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08.09

Is Energy Independence a Goal?

By George F. McClure

The Waxman-Markey bill, promoting energy efficiency and reduction in pollutants thought to be responsible for climate change, narrowly passed the House in June, 219 to 212. The official title is the American Clean Energy and Security Act. The bill next goes to the Senate for consideration.

Savings Through Efficiency, Conservation, and Renewable Energy

The Waxman-Markey bill does not address expanded drilling for oil or gas. It is also silent on expansion of nuclear power generation. It does require power utilities to increase savings from energy efficiency and to use more renewable energy. Combined, these amount to 6 percent in 2012, 9.5 percent in 2014, 13 percent in 2016, 16.5 percent in 2018, and 20 percent by 2020. Renewable sources include hydropower (projects built after 1992), biomass and fuels derived from it, wind, solar, geothermal, gas from landfill, waste-water treatment, and methane from coal mines.

Cap-and-Trade Remains Controversial

The most controversial part of the Waxman-Markey bill is the cap-and-trade provisions, capping greenhouse gas emissions (reducing U.S. emissions by more than 80 percent by 2050, below 2005 levels). Eighty-five percent of the overall economy is affected, including power utilities, oil refineries, and energy-intensive industries such as iron, steel, and cement producers, and paper manufacturers. Emission permits would be required for regulated industries; permits could be sold by entities reducing their pollution and bought by entities needing more.

Initially, there would be an auction of 15 percent of the emission permits, with 85 percent being given away free. Over time, more permits would be sold. Preliminary estimates from the Environmental Protection Agency value a permit to emit one ton of carbon dioxide at $11 to $15, in 2012. The value of all permits would be about $60 billion in 2012, rising to $113 billion in 2025.

President Obama, while a candidate in 2008, said, "Under my plan of a cap and trade system electricity rates would necessarily skyrocket.” However, the Congressional Budget Office (CBO) scored the cost to the average consumer household at $175 per year in 2020. Critics of the CBO report point out that this comes after eight years of transition with higher costs; that it does not include effects for loss of gross domestic product caused by the cap, projected by the Heritage Foundation at $161 billion in 2020 (2009 dollars) — $1,870 for a family of four, just for the GDP effect.

Investments in energy technology totaling an estimated $190 billion by 2025 would be directed to improve energy efficiency measures. Renewable energy technology and energy efficiency would get $90 billion; carbon capture and sequestration technology would get $60 billion; $20 billion would go for electric vehicles and other advanced automotive technologies, while another $20 billion would be dedicated to basic scientific research and development.

New coal-fired power plants could be built between 2009 and 2020 but would be expected to use carbon capture and sequestration technologies when they become commercially available. By 2025 all coal plants built after 2009 would have to capture 50 percent of their CO₂ emissions. The capture percentage would rise to 65 percent for all coal plants built after 2020.

New energy efficiency standards will be set for lighting products, commercial furnaces and other appliances.

Benefits for Displaced Workers

Workers displaced owing to new emission standards would be entitled to 156 weeks of income supplement (70 percent of average wages), 80 percent of monthly health care premiums, up to $1,500 for job search assistance, and up to $1,500 for moving expenses. The 2007 energy bill included an Energy Worker Training Program; funding there would be increased under this bill.

Renewable Energy Competes with Lower Oil Prices

With crude oil selling for under $65/barrel, and credit being difficult to arrange to pay for new transmission lines that would carry the generated power from the central plains to user coastal areas, the enthusiasm for renewable energy has waned. T. Boone Pickens has abandoned his plan to erect windmills from north Texas to the Canadian border.  He is now offering 687 new 30-story windmills for sale, $3 million each. Natural gas prices have fallen by 70 percent, making it a logical choice for electric power generation.

Alternatives from Republicans

Republican Senators have offered their own four-step plan for low-cost clean energy:

• Build 100 nuclear power plants within 20 years

• Promote electric cars for conservation

• Expand offshore drilling for natural gas and oil

• Double energy research and development to make renewable energy cost-competitive

America’s investor-owned utilities built 100 nuclear power plants between 1970 and 1990 with rate-payers’ money. “Why can’t we do it again?” asks Senator Lamar Alexander (R-Tenn.), who offers his blueprint. He cites the experience of other countries. France gets 80 percent of its power from 50 nuclear reactors, gaining both cheap power and low emissions. With permitting issues, it often takes ten years or more to bring a new nuclear plant online, but Japan is building nuclear reactors in four years.

Asked about adding a nuclear power title to the Waxman-Markey bill, Alexander suggested junking Waxman-Markey instead and starting over.

Prospects for Nuclear Power

Most reactors have revenue of $2 million per day, paying for construction loans ($5 billion) and still making low rates possible for consumers. A federal insurance program, Price-Anderson, was set up when the first 104 reactors were built in the United States, but it has never had to pay out a dime. Under the program, each reactor can be assessed $100 million for an accident at another reactor.

Standardized designs for nuclear power plants reduce risk and speed permitting approval.

