Princeton University Undergraduate Task Force on Energy for Sustainable Development

1. Princeton University Undergraduate Task Force on Energy for Sustainable Development Generation, Efficiency, Development, and Implementation Commission on Sustainable Development United Nations May 12, 2006

2. About the Task Force • Composed of nine undergraduate students of public policy at Princeton University • Directed by Prof. Denise Mauzerall • Consisted of one semester of research and collaboration • Informed by individual research and presentations from outside experts • Focused on the generation, efficiency, development, and implementation of energy services in India, China, and the U.S.

3. Global Energy Consumption

4. Total Carbon Emissions from Energy Consumption, 1880-2002 Figure created from data available at http://cdiac.ornl.gov/ftp/trends/emissions

5. Per Capita Carbon Emissions (1950-2002) Figure created from data available at http://cdiac.ornl.gov/ftp/trends/emissions

6. Objectives of the Task Force • Address the question, how can access to increased sources of sustainable energy be achieved? • Consider the need to balance increased energy services with environmental concerns, specifically climate change and air quality

7. Generation Clean Coal Wind Power Efficiency Green Building Improving Vehicle Fuel Efficiency Public Transportation Development Slum Electrification Energy Services for Rural Areas Implementation Mandated Market Systems Financing Renewable Energy Structure of the Presentation Questions and Comments

8. Coal Oil Gas Uranium STRENGTHENING HEALTH, SECURITY, AND ENVIRONMENTTowards a Sustainable Coal-based Development Strategy for China W. Ulysses Fowler

9. Coal Power Plant Growth Leads to Carbon Lock-in China World Current Status and Growth • Abundant reserves • Electricity demand rising at15% • Electricity generation77%dependent on coal • China responsible for 75% of current global coal growth • Coal electricity generation capacity projected to triple by 2020 • If installed, this new capacity willlock-inenormous carbon emissions, due to long lifetimes of power plants and infeasibility of retrofits Coal modernization required now to avoid carbon lock-in.

10. Coal Gasification to Avoid Carbon Lock-in What is it? • Process that converts any hydrocarbon into a synthesis gas composed of hydrogen and carbon monoxide Allows production of: • Electricity • Liquid fuels • Petrochemicals Provides a pathway to: • Reducingair pollution • Enhancingenergy securityby providing alternative to foreign oil and natural gas imports • Potential lower-cost route to reductions incarbon emissions

11. Barriers to Coal Gasification • Environmental Policy • Environmental regulations are poorly enforced and not tough enough to justify investment in clean technology (2) Institutional Capabilities • The innovation system is weak and fragmented (3) Intellectual Property Rights Protection • Intellectual property rights protection for coal gasification technology is poor, hindering acquisition and diffusion of the technology (4) Investment and Trade Rules • Ownership restrictions and complex approval processes for foreign investments restrict access to Chinese market for advanced coal technologies (5) Finance and Economics • Coal gasification relies on expensive imported technology that is unfamiliar to the energy sector and not affordable without strong financial incentives

12. Policy Recommendations • Environmental Policy • Enforce existing environmental regulations to reward clean technologies. • Require installation of monitoring equipment to enable enforcement (2) Institutional Capabilities • Reform the innovation process to allow coordinated research, development, demonstration, and commercialization of gasification technologies (3) Intellectual Property Rights Protection • Strengthen intellectual property rights protection for advanced coal technologies (4) Investment and Trade Rules • Streamline the approval process for large gasification-related foreign investments • Define priority channels for technology transfer, favoring technology acquisition through foreign direct investment (FDI) and licensing over simple equipment import (5) Finance and Economics • Encourage gasification-based electricity generation demonstration projects with loan guarantees, capital subsidies, and grants

13. Wind Power: A Clean and Renewable Supplement to the World’s Supply of Energy Michael Treadow

14. How Much Will Wind Help? • The answer to this question depends on several factors: 1) Pace of technological advancement in wind industry 2) Ability of wind-generated electricity to compete cost-wise with traditional energy sources 3) Extent of support wind industry receives from governments and policymakers via legal, financial and environmental channels • Though wind currently generates less than 1% of the global electricity demand, new installations are increasing worldwide wind capacity at a rate of 30-40% per year

15. Key Points on U.S. Wind Power • Currently ranks 3rd in the world in terms of installed wind capacity at 9.149 GW • Financing is vital for wind industry’s growth, but many in U.S. still regard wind power as a novel and risky endeavor • Part of this perception stems from on-again/off-again nature of federal production tax credit (1.5-1.8 cents per kilowatt-hr) • Remoteness of wind in U.S. poses a hurdle to its ability to compete cost-wise with established energy sources; it makes transmitting wind-generated electricity more expensive • There is an enormous potential for U.S. wind power in the offshore setting which is estimated at over 1000 GW

