton.
- Recycled industrial waste heat without a cogen cycle (e.g., recovered only for power) saves $91/ton.
- Recycled industrial waste heat with a cogen cycle saves $103/ton.
Conclusions
This list is not exhaustive, and I certainly don't mean to imply that we now know which winners to pick. But in a world that really cares about CO2 reduction and that must operate under fiscal constraints, any decision to preferentially shift resources towards the highest cost approaches is a decision not to maximize the rate of GHG reduction.
And the temptation to pick winners is no less present among those lobbying for coal plus CCS than it is for those in the environmental community who insist upon a 100 percent solar grid. Both paths have the potential to reduce CO2, but neither does it in an economically-responsible way, and therefore neither does it in a way that will maximize the rate of GHG-reduction.
A few final observations:
- To the extent that our current policy conversation is beginning to take CO2 reduction seriously, it is focused almost exclusively on the most expensive approaches. This is irresponsible.
- The technologies being deployed in response to current RPS markets are almost universally the most expensive routes to CO2 reduction.
- We've got an awful lot of playing field to level to get this right.
‘Copenhagen Diagnosis’ offers a grim update to the IPCC’s climate science
Comments
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vakibs Posted 9:10 am
07 Oct 2008
I will not get to the topic of disputing your assertions on nuclear power that it costs $157/ton for CO2 reductions or that loan guarantees are the same as subsidies etc.. This thread is not about nuclear power.
I will have to criticize you on the fundamental topic of CO2 reductions.
a) You are talking of reducing CO2 emissions per KWH of electricity produced. What if more KWH of electricity is needed ? You will produce more CO2. What if your energy source has a fossil-fuel component and this goes indefinitely into the future. You will produce more CO2. There is no implicit check in your thinking to limit the amount of CO2 emissions that you might produce.
b) You are assuming that different energy technologies will compete with each other in this holy job of reducing CO2 emissions. An implicit assumption that you have is that each of these technologies can be scaled up infinitely. But in reality, there is only a finite amount of energy that can be extracted from each of these technology. There is only a tiny weeny bit of geothermal power that can be extracted (it is not sufficient to even 10% of our energy needs). Similarly, there is only a limited amount of hydro-electricity that can be extracted. Even if all your winner technologies be used to their maximum potential, there will still be unaddressed energy demand.
c) You are making future energy policies based on ephemeral numbers which are prices in dollars of coal, natural gas and so on.. This is bad on two counts (1) These prices change rapidly based on whether the economy is doing well or not - essentially based on the purchasing power potential of the citizenry, which in itself is dependent on the accessibility of energy (2) Different countries and regions have different prices of fossil fuels, and thus some countries will still find it profitable to pollute.
d) When you favor a technology which depends on natural gas (local cogeneration or whatever), you are not considering (1) a long term strategy of what we will do when natural gas reserves dry up (2) the sensitivity of the produced electricity to natural gas prices which are bound to rise in the future (3) the utter stupidity of continued reliance on a fossil fuel component upto an indefinite period into the future (which keeps rising the CO2 concentration levels in the atmosphere)
The basic mistake with your thinking is that it is grounded on two notions that are unimportant to the climate change question (1) reductions in CO2 emissions (2) dollar prices.
The only thing that is important in the climate change question is the concentration levels of CO2 in the atmosphere -> this is directly related to the amount of fossil fuels that we leave underneath the earth. As long as your plan doesn't impose a hard limit on the total amount of fossil-fuels you will use in the future, it remains utterly meaningless towards the climate change problem.
The only policy that makes sense to the climate change problem is a moratorium on fossil fuel use.
Let's think in terms of eco-dollars.
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Sean Casten Posted 9:31 am
07 Oct 2008
We agree that the goal is to get the atmospheric concentration down - but the incremental decision in front of us is not whether or not to completely eliminate fossil fuel combustion. It is rather "what do you do next?" If you answer that the next step is to install the most expensive CO2 reduction approach, you are slowing the time to our mutual, long-term goal, since you will run out of money before you get there. I'm simply arguing that the responsible approach is always to pursue the incrementally cheapest cost reduction per ton. Once that option is exhausted, move onto the next one. To do otherwise is irresponsible.
