Energy Policy and Environmental Impact: Examining Current Options and Future Directions

1. Energy Policy and The Environment Chapter 19

2. Energy at the center of the environment… • Heat and Power • Transport • The current picture  • The alternatives: CT Options?

3. Energy Consumption per Capita, International Comparison

4. I. Heat and Power Options • Demand-side mgmt=energy efficiency • Coal--48% • Nuclear--20% • Natural gas--20% • Hydroelectric Power--6% • Fuel Oil--2% • Other renewables--4% (wind, solar, geothermal, biofuels)

5. Demand-Side Management • Demand-side management (DSM) • Promote technologies that use energy more efficiently • “Produce” energy by freeing up supply • Cogeneration • Energy efficient industrial motors and cooling and cleaning appliances

6. Potential for Electricity Savings Through DSM

7. The Dominance of Coal • Reasons for coal’s dominance • Reliable, low-priced fuel source • Well-developed technology • Abundant domestic resources • Problems with coal • Primary source of global warming pollution • Acid rain • Criteria air pollutants • Dangerous underground mining • Impact of transport on roads

8. Nuclear Power • 110 plants operating in the US • No new plants since the mid-1970s • Is it cost-competitive? • Is it “clean”? • Worst-case disaster in US might cause 100,000 deaths (Nuclear Regulatory Commission)

9. Nuke Economics • No one knows… no new plants in 30 years! • Currently Heavily subsidized: • A large share of R&D • Waste disposal: Govt pays • US Govt caps accident damage liability • What about security?

10. Nuke environmental impacts • Low global warming impact • Radiation releases and meltdowns • Chernobyl, Three-mile Island • Waste Disposal

11. Nuclear Waste Disposal • High-level waste • Remains toxic for hundreds of thousands of years • Spent fuel rods • Waste from weapons production • Low-level waste • Contaminated clothing • Wastes from medical and pharmaceutical facilities

12. Storage of High-Level Waste • Burial in geologically stable formations • Above-ground storage • Political opposition to siting of waste facilities has halted nuclear power

13. Nuke Bottom Line • Nuclear power requires a significant level of ongoing government subsidy and regulatory dollars: • Safety regulation • Waste Disposal • Bailouts in the event of a meltdown

14. Natural Gas • Cleanest of fossil fuels • Yields 70% more energy for each unit of CO2 emitted than does coal • Likely to increase its share of the electric power and heating markets • Three drawbacks • Relatively small supply • Uneven geographic distribution • Still a greenhouse gas

15. Hydroelectric Power • Half of the nation’s potential hydro sites have been developed • Dam projects can have significant environmental impacts • Flooding of ecologically valuable lands • Negative impacts on aquatic life

16. Solar Power • Active solar • Photovoltaic power--produces electricity directly from solar cells • Solar thermal power--focuses the sun’s energy to heat a liquid and drive a steam turbine • Passive solar • Produces heat– mostly used for heating houses and pre-heating water

17. Wind Power • The most promising renewable electric technology • 2010: global capacity > 100,000 MW; about the same as 100 nuclear power plants • Cost competitive: $.04 KWh • Major environmental impact is noise and aesthetics

18. Wind Power: Storage and Transport • Major obstacle to wind power is storage and transmission • Produces power on an intermittent basis • Current solution is to use electricity grid • Grid transport and storage are limited

19. Policy Options: Electricity and Heat • Pick the clean, low-cost technology • Increase CT profitability by eliminating subsidies and/or internalizing social costs for competitor technologies • Promote the technology directly

20. Picking Winners • Low-hanging fruit are efficiency and wind power • Photovoltaics and solar thermal have the best chance of being competitive with coal in the long-run • Solar, efficiency, and wind probably offer a more feasible, cleaner and cheaper option than nuclear

21. Level the Playing Field • Cut Dirty Subsidies • Tax breaks • Expenditures supporting industry

22. Oil subsidies

23. Federal Energy Subsidies by Sector Source: Koplow

24. The Subsidy Pie, 2005 • 8%: efficiency and non-hydro renewables • 78%: nuclear and fossil fuels • Provide bulk of country’s power • Important political constituencies • Reduce conventional pollutants from coal plants • Renewable share increased in 2008, with “green stimulus”. Similar shift in 1978 was short-lived.

25. Highlights of Subsidy Policy • Energy markets are not free markets • Substantial government intervention • Our current energy mix is not a “natural” outcome • Federal policy currently tilts the playing field against renewables and energy efficiency

26. Direct Promotion of CTs • Subsidy policies designed to encourage late-stage- CTs face the following problems • Equity issues • Strategic behavior • Free-riding • Rebound effects • Requiring recipients to pay at least a portion of the cost should reduce these problems

27. Promoting CTs • Promoting early-stage CTs like photovoltaics can be done in two ways • Develop better technology through R&D • Capture cost savings through economies of scale

28. II. Transport Options: • In developed countries, motor vehicles account for • Half the nitrogen oxide • Half the volatile organic compound emissions • Two thirds of the carbon monoxide emissions • Autos account for • 14% of global CO2 emissions • 31% of US CO2 emissions

29. Social Costs of Oil • Taxpayer subsidies • Environmental externalities • Energy security • US monopsony power in oil market

31. Fuel Efficiency • Increased fuel efficiency comes closest to being a simple CT • Hybrid vehicles • Concerns about fuel-efficient cars • Safety? • Performance • Rebound effect

32. Fuel Switching • Biofuels: • Fuel from crops can be justified as a transition technology only • Medium run goal is “cellulosic” ethanol: fuel from woody matter. • Hydrogen: Direct Combustion/Fuel cells • Requires clean electricity to produce hydrogen • Fuel cells require further R&D • Electric vehicles • Require clean electricity • Battery disposal

33. Mode Switching • Environmental benefits of urban mass transit • Energy-efficiency • Reduce both local and global air pollutants • Slows growth in total miles traveled • Cars still have an edge in convenience and greater mobility

34. Policy Options:Transport • Tighter CAFE standards: easily justified on efficiency grounds • Gas taxes • Auto emissions tax • Feebates • Pay-by-the-mile auto insurance

35. Policy Options for Mode Switching • Remove subsidies for private transport • Internalize externalities (associated with congestion) • Toll systems on highways • Congestion or peak-load pricing • Dedicated traffic lanes

36. Slowing Global Warming at a Profit? • Optimists • Global warming can be reduced while yielding a net economic benefit • Pessimists • Technology-forcing standards generate self-defeating problems • Government must bear real marketing costs • Easy efficiency measures will soon be exhausted • Renewable energy options do not have promise

37. Direction of Government Policy • Optimists and pessimists generally agree that government should • Increase commitment of R&D funds to clean energy sources • Disagreement over whether • Government should support market diffusion of clean energy sources

38. Lessons from Wind and Solar-Thermal • Government subsidy policy can be effective. • Takes 25 years to move from R&D to commercial competitiveness • Moral: to stop global warming, we need to invest today in a suite of clean energy technologies