MIT Energy Initiative MIT e i 1 Towards a Clean Energy Future: Fracturing Some Energy Fairy Tales Melanie Kenderdine MIT Energy Initiative NESCAUM/Endicott House August 17, 2011

MIT Energy Initiative MIT e i 2 The Sky Really is Falling: Some Hard Truths

MIT Energy Initiative MIT e i EIA forecasts a 30% global increase in CO 2 emissions in next two decades 60% of the CO 2 emissions in 2010 will be from 6 countries: the US, Japan, Russia, India, Germany and China 49% of this increase will be from China alone 68% of this increase will be from China, India, the US, and the Middle East Climate Change Challenge: Global CO 2 Emissions*, 2010/2030 *million metric tons EIA 2009 IAEO

MIT Energy Initiative MIT e i Without Policy With Policy Analysis of Climate Policy Targets Under Uncertainty, Prinn, et al It’s later – and more serious -- than we think

E.S. Figure 1. America’s electricity comes from old power plants 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s MIT Energy Initiative MIT e i Annual per Capita Electricity Consumption 5 “The world will need to consume four times as much energy by 2100 to raise the standard of living in developing nations to that of those in developed nations.”

MIT Energy Initiative 6 Challenge: Global Energy Consumption 2030 Source: Lawrence Livermore National Laboratory, John Ziagos 680 quads/yr. MIT e i

MIT Energy Initiative MIT e i 7 US Energy Supply Since 1850 ? Can We Cut Transition Time by 2/3rds? Wood Coal Oil Gas

MIT Energy Initiative MIT e i 8 Spinning Straw into Gold (maybe)

MIT Future of Natural Gas Study9 9 Gas Coal Electric sector CO2 Mitigation with Carbon Price

MIT Energy Initiative MIT e i 10 Beware the Long-term Impacts of Policy Decisions on Energy Infrastructure/Mix Use of Petroleum/Natural Gas in Power Generation Hotly Debated Post-OPEC Oil Embargo Debate has Chilling Effect on New Gas Plant Construction US Congress, Congress Repeals Fuel Use Act, Paving Way for New Gas Generation Washington, DC, 1987 In 2007, roughly 27% of all CO 2 emissions from the power sector came from coal plants built between 1975 and 1987.

Uprising Against the Ethanol Mandate MIT Energy Initiative 11 Federal Reserve Chairman Alan Greenspan Declares Impending Natural Gas Crisis Fox News, June 23, 2003 Exxon to Buy XTO for $31 Billion in Bet on U.S. Gas Bloomberg, December 14, 2009 Exxon to Buy XTO for $31 Billion in Bet on U.S. Gas Bloomberg, December 14, 2009 Beware of the “Herd Mentality” MIT e i

MIT Future of Natural Gas Study12 CoalPet.NGCCNG other Nuc.HydroOther Renew All energy Power Generation Technologies, Capacity Factors, 2007 % Nameplate Capacity vs. % Generation, 2009

MIT Future of Natural Gas Study13 TX LA MS AR OK NM AZ CA NV OR WA ID MT WY ND SD MN IA WI IL MO TN AL FL GA SC NC VA WV OH MI IN PA MD DE NJ NY CT RI MA ME NH KY Scale: 100,000,000 MWh MWh coal generation, heat rate <10,000 MWh coal generation for pre-1987 plants with >10,000 heat rate Existing NGCC capacity operating at 85% capacity factor minus 2008 actual MWh generation (FDNP) Scale and Location of Fully-Dispatched NGCC Potential and Coal Generation (MWh, 2008)

MIT Future of Natural Gas Study14 Coal to Gas Fuel Substitution Benefits Vary by Region Nationwide, coal generation displacement with surplus NGCC would: reduce CO2 emissions from power generation by 20% reduce CO2 emissions nationwide by 8% reduce mercury emissions by 33% reduce NOx emissions by 32% cost roughly $16 per ton/CO2 The displacement of coal generation with NGCC generation should be pursued as the only practical option for near term, large scale CO2 emissions reductions

MIT Energy Initiative MIT e i 15 Spinning Gold into Straw: Unintended Consequences

Uprising Against the Ethanol Mandate Senate Committee Ups Ethanol Mandate to 8 Billion Gallons by 2012 AAHSTO Journal, June 1, 2005 MIT Energy Initiative 16 Beware the Unintended Consequences of Mandates Ethanol industry balks at legislative mandate to boost production Renewable Fuels Assn., Dec 08, 2009 Ethanol's popularity wanes amid rising food prices USA Today MIT e i

MIT Future of Natural Gas Study17 Coal Wind The principal impacts of increased deployment of intermittent renewable energy sources in the short term are –  the displacement of NGCC generation  increased utilization of operating reserves  more frequent cycling of mid-range or even base load plants. Gas NGCC Large Scale Penetration of Intermittent Wind in Short Term/ERCOT

MIT Future of Natural Gas Study18 Buildings: Full Fuel Cycle Energy/CO2 Energy Consumption CO2 Emissions Fuel Energy per 100 MWh of Useful Energy Site Energy Source Energy Ton CO2 per 100 MWh of Useful Energy Gas +10% 2.7X + = Electricity + 194% For buildings, a move to full fuel cycle efficiency (site vs. source) metrics will improve how consumers, builders, policy makers choose among energy options (especially natural gas and electricity). Efficiency metrics need to be tailored to regional variations in climate and the electricity supply mix.

MIT Energy Initiative MIT e i 19 Forgetting the Moral of the Story

MIT Future of Natural Gas Study20 Public and public-private funding for natural gas research is down substantially even as gas takes a more prominent role. Consideration should be given to restoring a public-private RD&D research model –  Industry-led portfolios  Multi-year funding Federal Funding GRI Funding Steady over 15 years GRI Funding Steady over 15 years Time limited tax credit Gas produced under tax credit Gas produced after tax credit RD&D Spending Historical Overview: Coalbed Methane R&D

MIT Energy Initiative DOE Budget Summary, FY2011 DOE Energy R&D: FY 12 Request (million $) Coal 100% Solar 39% Bio 29% Wind 11%

MIT Energy Initiative MIT e i 22 Happily Ever After?

MIT Energy Initiative MIT e i New structures for $1.6 billion in energy research over the next five years The Changing DOE Innovation Ecosystem

Uprising Against the Ethanol Mandate MIT Energy Initiative 24 Current DOE Organization of Energy Programs Renewables/ Efficiency Nuclear Energy Electric Reliability Office of Science Fossil Energy (Coal, gas, oil) Undersecretary, Energy/Environment Undersecretary, Science Advanced Research Projects Agency - E Secretary, US DOE MIT e i 24 Relationship of electricity to fuel sources? Is there an organizational home to migrate basic science discoveries to technology solutions? Why is efficiency in the renewables office? Is there any significant relationship between vehicle, building, industrial efficiency technologies? Where does transportation fit? What about transportation fuels? Where would you put an energy and water program? Which office is responsible for distributed generation? If a fuel meets environmental specifications do we care which fuel we use? Can we develop a comprehensive research/policy portfolio when offices are organized around fuels?

Uprising Against the Ethanol Mandate MIT Energy Initiative 25 A Different Structure: A Portfolio Approach Office of Science Undersecretary, Science & Energy Advanced Research Projects Agency - E Secretary, US DOE MIT e i Office of Transportation Office of Buildings Office of Industrial Energy End use model Functional model Office of Power Office of Heat Office of Fuel Efficiency, Carbon Mgmt., Water Embedded in Each