Re: the cost per kWh, I hope you don't confuse my algebraic shorthand with some larger issue. I used that math because if you want to talk about low carbon power generation technologies, the cost to society is simply the cost per kWh as compared to what you would otherwise pay. And since the CO2 savings also scale directly with kWh of production, you can divide the differential cost per kWh by the differential CO2 per kWh to the cost per ton. As total kWh of demand goes up or down, the total tons of reduction will scale accordingly, but the cost per ton does not. In other words, the algebra is convenient - nothing more.
Indeed, any conversation of $/ton necessarily needs to be followed with your question: "how many tons?" That's legitimate - but regardless of the answer to that question, it is irresponsible to buy tons that go for $300 when there are $3 tons available. A proper carbon pricing regime will always buy the cheap stuff first. Those policies we currently have in place to encourage CO2 reduction almost never do.
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David Roberts Posted 9:35 am
07 Oct 2008
OK, well, that's not going to happen.
So what now?
grist.org
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Jon Rynn Posted 10:44 am
07 Oct 2008
One might also be able to ask the cost per ton of creating or expanding a walkable neighborhood. You'd have to figure out the carbon used to build, and the car use cancelled out by walking (or biking).
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Colin Wright Posted 11:46 am
07 Oct 2008
If you wanted to expand your spreadsheet, I didn't see Concentrated Solar (with and without (salt?) storage, and with and without transmission).
Or what about a column with just the "base price"? (A 12% profit would double in size every 70/12 = 6 years, thus tripling the cost over 20 years, right?) Who knows what the private equity markets will be like in the years ahead?
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Sean Casten Posted 12:08 pm
07 Oct 2008
Re: capital costs, I'm afraid you have to factor in some sort of amortization schedule. Some technologies (like natural gas plants) have relatively low capital costs but high operating costs. Other technologies (like nuclear, and renewables) have very high capital costs but low operating costs. Capital amortization simply lets us lump all the costs into a single, annual payment. Otherwise you have a one hand clapping exercise.
The issues isn't about private (or public) equity (or debt) markets per se, but simply the fact - true since the dawn of human civilization, so far as I can tell - that anyone who puts resources aside today for a gain tomorrow expects more tomorrow than today. This is as true for someone giving up a pile of grain as it is for a bank making a $1000 loan. Ergo, interest and capital returns.
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Gar Lipow Posted 2:33 pm
07 Oct 2008
Your big thing is industrial combined heat and power or "recycled energy". OK, if you take a plant that is already producing heat for industrial purposes and use it to produce electricity besides, you are getting that electricity for no additional emissions, no additional fuel and a very small capital cost. But the problem is: given constraints, are we going to be able to continue to tolerate continued emissions from industry at the current level, even if we get "free" electricity as a side effect? Because if not, then from a social standpoint, beyond a certain point you are spending money in a way that will be obsolete fairly quickly.
Now this is not an argument against recycled energy, because we are nowhere near that point. Certainly there is a level of emissions we will have to tolerate from industry. Also some industrial processes will not change fundamentally, but will be powered by biofuel, to some extent by solar heat, and to some extent by a very tiny amount of fossil fuel. Whatever that level is, we may as well get electricity as a side effect.
Also, a lot of combined heat and power pays for itself very quickly. If some systems will be obsolete in twelve years - well I'm pretty sure there is a hell of a lot of recycled energy potential that can pay for itself easily in that length of time.
However there is a lot of argument for doing some of the expensive things at the same time you do the cheap things. Because we need to reduce emissions from electricity production by 80% to 95% within 20 years, and to reduce emissions from industrial production by a similar amount within the same time. Keeping industrial emissions at the current level and getting part or all of our electricity for "free" by doing so does not make sense. Neither does waiting ten years to ramp up production of wind, solar and other renewables.