Nuclear power is the lowest cost producer of base load electricity. Average nuclear production costs have declined more than 30 percent in the last 10 years, to an average of 1.7 cents per kilowatt-hour. This includes the costs of operating and maintaining the plant, purchasing nuclear fuel, and paying for the management of used fuel.

A potential bottleneck in a new reactor program is the cast forgings for containment vessels. Except for Russia, all manufacturers depend on Japan Steel, which can produce only four per year at present.

While most nuclear power reactors are rated at 1,000 megawatts or more, a scalable modular design from Babcock and Wilcox promises nuclear power in units of 125-150 megawatts.

A global summary of nuclear power shows 436 plants operating in 31 countries as of June 2009, with total capacity of 370 GW. The United States has 104 of those plants. Another 48 plants are under construction in 15 countries, with 42 rated at GW capacity. One of those plants is in the United States, TVA’s Watts Bar unit #2, on which work had been suspended in 1985.

As of the end of 2007, the total electricity production since 1951 amounts to 59,450 billion kWh. The cumulative operating experience amounted to 12,750 years by the end of 2007.

Nuclear power plants world-wide, in operation
and under construction, as of June 2009

There are six current designs, with four already certified by the Nuclear Regulator Commission.

According to the Financial Times, India’s national energy plan calls for 30 GW of nuclear power by 2020, 63 GW by 2030 and 250GW by 2050. Western companies see opportunities. In January, executives from 30 U.S. companies, including GE, Westinghouse (majority owned by Toshiba), Bechtel, Babcock & Wilcox, and Shaw Group, visited India for discussions with government officials and the NPCI (state-owned Nuclear Power Corporation of India) on meeting India’s power needs.

Global carbon emission reductions

Explosive power demand growth in both China and India means more fossil-fueled power plants are required. Neither country signed on to the Kyoto Protocol to reduce emissions. The United States did not ratify Kyoto either, on the grounds that the emission reductions required would seriously impact our GDP without making a significant effect globally. On a visit to India, Secretary of State Clinton urged India to pursue a low-carbon future. However, she was rebuffed by India’s environment minister who pointed out that on a per-capita basis, India already has low emissions, and that India would probably face carbon tariffs on exports to the United States.

The recession has cut into carbon emissions in the European Union such that any agreed emission reductions may be delayed to 2015. The caps on emissions were set too high, critics say, and emission credits may be bought more cheaply abroad when needed. Outsourcing production overseas could reduce emissions at home. The British environmental group, Sandbag, argues that benefit from emission reductions should be credited to the entity achieving the reduction, rather than being returned to the power producer to offset further emissions.

Other alternatives

On renewable energy, British Petroleum (BP) has invested in alternatives for several years, under the slogan, “Beyond Petroleum.” It has now terminated that effort in view of falling oil prices and zero or negative returns from its alternatives investment. The new slogan could be “Back to Petroleum.”

At the same time, Exxon-Mobil has begun a program to derive a biofuel from algae. Its partner is Synthetic Genomics. The oil company will invest $600 million in the research.

What’s Next?

The Senate will take up the energy and climate change bill after the August recess. The health care bill has a higher priority.

References

1. Congressional Research Service Summary- H.R.2454: American Clean Energy and Security Act of 2009. http://www.govtrack.us/congress/bill.xpd?bill=h111-2454&tab=summary

2. Waxman-Markey Bill overview - http://www.govtrack.us/congress/bill.xpd?bill=h111-2454

3. Everything you wanted to know about the Waxman-Markey energy/climate bill – in bullet points. http://www.grist.org/article/2009-06-03-waxman-markey-bill-breakdown/

4. Crude retreats below $60 a barrel, Financial Times, 10 July 2009 http://www.ft.com/cms/s/0/13608bb4-6d3b-11de-8b19-00144feabdc0.html

5. U.S. Wind Power – Pickens to sell windmills. Financial Times, 12 July 2009 http://www.ft.com/cms/s/0/5a180016-ecdd-11dd-a534-0000779fd2ac.html

6. Sen. Lamar Alexander – A blueprint for 100 new nuclear plants in 20 years. http://alexander.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=b2540643-db93-4339-8faa-d00fc70631a3&Month=7&Year=2009

7. India’s national nuclear plan, Financial Times, 30 January 2009, http://www.ft.com/cms/s/0/5a180016-ecdd-11dd-a534-0000779fd2ac.html

8. Can Japan’s Nuclear Power Renaissance Reduce Global Emissions? Japan Focus, 7 September 2008. http://www.japanfocus.org/articles/print_article/2883

9. Back to Petroleum, Financial Times, 8 July 2009 http://www.ft.com/cms/s/0/f5a06d86-6b57-11de-861d-00144feabdc0.html

10. In Strategy Shift, Exxon plans 600 Million Biofuels Venture – Wall Street Journal, 15 July 2009. http://online.wsj.com/article/SB124757174435338281.html

George McClure is Technology Policy editor for IEEE-USA Today’s Engineer and the IEEE Vehicular Technology Society's representative to IEEE-USA's Committee on Transportation and Aerospace policy. Comments on this article may be submitted to todaysengineer@ieee.org.