16. Key Points on Chinese Wind Power • Ranks 8th in the world in terms of installed wind capacity at 1.260 GW but had laid out ambitions plans for expansion of its wind industry: 4 GW by 2010, 20 GW by 2020 • Currently generates over 70% of its energy from coal • Overly reliant on imported equipment for wind industry and thus sees higher costs for wind-generated electricity • Antiquated grid system in China incapable of automatically rerouting power to match supply and demand • Control over wind energy policy decisions is not vested in a single government agency which can give rise to bureaucratic delays in implementing reforms

17. Policy Recommendations China 1) Renovate aging grid system to enable wind to be integrated efficiently 2) Drive down wind power’s cost through tax incentives and policy measures which promote renewable sources 3) Encourage homegrown wind industry United States 1) Ensure fair grid access rules regarding electricity transmission system 2) Promote partnerships between wind industry and offshore oil/gas sectors to expand offshore capacity 3) Expand Renewables Portfolio Standard to all 50 states and stabilize Federal Production Tax Credit

18. Reducing Climate Change through Green Building Andrew Turco Picture: Energy Star, 2006

19. Current Consumption and Future Strategies • Buildings = 39% of energy use in the US (Energy Information Administration, 2004) • Long lifetime / lasting influence • Peak electric loads: lighting and cooling (Tester et al., 2005) • Heating/Cooling & Lighting = 2 largest energy uses in buildings (Energy Star, 2006) • Make buildings more efficient • Internalize energy costs • Push-pull policies to reduce energy use • Factor in life cycle

20. Technologies and Approaches • Energy Star certified equipment: 30% energy savings • Better windows, insulation, site orientation • Geothermal heat pumps • Can reduce energy consumption by 63%-72% • Available everywhere • High Initial Investment but payback: 5-10 yrs (US Department of Energy, 2005)

21. Advantages & Policy Models Advantages: • Reduced operating costs – payback on higher investments is quick • Reduced need for new power plants • Increased property values (David, 2006) Policy Models: • US Green Building Council / Leadership in Energy and Environmental Design (LEED) / Energy Star • NYC LEED certification requirements • Grants, rebates, & tax credits for sustainable energy infrastructure • Fannie Mae and Freddie Mac mortgages

22. Policy Recommendations 1) Implement a carbon tax, paid by consumers, on electricity purchased from non-renewable sources 2) Provide larger subsidies for the initial investment in geothermal heat systems, with funding from the “dirty electricity tax” 3) Partner with programs such as Fannie Mae and Freddie Mac in devising a mortgage program targeted at energy efficient homes 4) Incorporate estimated life-cycle energy operating costs on labels of all energy consuming equipment • Mandate a renewable energy component for a portion of the energy used in buildings over a certain size • Through Type II partnerships, provide the framework for business alliances that seek to reduce their carbon footprints

23. Raising Automobile Fuel Efficiency: Policy Recommendations Ben Steiner

24. Convergence of Rationale for Higher Standards • Climate Change • Transportation responsible for 33% of US CO2 emissions and 23% of emissions worldwide • Developing world demanding more personal automobiles • Energy Security • US oil imports at new high • Hubbert’s Peak • Environmental Effects • Air pollution major problem in India and China • Feasibility • Shorter lifecycle than other fossil fuel burning infrastructure • Bipartisan political support

25. Current Situation in US:CAFE Standards • History • Established in midst of Arab Oil Embargo in 1975 • Standards stagnant since mid-1980s • Rules • Separate standards for light truck and passenger car fleets • Light trucks to be split into 5 “footprint” groupings in 2009 • Current regulations: 27.5 mpg for cars, 22.5 mpg for light trucks • Opportunity • Great chance to improve fuel efficiency while rectifying market failure

26. Current Situation in China:New Fuel Efficiency Standards • History • China set fuel efficiency standards in 2004, above US but below EU and Japanese levels • Rules • Separate standards for 16 vehicle weight classes • Each model meets standard • Current regulations: between 19 and 38 mpg by 2005, and between 21 and 43 mpg by 2008 • Opportunity • Chinese car market to be largest in world by 2020 • China will set global standard for fuel efficiency

27. Policy Recommendations • Raise and reform CAFE standards and suggest improvements in Chinese standards • Follow McCain-Kerry plan to raise standards 40% by 2015 • Create one fuel efficiency standard for entire vehicle fleet • Make credits tradable • Most politically feasible option • Increase gas tax to $1.20 a gallon in US and suggest higher gas tax rates in China • Eliminates “rebound effect” of 1 extra mile driven for every 5 mpg improvement in fuel efficiency • Economically cheapest solution, but least politically feasible • Implement feebate system that subsidizes high efficiency vehicles with fees collected on low efficiency vehicles • Eliminates market failure by bringing total lifecycle costs to foremarket • Program is revenue neutral if pivot point is set properly • Provides constant incentive to improve fuel efficiency