We need to reduce emissions by 80% to 90% in 20 years, by 95% or better within 30 years, to zero not much later, to human activity actually being a net remover of carbon within 40-50 years.
the middle game is a drastic reduction of emissions from ALL sectors within 20 years. As industrial emissions drop so will recycled energy potential. If we do things right, within 20 years, the potential for electricity from industrial waste heat will be drastically less than electricity demand. At that point we want the remaining electricity to come from renewable sources. So if you really want to exhaust combined heat and power before significantly increase deployment of renewable electricity, then you better find a way to deploy that fast, like within five year. If you can't do that, if you think it has to be done gradually over the course of ten or twenty years, then we had better start deploying renewable electricity now at a much faster rate than we have been. Because we can't take twenty years to deploy all the recycled energy potential and then take another twenty to reduce industrial emissions and deploy renewables.
Also, even though a lot of recycled energy will pay for itself before it become obsolete, it is still better to minimize deploying capital twice. If you invest in a recycled energy system which then has to be discarded and replaced with a wind generator, it seems like it may be better to build the wind generator in the first place. The "deploy the cheapest first" is efficient statically, but not always dynamically.
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mreinbold Posted 2:49 pm
07 Oct 2008
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David Roberts Posted 3:57 pm
07 Oct 2008
grist.org
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Pangolin Posted 5:01 pm
07 Oct 2008
Somewhere else on the planet carbon will have to return to the earth as a mineral or it will end up in the oceans as an acid.
I can't help feeling that there will be an ongoing need to be overly fussy when looking at these projects. Not to stop them but to measure them against a zero-net carbon goal.
Put the Carbon Back
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Sean Casten Posted 10:56 pm
07 Oct 2008
Also: the idea that we shouldn't deploy capital twice (not that I believe this to be an issue) is nonsense. It is relevant only in a world where government dictates what capital should be built, in the sense that the taxpayer ends up holding the bag for bad investments. But even there, it is dangerous - witness our electric grid, where the logic for guaranteeing the profitabilty of 50 year old, obsolete power plants is that they were built by ratepayers.
The private sector makes bets all the time, and statistically, most of them don't pay off. (Indeed, the basic idea behind venture capital is that if you make 100 small bets, one of them will pay off huge to offset the 99 small losses. This, writ large, is the way that markets work, and the way that economics, science and technology have always progressed.) A price on carbon that truly incentivizes carbon reduction will allow lots more of those bets to be taken, and it doesn't make a lick of difference whether some investors make money and others don't - what matters is that the carbon goes down. Do we cry over the fact that the factories building Rios didn't recover their capital once the iPod came along? Or that betamax factories had to be re-tooled? Of course not. Investors thought they saw an opportunity and judged wrong. (Indeed, one of the central tenets of a competitive market is that there be no barriers to exit.)
As I say, I really don't think that's an issue. So long as the world needs metal, paper, plastic, chemicals and heat, there will be good reason to install efficient production of heat and power at those facilities. I'm willing to take that bet, and if I'm wrong... well, that's my problem. But the point here is not to suggest that regulation ought to shift capital from one set of winners to another. It is that regulation ought not to pick winners. The fact that we are currently sending the majority of our environmental dollars towards the most expensive environmental control measures only proves the problem with winner picking - it doesn't suggest that me, you Obama or Good King Wenceslas is any better at winner picking than those who have come before.
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Sean Casten Posted 11:16 pm
07 Oct 2008
In the last 10 years, we have deployed 42 GW of cogen nationally, in spite of a really crummy regulatory environment. The DOE and EPA set a goal to double the installed base of CHP in 10 years in 2000, and that's now up to 87 GW. This basically puts CHP just about on a par with nuclear (100 GW) as far as it's total contribution to the US grid. Moreover, that's more total generation capacity additions than came from coal, nuclear, wind and solar combined during the same period. Again, this isn't to suggest that CHP is the silver, or only bullet - just that there are things happening on the grid that get a lot less attention than the high profile, top-down government fiats but in many ways are more important.
