Validation of Direct Natural Gas Use Strategies to Reduce National CO 2 Emissions

Transcription

1 Validation of Direct Natural Gas Use Strategies to Reduce National CO 2 Emissions INGAA Foundation Spring Meeting April 17, 2009, Austin, TX Neil Leslie , neil.leslie@gastechnology.org

2 Drivers for Study on Direct Natural Gas Use >Global concerns about greenhouse gas emissions >Energy diversity and security >Efficient, sustained use of abundant domestic energy supplies Near term strategies Options to integrate with low-carbon future 2

3 Gas and Electric CO 2 Emission Trends in Residential and Commercial Buildings 3000 Residential and Commercial CO 2 Emission Trends Million Metric Tons CO Natural Gas Electricity Source: EIA Annual Energy Outlook

4 EPA Water Heater CO2 Analysis Source: EPA Presentation to National Academy of Sciences February

5 Related Studies >American Gas Foundation direct gas use study >McKinsey 2008 global study and 2007 U.S. study >Natural Gas Council studies on GHG initiatives >GTI CO 2 e emission reduction strategy white paper 5

6 Near-, Mid-, and Long-Term CO2e Management Strategy (GTI Study) >In the near term, aggressive deployment of highefficiency natural gas equipment in the nation s homes, offices, and industries can achieve substantial CO 2 savings >In the midterm, reduce methane leakage from the nation s natural gas production, transmission, and distribution systems and deploy NGV s for additional GHG savings >In the long term, renewables-based gas can be fed into the pipelines to create a sustainable, netzero-carbon option 6

7 Cumulative Impact of Proposed Strategies on GHG Emissions 15% CO 2e emission reduction below 1990 levels 7

8 Analyzing Direct Use with NEMS >Objectives Assess CO 2 emission reductions, energy savings, and cost savings through direct use of natural gas > Displace electricity, oil and less efficient practices > Install higher efficiency gas appliances > EIA AEO 2008 Reference Case baseline scenario Compare merits of increased direct gas use relative to other options to meet CO 2 reduction goals 8

9 Consortium Participants >Funders: INGAA, INGAA Foundation, APGA, APGA RF, National Fuel, National Grid, Nicor, Piedmont, Sempra Utilities, Southwest Gas AGA participation on steering team Limited external stakeholder involvement >Analysis Team: SAIC, GTI SAIC: execution of NEMS model, analysis, reports GTI: input on scenarios and modeling assumptions, supplemental analysis, reports, program management Steering team: guidance on program needs, direction, external stakeholders, publication 9

10 NEMS Model >National Energy Modeling System (NEMS) is an economy-wide, integrated model covering energy supply, conversion and demand Achieves supply/demand balance in end-use demand regions with projections to 2030 Reflects market economics, industry structure, supply and demand technologies, and existing energy policies and regulations influencing market behavior >EIA AEO 2008 Reference Case baseline scenario >Residential and commercial module inputs modified for scenario analyses 10

11 NEMS Structure Focus of Study 11

12 NEMS Model Scenario Analyses >Residential and commercial market focus >Incentives for existing natural gas technologies 40% subsidy for high efficiency gas technologies Educated consumers Improved opportunity for fuel-switching >R&D for future cost and efficiency improvements Gas heat pumps Combined heat and power >Subsidized electric technologies 50% subsidy 12

13 Results >Natural gas direct use scenarios reduced primary energy consumption, costs, and CO 2 emissions compared to the AEO 2008 baseline and aggressive electric subsidy scenario >Significant reductions by 2030 from encouraging natural gas direct use 1.9 Quads per year 96 million metric tons CO 2 per year $140 billion cumulative savings 50 GW cumulative power generation avoided All reductions significantly better than electric subsidy 13

14 Impacts on Energy Demand Relative to AEO 2008 Reference Case 0 Total Delivered Energy: All Sectors Change from Reference Case Trillion Btu PR1 PR2 PR3 AE50 14

15 Results (continued) >Natural gas price 2030 impact 2% increase residential, flat commercial by encouraging gas use Natural gas prices fall with electric subsidy >Natural gas production 2030 impact 0.2 Quad increase by encouraging gas use 1.2 Quad reduction with electric subsidy >Electricity generation 2030 impact 200,000 GWh reduction by encouraging gas use 280,000 GWh increase with electric subsidy 15

16 Results (continued) >Direct natural gas use subsidy has significantly lower gross cost per tonne than electric subsidy or insulation retrofit subsidy >Retrofit markets pose unique challenges for CO 2 emission reduction strategies High cost of retrofit compared to new construction Variability of cost complicates economics and incentive strategies Focus on the most attractive regions and market segments for lower cost per tonne 16

17 Conclusions >The NEMS analysis supports prior CO 2 emission reduction study results showing the benefit of policies that encourage efficient direct natural gas use in residential and commercial markets Ready for immediate implementation R&D improvements for sustained future impact Options for low or negative net cost per tonne >GHG initiatives that include incentives for efficient direct gas use strategies will reduce energy use, consumer costs, CO 2 emissions, peak demand, and future power generation requirements 17