28. Promoting Public Transportation for Sustainable Development Nikki Laffel

29. The Problem • Personal vehicle use is increasing  increasing emissions • Vehicle emissions have two negative effects • Global climate change • Air pollution • United States • World leader in carbon emissions • China • World’s second leader in carbon emissions • Projected to become top emitter by 2020 • India • Current carbon emissions are low • National population growth rate exceeds global rate which means increasing global share of emissions

30. Existing Public Transportation • General trends: road based and rail based transit • Some public transit systems exist, other locations lack • Private vehicle use • more convenient/appealing due to independence/flexibility • Increase with increasing wealth • United States • In 2000: 88% use private vehicles for commuting • New York, Chicago, Atlanta: good public transportation systems • China • Guangzhou: 18 % use public transportation • Shanghai: impressive magnetic-levitation rail link • India • Delhi: 34% use public transportation (effective bus transit) • Mumbai: 86% commuter trips by bus system and suburban rail • Calcutta: impressive 17 km metro

31. The Problem (continued) • Public transportation systems are not ubiquitous in nature • Current systems cannot meet increasing commuter demand • % annual change in per capita vehicle ownership 1990-2020 • US: 0.1% - China and India: 7.5%

32. Policy Recommendations • Allocate more money to build new subway and bus systems and expand or improve old systems • Encourage citizens to use public transportation systems • subsidize mass transit fees for employees • reward carpooling • educate citizens to dismantle negative stigmas of public transportation • Discourage citizens from using personal vehicles for travel • increase the price of personal vehicle travel • reduce the number of vehicles allowed in urban areas • Change urban plans and city designs • build more walking and biking paths and bike racks • build cities to link resident zones to business zones

33. Clean Distributed Generation for Slum Electrification: The Case of Mumbai David A. Schaengold

34. Current Situation • Electrification is important: Better worker productivity, increasing wealth, air quality, and empowering • Unsafe, expensive electricity widely available, due to theft from power lines • Three kinds of barriers to traditional electricity service in poor urban areas: • Sociological: unfamiliarity with traditional payment methods, anti-slum sentiments • Infrastructural barriers: poor access for vehicles, no legal rights or existence, no property rights • Economic barriers: extreme poverty, not cost-effective for most utility companies

35. Distributed Generation (DG) is a possible solution • Can be a small investment, compared to expanding traditional service • Flexible - parts reusable • Low transmission costs, and hard to steal • Empowering for residents - DG can allow slum-dwellers to control their own power sources

36. Renewable DG best option (solar and wind, specifically) • Photovoltaic (PV) and Wind have no fuel costs • reduces recurring expenses • no need for fuel distribution network, which would be difficult in slums • Adverse health effects of non-renewable DG, such as diesel generators • Climate conditions in Mumbai ideally suited for wind and PV • If necessary, can be combined with diesel generator for increased reliability (useful for refrigeration)

37. Financing & Implementation • Micro-credit to local actors through existing banks or new sub-bank of Indian Renewable Energy Development Agency (IREDA) • Allow for entrepreneurship (eg if one slum-dweller can pay, allow him/her to establish generators and charge others) • Utility companies can be a source of capital for loans, since they have a financial incentive • Variety of non-traditional payment options (for instance, upfront) • Gender-conscious — women have most to gain from electrification, and are traditionally more reliable investors • Community-focused

38. Off-grid Energy in Rural India Antonio I. Lacayo

39. Rural Energy Electric Connectivity in Rural Areas • World: 1.6 billion, 1.3 in rural areas (80%) • India: 580 million, 400 in rural areas • Too expensive, poor people, difficult terrain. Dependence on traditional biomass • 2.4 billion people worldwide • Negative effects: time spent finding fuel, wood, indoor air pollution, other hazards, environmental degradation • Energy for development:wellbeing, education, health, income. • Energy ladder: biomass is free, use of electricity selectively, moving up is dependent on three factors.

40. Government of India’s Goals • Government of India’s Goals • Extend electricity grid to every village by 2008 and every household by 2012 (Rural Electricity Act 2003). • Necessary yearly investments: $ 15 billion. • Current energy investments: $ 350 million. • Over-ambitious, too expensive. • No coordination between institutions (3 ministries). • Does not attend end-uses, just focuses on access. • Off-grid Alternatives Focusing on End-use • Efficient wood fueled cookers, solar thermal cookers. • Biogas digesters for fuel, wind power for water pumping, photovoltaic panels for stand-alone systems. • Small hydropower and biomass gasifiers for electricity micro-grids.