The best recent example we have of how quickly markets can respond once we take off the emergency brake is the gas fleet. Prior to 1992, it was essentially impossible for anyone who wasn't a utility to build anything but a qualifying facility (cogen, biomass, small hydro, etc.) per PURPA. Then in 1992 we passed the Energy Policy Act to open up competitive markets and... nothing happened. That's because even though you could build a plant, you still couldn't get your power to market, since your competitor (the utility) owned the distribution network and set the access price. So in 1996 FERC passed order 888 to mandate that all utilities who owned transmission lines provide non-discriminatory access to their wires and... nothing happened. Because 888 was contested and fought. The final 888 rule was passed in 1998. At which point... boom. In 1997, the total US natural-gas fired power fleet had a nameplate power output of 203 GW. By 2006, that had almost doubled to 383 GW. (As a point of comparison, there were 130 GW in 1976. As another point of comparison, we have added essentially zero GW of coal and nuclear since 1990.) I don't suggest that this gas fleet was ideal, nor even a good investment (witness Calpine). But it was the only thing that a competitive provider could build. More significantly, since our total generation fleet is 1000 GW, this means that we built one-fifth of it in a 7 year window. This is remarkable - and it is no exaggeration to say that in many parts of the country, the lights would not be on today but for this construction.
Again, I don't suggest that these are optimal, nor silver bullets. But do not dismiss how rapidly the private sector can deploy capital once we ease back on the emergency break that is modern energy policy.
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amazingdrx Posted 11:34 pm
07 Oct 2008
Modular generators that run on waste heat can run on waste heat from solar as well as combustion heat.
The utility regulatory reforms that Sean's company seeks will benefit distributed renewable smart grid technology. But will cogeneration keep coal going when it should die from inefficiency and cost?
Probably not. The cost of fuel is falling now, with this credit squeeze recession. That won't last though. As fuel prices soar again, after liquidity returns (remember, it's only money, governments will mint more..electronically) the competitive advantage of renewables should close down fossil fuel energy even with the added efficiency of energy recycling.
Pricing carbon, prefferably with the Gore plan, rather than cap and trade, should help that along. It might not be as urgent to get carbon priced immediately as the sound and fury behind cap and trade would indicate.
Maybe spurring mass production is more important right now. Without jobs, nothing is going to happen except more economic spiral downward.
Government/central banks all over the planet will have to realize that only local credit will revive the global economy. Money right to local credit markets, forget cash infusion and bailout for the big boys at the top of the pile.
Catch the crooks, confiscate their assets and transfer those assets to bolster local credit markets. Or failure will continue.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Gar Lipow Posted 4:27 am
08 Oct 2008
However an argument against subsidizing expensive power carbon free sources is that this competes with investment in cheaper ones. That the cheaper ones may prove more expensive in the long run is a valid counter to that.
> Speculate all you want about what our industrial mix will be 15 years from now - but for goodness sake, don't stipulate what we ought to be building today based on some guess about our future economic mix
I think you are confusing speculation with goal setting. The point is not that our industrial mix will be X or Y in ten to twenty years. The point is that there are constraints we MUST make sure our met, that any policy must advance compliance with those contrains. Total emissions must be lower by 80% to 90% by 2030. (Probably 90%). Possibly some sectors can reduce by more than this to allow others to reduce by less. But I don't see how we can meet this goal if any sector fails to reduce by a lot - 70% at least?
I'm not disagreeing that there is a lot of combined heat and power potential available cheaply or that we should remove some of the absurd regulatory barriers to it - especially the rules on running private wires over public right or ways. (Note though, that there is nothing in principles of a free market that allow you to run wires over public rights of way. This modification is not "deregulation" in the usual sense, but a small (and eminently sensible) public subsidy.) (Second note: a raving ideologue would argue that having public right of ways is the problem. I hope nobody that raving is taking part in this discussion. Anyway, if these rights of way were private, mandatory access would be a new regulation of private property and not any form of deregulation.)
