1. ENERGY POLICY LEADERSHIP Brice Dally September 16, 2008 CBE 555

2. Outline  Intro  Bush Policy  Obama and McCain Proposals  Pickens’ Plan  Conclusion/Discussion

3. Relevance  Energy Crisis  Environmental  Economic  National Security  Informed Voter  Impact to ChE Job Market  Informational, not Persuasive

4. Current Energy Usage

5. Energy Policy Leadership  New Deal or Space Race situation  Business as usual without the right leadership

6. President Bush’s Plan  Unveiled at 2006 State of the Union  Advanced Energy Initiative (AEI)  22% increase for clean tech  Fuel for vehicles  Power for homes/business  American Competitiveness Initiative (ACI)  Over 10 years  $50 billion for R&D funding  $86 billion for tax incentives

7. Federal R&D Distribution In 2009, Energy accounts ~1% of Federal R&D spending

8. DOE Bush Proposed Budget 2009 Total ~ $25 billion

9. AEI Budget, $3.2 billion

10. AEI Goals  Vehicles  40 mile range solely on battery  Cellulosic ethanol competitive with corn-based by 2012  H2 fuel cell available to public by 2020

11. AEI Goals  Homes and Businesses  Complete $2 billion commitment to clean-coal, bring to marketplace  Global Nuclear Energy Partnership to address spent fuel, proliferation, work on new tech  Improve solar pv cells to be competitive by 2015  Expand access to wind energy

12. Twenty in Ten  Reduce gasoline usage by 20% in ten years (2017)  35 billion gallons of renewable and alternative fuels Corn ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen, other alternative fuels  8.5 billion gallons saved by fuel economy regulations Improvement in 2010 to 2017

13. Bush Accounting of Alt. Fuels  All fuels are treated equal on a per volume basis, except diesel gets a 1.5x credit.  32 billlion gal / 213 billion gal projected = 15% reduction  5 years behind schedule according to DOE projections Credit EtOH- Corn15 EtOH- Cellulosic7.2 EtOH- Import3 EtOH- Other Feedstock0.5 BTL diesel2.94.35 Biodiesel1.31.95 Total32billion gal

14. Quick Check  (32 billion gal gas)(125000 BTU/gal) = 4e15 BTU  (25.7 billion gal EtOH)(84000 BTU/gal) = 2.1e15 BTU  (2.9 billion gal BTL)(128000 BTU/gal) = 3.7e14 BTU  (1.3 billion gal Biodiesel)(128000 BTU/gal) = 1.7e14 BTU  Total = 2.7e15 BTU / (125000 BTU/gal) = 22 billion gal gas replaced  22/213 = 10% reduction

15. Fuel Economy  Current avg = 20.2 mpg  Improve to save 8.5 billion gal gas  8.5 billion gal/213 billion gal = 4% (not 5%?)  New mpg = (20.2 mpg)(213 billion gal) 213 billion gal – 8.5 billion gal = 21.0 mpg  Federal policy needed?

16. Congress Acts  Changes fuel economy standard to 35 mpg by 2020.  Gas saved = 213 billion gal – (20.2 mpg/35 mpg)(213 billion gal) = 90 billion gal saved, a 40% reduction  Alternative fuel policy stays the same  “Twenty in Ten” becomes “Fifty in Fifteen”

17. Bush’s Last Energy Policies…  Off shore drilling  Oil shale  1.5 trillion barrels in CO, UT, WY basin  ANWR  Refinery projects  149 refineries, none built in last 30 years  Speed up governments review of improvements

18. Obama and McCain  Originally focus of talk, but limited numbers available  Campaign promises vs. actual policy…?  Latest poll statistical dead heat

19. Cap-and-Trade Program  Cut emissions 80% below 1990 level by 2050  Auction 100% of credits, everyone pays  Cut emissions 60% below 1990 level by 2050  Phase in auction over time, relies on past emissions distribution Obama SupportsMcCain Supports

20. Cap-and-Trade  Government sets a cap on total emissions of CO2  Companies/groups issued credits which give the right to emit a certain amount  Trading occurs by over-polluters buying from under-polluters  Government uses some/all revenue to fund Energy Policy  Issues include enforcement and allocation of credits

21. Off-Shore Drilling  Maybe would consider as part of comprehensive plan  Calls for lifting ban of Outer Continental Shelf  Immediate price relief Obama ReluctantMcCain Supports

22. Potential of Off-Shore Sites

23. Production from Off-Shore Drilling  Commercial production estimated to start in 2013 (locating and developing wells) assuming legislation passed today  Estimates of production from 200,000 (Energy Information Administration) to 1 million barrels a day (Oil Industry group)  Taking best case scenario, 1 million barrels would increase world’s daily supply 1%  Over long term, a standard economic model shows a 1% increase in production yields a 3% decrease in gas price, assuming others don’t cut production to maximize profits  $4 gal of gas reduced to $3.88  Worth the risk?

24. Fuel Economy Standards  4% mpg improvement per year  1 million plug-in hybrids by 2015  $7000 tax credit  All new vehicles flex fuel by 2012  More effectively enforce current mpg standards  $5000 for carbon-neutral, graduated for lower emissions  Calls for more rapid change than current 50% flex fuel by 2012 ObamaMcCain

25. 4% Annual Improvement  New mpg = (20.2 mpg)exp(.04*t)

26. Nuclear Power  Should explore, but not a great option  Safety  Storage  Big government subsidies  Want 45 new plants by 2030  Ultimately increasing to 100 new plants  Best reactors in US produce about 10 million MW-h annually  100 plants @ 10 MWh = 1 billion MWh  1/4.2 = almost 25% of 2007 total electrical generation Obama OpposesMcCain Supports

27. Other Policy Highlights  Total investment of $150 billion over ten years  Bush spent $15 billion in eight years  10% of electricity from renewables by 2012, 25% by 2025.  Clean coal, Smart Grid, Alaka Pipeline  Weatherize 1 million homes annually  60 billion gallons advanced biofuels  $300 million prize to improve battery technology for transportation- 30% current cost  $2 billion annually for clean coal  Tax credit equal 10% of wages spent on R&D ObamaMcCain

28. Pickens’ Plan  DOE says 20% of power can come from wind, cost $1 trillion  This could replace natural gas in electrical production  Use domestic natural gas for transportation fuel to replace foreign oil  Accounts for 38% of imports, saving $300 billion annually

29. Conclusions  Once in office, much more accountable for realistic policy  Between two current candidates, Obama has put forth more details thus far  Both promise more $$$ than currently used

30. References  http://www.whitehouse.gov/ http://www.whitehouse.gov/  http://www.energy.gov/news/ http://www.energy.gov/news/  http://www.nsf.gov/statistics/infbrief/nsf08312/ http://www.nsf.gov/statistics/infbrief/nsf08312/  http://www.eia.doe.gov/basics/quickoil.html http://www.eia.doe.gov/basics/quickoil.html  http://www.eia.doe.gov/ http://www.eia.doe.gov/  http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf  http://www.johnmccain.com//Informing/Issues/ http://www.johnmccain.com//Informing/Issues/  http://www.grist.org/candidate_chart_08.html http://www.grist.org/candidate_chart_08.html  http://www.eppo.go.th/ref/UNIT-OIL.html http://www.eppo.go.th/ref/UNIT-OIL.html  http://www.slate.com/id/2197283/ http://www.slate.com/id/2197283/  http://www.nei.org/ http://www.nei.org/  http://www.pickensplan.com/ http://www.pickensplan.com/

31. Discussion  Thank you  Any questions/comments???