41. Policy Recommendations • Renewable Energy Technologies (RETs) • Offer a variety of direct-end uses, lower costs for transmission and distribution, environmentally friendly, and low operating costs. • Focus on micro-credit to overcome high capital costs. • Provide consultancy to families. • Targeting Women’s Energy Needs • Women suffer the most from energy scarcity, provide higher benefits to the household, and 70% of the world poor are women. • Focus to women’s energy needs, like cooking and water. • Provide financing for women’s businesses, like baking and pottery.

42. Policy Recommendations • Capacity Building and using Local Resources • Allow community members to operate, maintain and repair energy technologies to foster self sufficiency and overcome cultural barriers. 1. Form partnerships with community members for energy provision. 2. Include capacity building on all projects. • Energy through micro-enterprise • Use energy as a means to increase income and reduce reliance on subsidies and hand-outs. 1. Provide financing for energy-dependent businesses and energy service providers. 2. Promote the creation of micro-enterprise zones.

43. Building Markets for Renewable Energy in China Renewable Portfolio Standards, Feed-In Tariffs, and Tendering Sabina Sequeira APMultimediaArchive

44. China’s Capacity for Renewables Wind SolarPhotovoltaic • 253 GW onshore capacity, 1000 GW offshore • Majority of materials imported • Has 1.2GW; 20GW planned by 2020 • 2,000 hours of sunlight/year , 170 Btce annual solar insolation • Vibrant PV manufacturing industry: 85% exported • In 2003, had 50MW Barriers to RE Growth • High initial costs for developers • Nascent industries: investor uncertainty • High market prices: 7-9cents/KWh wind, 42cents/KWh solar PV • Supply/demand alignment http://www.agu.org/journals/jd/jd0512/2004JD005462/ http://grid2.cr.usgs.gov/ms_demo2/swera/china/template.html  Policy: engage private sector, expand development

45. Mandated Market Share Policies • Renewable Portfolio Standards - Gradually increasing purchase obligation for electric utilities, Tiers, credit multipliers, credit trading system  Competition, innovation drive down price • Feed-in Tariffs - Fixed cost of RE (subsidized), Optional purchase  Set price lessens investor uncertainty • Tendering - Competitive bidding process • Economies of scale, competition, promote lower prices Wiser et al, 2004 Key Considerations • - Market development stage of technology, presence of competition • - Costs, Market distortions • - Efficiency, results

46. Renewable Energy Policy in China • Goal-setting: Five-Year plans and growing energy concerns • Tenth Five-Year Plan and 2005 Renewable Energy Law: First target set: 15% RE by 2020 • Many organizations, lack of coordination • Agencies, programs, province, local, and village governments • Currently under National Reform and Development Commission, National Energy Leading Group • Still, lack of concrete implementation processes • Steps toward MMS: Wind Resource Concession Program, province-level feed-in tariffs, considering national feed-in tariff or RPS

47. Recommendations • Policy Design - Carefully Consider renewable energy capacity and market conditions - RPS in urban areas, feed-in tariffs for rural, tendering for high capacity rural sites, separate purchase obligations for solar PV and wind • Transparency and Coordination - Create a department of energy, require monthly energy reports from provinces - Compliance incentives for provinces • Supply and Demand - Nationwide credit trading: allow urban electric utilities to purchase rural credits - Restructure transmission system, develop with R&D • Costs - Spread costs of across all energy consumers: fund initiatives through electricity surcharge, public benefits fund, reductions of fossil fuel subsidies - China pledged to spend $1.84 Billion by 2020 on renewable energy, can be used on MMS policies to promote rapid private sector expansion of renewable energy

48. Financing Renewable Energy Karis Anne Gong

49. The Export-Import Bank of the United States • An independent agency of the United States, chartered by the U.S. Congress • An export-credit agency, a “financial institution whose purpose is to promote the exports of their respective countries by providing loans, guarantees, insurance, technical assistance, and more with the backing or approval of the national government” • ECAs directly finance 1/8 dollars of world trade (Gianturco) • The Export-Import Bank of the U.S. (ExIm Bank) finances $10-13 billion of U.S. exports per year

50. Ex-Im Bank Energy Financing • 98% of energy financing (~ $1-3 billion/year) is authorized for the export of fossil-fuel based energy projects, including generation and extraction • Climate Change contribution: by 2012, the Bank’s power project will contribute to at least 450 million tonnes of CO2 emissions annually; this is on par with Mexico and Canada. In addition, its extraction projects financed from 1989-1999 in their lifetimes will generate about 14.1 billion tonnes of CO2 emissions. (ExIm Bank)