Also, the electricity production sector, and operation of residential and commercial buildings are the only sectors where it is possible to be 95% or better emissions free in the next 20 years. And the latter two (the buildings sector) can only reach that high a degree of emissions reduction if they have sources of 95% or better carbon electricity. If industry and transport can't be 80% greenhouse emissions free in the next 20 years (and probably they can't) then we need to make up for that in other sectors. Drastically lowering emissions from electricity production is essential.
Now we agree that recycled energy at a much higher level than present is part of this. But even if industry can lower emissions by 80% or more in 20 year time frame it has to still lower them drastically. 70%? If less not much less.
So we have to have a huge increase in carbon free sources other than recycled energy. Hydro? Most is currently developed, and altered weather patterns will continue (as they already have) to lower production from existing hydro plants. Geothermal? Very large potential if certain breakthroughs happen, otherwise very tiny potential with today's tech. Wave and ocean current? Again huge potential with breakthroughs, tiny with today's technology. So what is left with today's tech? Nukes, Wind and Sun. Any of these three will require massive subsidies to replace fossil fuels. I suspect you will agree that if the choice is subsidized sun and wind or subsidized nukes, subsidized sun and wind is better.
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vakibs Posted 6:23 am
08 Oct 2008
Gar, you are right in arguing that we should look a little beyond making a quick-buck in the market. We need to prevent climate tipping points, and this essentially forces us to look quite far into the future.
It is not about just deployment. We should do massive R&D; technologies that are ripe should be immediately funded for demonstration, and we should invest in infrastructure (transmission, storage etc).
Even if you think that nuclear is worse than renewables (such as solar baseload), you should not risk burning the bridges. We should have all the cards open.
Let's think in terms of eco-dollars.
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rsmith02 Posted 6:48 am
08 Oct 2008
Nuclear power accounts for as much as 50% of the energy on the New England grid, which also uses lots of central station gas and which has increasing renewables mandates (20% by 2020, etc). The result of this is that grid-average emissions are lower than that of directly combusing natural gas.
Grid average- around .8lbs/KWh (and growing cleaner) vs 1 lb/KWh for nat. gas or 1.5lb/KWh for oil.
So you get a drop in overall energy consumption (30%?) thanks to the efficient system that also uses waste heat but maybe small to no real reduction in GHGs (fact that grid is cleaner than gas cuts into the fact you're burning less gas)?
Also, what is the renewable energy future for combined heat and power systems? Hydrogen? Will we have to bulldoze them like uncontrolled coal plants in a few decades? What do we do with these buildings when all the gas is gone?
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vakibs Posted 7:50 am
08 Oct 2008
OK, well, that's not going to happen.
So what now?
David,
Failure is not an option. We will have to have a moratorium on coal in place, at the worst by 2050. I have better hopes.. That it will be operational by 2015 in developed countries and by 2030 in the third world countries.
I think the moratorium will be incremental. All easy options such as redesigning coal plants to burn bio-mass (or to use pebble-bed nuclear reactors) should be implemented rightaway. This refitting will probably be much more economical than attaching that CST monstrosity, which I suspect will not even work.
In any case, no new coal plants should be constructed. And no kid should be getting employed in a coal plant. We need fixed deadlines to achieve this.
Let's think in terms of eco-dollars.
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Sean Casten Posted 11:27 pm
08 Oct 2008
CHP is fuel agnostic. I used gas in my example to keep the math conservative and because it is indeed typical of much of the current fleet. But a world that needs heat and electricity (e.g., all likely human-inhabited worlds) and produces that energy through some sort of primary fuel conversion process will always maximize overall efficiency by coupling heat and power generation into a single block, for rather straightforward thermodynamic reasons. For other, more practical reasons, it is really hard to argue that even gas-fired CHP is ever a step backwards, but the larger point is that there is no reason to assume that CHP = gas.
