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U.S. Energy Policy: The Burdens of the Past and Moving Forward

U.S. Energy Policy: The Burdens of the Past and Moving Forward. John P. Banks Nonresident Fellow Brookings Institution. September 25, 2012. BROOKINGS MOUNTAIN WEST - UNLV. Challenges of US Energy Policy. Efficiency & Conservation. Market-driven. Role of Government.

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U.S. Energy Policy: The Burdens of the Past and Moving Forward

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  1. U.S. Energy Policy: The Burdens of the Past and Moving Forward John P. Banks Nonresident Fellow Brookings Institution September 25, 2012 BROOKINGS MOUNTAIN WEST - UNLV

  2. Challenges of US Energy Policy Efficiency & Conservation Market-driven Role of Government Supply / Demand Options National Security Regulatory-driven, Public investment Fossil fuels Alternatives Environmental Economic

  3. Natural Gas – RISING ROLE OF SHALE GAS US Natural Gas Production, Consumption, Imports – 1990 -2035 (tcf) Source: US EIA Annual Energy Outlook, June 2012

  4. Enormous Shale Gas Resource (USG estimates) Most estimates of total range from 1,800 to 2,500 tcf US current consumption: total of @ 23 Tcf (or 62 bcf/d) This has been revised by EIA to 482 tcf Marcellus from 410 tcf to 141 tcf

  5. Natural Gas – RISING ROLE OF SHALE GAS US NATURAL GAS PRODUCTION – 1990 -2035 (tcf) Source: US EIA 2012 Early Release, Jan 2012

  6. OIL: US Production Up - Imports Down Source: US EIA

  7. Projections of US Crude Oil Production Source: US EIA Annual Energy Outlook, June 2012

  8. CitiGroup: Big Potential for US Shale Liquids Production Source: CitiGroup Report, April 2012, page 17.

  9. CitiGroup: US Production Could Overtake Saudi & Russia Source: CitiGroup Report, April 2012, page 13

  10. PEW: US Leads Global Clean Energy Technology Market Source: Pew Charitable Trust, Who’s Winning the Clean Energy Race, 2011 edition page 14

  11. US Clean Energy Market U.S. DOE, 2010 Renewable Energy Data Book (September 2011).

  12. Shale Gas and Tight Oil Supply v. demand Use domestic supplies Gas to back out oil in transportation Role of Government: More v. less regulation Who should regulate? US still subject to global oil market price dynamics Gas penetration in passenger vehicles is limited Exporting gas as LNG = geopolitical benefits Domestic oil can reduce imports, provide geopolitical benefits National Security Gas to back-out coal in power generation Boost economic growth Create jobs Promote re-industrialization Environmental Economic Carbon-based fuels Fracking concerns Cheap gas is making low-carbon options uncompetitive Gains are overstated Exporting LNG will raise domestic gas prices

  13. Shale Gas & Tight Oil – Environmental Concerns NYC DEC Hearing - 11-30-11 (photo: J Banks)

  14. Shale Gas & Tight Oil – Environmental Concerns New York City – June 5, 2012 (photo: J Banks)

  15. Shale Gas Environmental / Regulatory challenges GHG Emissions • Natural gas leaks, venting, flaring Pollution • Air • Noise • Surface disruption WATER • Quality • Surface water contamination • Aquifer contamination 2. Volume • Water use at scale 3. Disposal Other • Seismic

  16. Coal Plant Retirement Projections http://www.realclearenergy.org/charticles/2012/07/30/coal_retirements_2012-2016.html

  17. CHANGING ECONOMICS OF POWER SECTOR Source: US EIA. http://www.eia.gov/todayinenergy/detail.cfm?id=7610&src=email .

  18. Nuclear: Lack of Cost Competitiveness is Hurting From Jeffery Immelt, CEO of GE (July 2012) • : It’s just hard to justify nuclear, really hard. Gas is so cheap and at some point, really, economics rule. So I think some combination of gas, and either wind or solar … that’s where we see most countries around the world going.”

  19. Electricity Generation Trends – 2010-2035 Capacity Additions by fuel type – 2011-2035 (GW) Source: US EIA Annual Energy Outlook, June 2012

  20. Energy & Toss-Up States Iowa: • Wind • Ethanol TOTAL ELECTORAL COLLEGE VOTES SHOWN: 96 Ohio: • Shale Gas • Coal Nevada: • Nuclear • Renewables 6 6 18 Virginia: • Offshore drilling 13 9 15 North Carolina: • Offshore drilling Colorado: • Shale gas • Wind Florida: • Offshore drilling 29

  21. The End

  22. OIL: US Production Up - Imports Down - Prices? Source: US EIA

  23. Crude Prices and Gasoline Prices Source: US EIA

  24. CHANGING ECONOMICS OF POWER SECTOR Source: US EIA. http://www.eia.gov/todayinenergy/detail.cfm?id=7090 .

  25. Keystone XL Pipeline

  26. Keystone XL Supply v. demand Use available supplies Canada is reliable ally; source is secure Role of Government: More v. less regulation We don’t import that much from ME anymore US still subject to global oil market price dynamics Prolongs dependence on oil & imports National Security Reduces dependence on Middle East If we don’t’ import it, China will take it Better than importing supplies from places with less rigorous environmental regulations Environmental Economic Boost economic growth Create jobs Additional supplies = downward price pressure High life-cycle CO2 emissions Pipeline spills Job creation relatively small, temporary

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