Your numbers on the New England grid aren't quite right. The entire US grid is about 10% nuclear by installed capacity (GW basis) and 20% on a generation (GWh) basis because it runs more often. I don't have the #s on New England readily available (although they can certainly be dug up on EIA), but when you look at CO2 signatures from the New England states on various EPA/DOE emission factor calculations, they show ranges from 1000 - 1200 lbs/MWh. That's better than the national average of 1350 or so (due both to a couple big nukes and a a higher gas/coal ratio than the rest of the country), but it's far from 50% carbon-free. Moreover, anything done on the margin to reduce electricity demand at the end of the wire doesn't affect the nukes, since those run baseloaded anyway - the stuff that get's shut off is the stuff that is on the ragged edge of the economic dispatch curve (inefficient gas, followed by some old oil/gas steam plants and then coal.) Just about everywhere in the country, this means that the average emissions is lower than the marginal, but in all cases, efficiency doesn't drive nuke off the grid until load falls by 80% to get down to the 20% nuclear floor. (One valid criticism of my math on this front is that having used the average emissions factor of 0.6 metric tons/MWh, I should really have used something like 0.7 to reflect marginal emissions.)
Hydrogen ain't renewable. Biomass, biogas are much more common. But there is a larger question - which any honest person ought not duck - as to whether the economy can ever become 100% renewable. It's a laudable goal, and perhaps possible in the context of power generation - but really hard to see a path there in a host of industrial processes that need high temperature heat that is not readily available from renewable sources. I don't claim to have the answer - only that the challenge is far to big to write off in the name of idealism. And if we can't get there, we better be as efficient as we can with the fossil fuel we do use.
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Sean Casten Posted 12:13 am
09 Oct 2008
That the cheaper ones may prove more expensive in the long run is a valid counter to that.
I've no idea on what grounds you can make the assertion that cheaper sources will be more expensive in the future - especially when the lion's share of just about all these technologies is capital recovery, which is all set up front. That said, do note that the reason I like output-based emissions standards is that they automatically re-correct, with the baseline being recalibrated every year to the actual grid emissions factors in tons/MWh. Ergo, if a project is reducing 0.4 tons/MWh in year one, but then the grid gets cleaner by 0.1, that project only gets paid for 0.3 tons as the grid cleans up. This puts a steady and inexorable pressure to keep chasing the cleanest sources that is absent from just about all other carbon pricing models. But I digress. The bottom line is that if the private sector pays money to reduce CO2 anticipating one price and gets another, that's their problem, not society's. So long as we continue to price CO2, capital will be available and reallocate. But I have a really hard time seeing the logic of presuming we know what technology might be best in some ultra-long-term view and then throwing resources at that one. We've already tried that with nuclear power in the 50s, oil before that, hydrogen in the 90s... Just set the goal and let markets adjust.
Total emissions must be lower by 80% to 90% by 2030. (Probably 90%). Possibly some sectors can reduce by more than this to allow others to reduce by less. But I don't see how we can meet this goal if any sector fails to reduce by a lot - 70% at least?
We agree that emissions need to fall. That can be met with a declining cap. But that is entirely different from saying that we know exactly where and to what degree. Do you (or do I) know with confidence which sectors of the economy have the most low-hanging fruit? Do we know which technologies would be developed? Do we know how product demands will change? We don't - but we can set a hard cap on emissions and provide financial incentives to hit them without stipulating where they would occur. As an example, 100 years ago municipalities were up in arms about how to deal with all the horse manure, dust and insect-borne diseases that were the result of their transportation infrastructure. When the automobile came out, it was heralded as a pollution control device, ironically enough. But before it's invention, no one could see any way to get manure piles down without crippling the economy. I have no doubt that such technological surprises also await us in the carbon space - but let's always make sure that we maximize our CO2 reduction per dollar.
Note though, that there is nothing in principles of a free market that allow you to run wires over public rights of way. This modification is not "deregulation" in the usual sense, but a small (and eminently sensible) public subsidy.
To clarify, there is a robust tenet of competitive markets that says that there are no barriers to market entry or exit. The problem with private wires is not the wire specifically, but that a generator - CHP, solar, or otherwise - cannot go to market without the use of their competitors distribution network. It is analagous to mandating that all cell phones be sold in Apple stores. No reasonable person would argue that that scenario would not lead to a strong public preference for iPhones, and a huge under-investment in non-apple cell phones. That is the barrier created by the private wires ban - it's not that I personally want to get in the wires business, but rather that if I'm paying 10 c/kWh for power, my neighbor is paying 10 c/kWh for power, and I have the ability to produce more power than I need for 5 c/kWh, market principles are violated when the only choices I have for my excess power are to (a) sell it to the utility for 4 c/kWh or (b) run a wire across the street and go to jail.
Also, the electricity production sector, and operation of residential and commercial buildings are the only sectors where it is possible to be 95% or better emissions free in the next 20 years
Maybe. Maybe not. I go back to my earlier comment though that we not make our next decision based on a presumption about what decision 100 will be. We'll branch in surprising directions on that tree with new tech, new regulations and all sorts of other things we can't forsee. The only way I know to make sure that we make the right decision at each successive fork is to make sure that each one is guided by maximally lowering the CO2 per dollar expended. In other words, let's not focus on the decisions per se, but rather on the decision framework. The latter can be set up to ensure we make the right decisions - but the former only gets to the right place if we are infallible. Which some of us are of course. : )
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rsmith02 Posted 3:40 am
09 Oct 2008
1. "For other, more practical reasons, it is really hard to argue that even gas-fired CHP is ever a step backwards, but the larger point is that there is no reason to assume that CHP = gas."
I'm concerned that CHP is also oil or dual fuel oil/gas. You mention biomass/biogas, but will they scale up? Hydrogen is at least producable from other energy sources. It may not make sense for cars but is there a reason to use it instead of "plug-in" home heating?
2. The CT DEP is using .554tons CO2/MWh (1108lbs) but I can't remember if that's marginal or average CO2 emissions.
Now shouldn't that number go down as intermittent renewables are increasingly brought on line through regional RPS policies and other direct mandates and incentives?
The bigger question is that if we're already close to the emissions rate for gas how will CHP get us towards the 80% by 2050 reductions we need to make? It seems like CHP is mainly a strategy for conserving natural gas or knocking off inefficient marginal generators.
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Sean Casten Posted 4:03 am
09 Oct 2008
Again, I'd suggest not getting caught up in the fuel side, but the issues you raise go to the heart of why I find claims that we can completely eliminate fossil fuel use somewhat dubious. Remember that our fossil energy use is divided roughly in thirds between electric power, transportation and heat - the last concentrated in the industrial space, where high (read: fossil-sourced) temps are often critical. Any fossil-free future better have a way to meet all three of those sectors to be plausible, and all non-fossil options have scale-up problems (whether for resource or economic reasons). Maybe we can get there, and I don't mean to sound fatalistic. But we ought not get caught up in a presumption that we can or can't at the expense of maximizing the efficiency of all energy chains today.
At the risk of sounding awfully cranky, forget hydrogen. Yes, it can be produced from other energy sources. So can electricity. So can heat. So can any number of other energy carriers. But just there is nothing innately renewable about electricity, there is nothing innately renewable about hydrogen. Moreover, any fuel chain that injects another energy carrier into the mix (e.g., primary fuel X --> hydrogen --> elec/heat/transport) is by definition a less efficient fuel chain since it adds one more conversion loss. Virtually all talk of hydrogen is counter-productive to an economic or environmentally-responsible future.
Your CT numbers sound about right, and are right on par with US averages at 0.6 tons/MWH.
Yes, if renewables become a signficant part of the grid those ratios go down. But that simply suggests that a carbon policy ought to compare to actual, real time CO2 emissions per MWh rather than stipulating a savings for the next 20 years. (e.g., the ability of any carbon policy to decarbonize can be factored into the policy itself when we give credit for CO2 reductions.) My math is necessarily based on today's numbers, and would reduce accordingly as we go forward. But note that those reductions apply to all technologies across the board - after all, on a grid with more renewables, the marginal CO2 reduction of another renewable installation falls as well, at least on an average basis.
Finally - and I need to keep saying this - the goal is not to deploy CHP, nor solar, nor wind, nor purple flabulators. The goal is to drive down CO2 as quickly and as cheaply as possible. Each of those technologies is a tool, and good policy will make effective use of those tools. Our present policy does not, which is my beef - not because CHP isn't subsidized as heavily as other technologies, but because any differential subsidization to any technology skews capital allocation in ways that are economically and environmentally detrimental.
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RDMiller Posted 5:02 am
09 Oct 2008
Just so this is clear... any application that can be fired by coal, can be fired by biomass. High temperature energy is not an issue. Scaling is not a problem. New forms of torrified biomass replace coal "chunk for chunk" and carry the inherent potential to be carbon negative. We have the land base. The cost is affordable. No new plants need be built to burn the stuff. We have the technology. It's just a matter of doing it.
Richard
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Sean Casten Posted 5:37 am
09 Oct 2008
That said, I'm still not entirely comfortable saying that everything can be replaced, since there are so many industrial processes that are reliant on specific features of fossil fuels, from their temperatures to reducing chemistry to lack of impurities to physical structure (a la metallurgical coke). I can see ways for many of these fuels to be replaced with bio-derived materials, but am not quite comfortable saying that all can be replaced. Not that I know they can't - just that I'm consistently learning new industrial processes and consistently trying to find ways to get their CO2 signature down, and the one thing I know for certain is that it's complicated.
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rsmith02 Posted 6:17 am
09 Oct 2008
"My math is necessarily based on today's numbers, and would reduce accordingly as we go forward. But note that those reductions apply to all technologies across the board - after all, on a grid with more renewables, the marginal CO2 reduction of another renewable installation falls as well, at least on an average basis."
Okay, I like that approach.
I think it argues for at least starting with a CA or WA-type CO2/MWh standard (they set it at 1100lbs/MWh but only for new generation or new long-term contracts) and having it decline over time.
I think that could work together with a cap and trade system (actual tonnage limit on CO2) and even with a RPS (forcing renewables into the mix to serve other societal objectivies- fuel diversity, etc).
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Sean Casten Posted 8:05 am
09 Oct 2008
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RDMiller Posted 8:54 am
09 Oct 2008
Have you specifically looked at this process:
http://www.newearth1.net/e-coal.html
I believe it may solve some of the issues you are dealing with. I'm not sure about their reed plantations (a form of bamboo, I believe), but creating a sustainable supply of fast-growing biomass can be done in numerous ways.
Richard
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Backcut Posted 9:36 am
09 Oct 2008
That is the estimated tonnage of just the CO2 that has spewed into our atmosphere from wildfires during the Bush Administration, with the silent approval of the Sierra Club and other eco-groups. This assumes a VERY conservative estimate of 10 tons per acre. A thick old growth forest can put out over 100 tons of CO2 per acre.
Of course, this DOESN'T include CO, mercury, particulates and other pollutants.
I was thinking very hard about this the other day and concluded that the Bush strategy is that once the lands are burned, they will no longer have the designations and protections that the original forests once had (see Biscuit Fire).
What is the Sierra Club (and others) strategy for burning our forests in the middle of the summer, with no firelines, no smoke control, no public involvement, no environmental analysis and no fiscal oversight?
People ARE starting to question what the hell the Forest Service is doing, and their Let-Burn program WILL find its way into the courts.
Scenic pics at http://Lhfotoware.blogspot.com
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