Coal & Minorities Affordability, Reliability & Economic Development

Transcription

1 Coal & Minorities Affordability, Reliability & Economic Development Morry C. Davis National Energy Efficiency Team Lead Legislative Issues & Public Policy Committee American Association of Blacks in Energy

2 Energy Efficiency Contact Regardless of your position on coal & the environment, we should all be for energy efficiency because we can ALL participate. Whether it s through new techniques, new technologies or changes in behavior, we can always find new ways to do more with the same amount of energy or less than what we re currently using. There are many simple things that residential & commercial consumers can do. When it comes to lighting, we can: Maximize the amount of sunlight we let in our home or business. Buy new, more efficient light bulbs that use less electricity. Simply turn the lights off when we aren t using them! New energy projects are the energy industry s way of implementing energy efficiency: New plants use less fuel than existing plants. New electric & natural gas transmission reduce energy lost. Enhanced infrastructure, logistics and operations help to save energy & maximize productivity. Whether your interest is environmental stewardship, economic stewardship or promoting tranquility being a SMARTER CONSUMER will help you achieve your goal! 2

3 America s Energy Burden The Potential for Higher Energy Prices from Climate Change Legislation Rising Cost of Electricity & Volatile Natural Gas High Gasoline Prices, and in some regions Gasoline Shortages (likely to return with national & worldwide economic recovery) High Food Prices due to the increase cost to produce, store & transport food supplies, but also in part from the use of food supply as feedstock for bio-fuels The American Family, already working through a weak economy, credit crunch and in many cases job loss, has to balance 3

4 Increases in Energy Prices Hit Low- and Fixed-Income Families the Hardest Families earning $50K or more annually spend 4% of their income on energy-related expenses Families earning $10K or less spend 46% on energy costs Households earning < $50 K: 54% of households say rising energy costs are forcing them to make hard decisions on which bills to pay Energy? Healthcare? Child care? Housing? Food? Clothing? Investments? 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Household Energy Expenditures vs. After-Tax Income > $50K $30K - $50K $10K - $30K < $10K 54% of Americans shoulder major energy burden Source: U.S. Dept. of Energy (2006); Americans for Balanced Energy Choices (ABEC) 4

5 Rising Energy Cost: A Cause for Concern for Minorities The continued availability of a reliable and reasonably priced supply of electricity and natural gas is critical to our nation s economic wellbeing, security, and the health and well-being of our citizens [National Association of Regulatory Utility Commissioners (NARUC) Resolution, June 25, 2007] Percent of Generation 5% 20% 50% 5

6 Coal Use, Electricity, GDP and Life Expectancy All Grow in Tandem U.S. Economic and Energy Growth GDP +164% 225 Indexed to 1974 (100) Electricity Use +117% Per Capita Income +86% Coal Use +78% Life Expectancy Source: Energy Information Administration Annual Energy Review 2006; National Center for Health Statistics, National Vital Statistics Report, December 28,

7 Technology is Driving Greater Coal Use & Economic Growth With Lower Emissions 250% Electricity from Coal Has Tripled Since 1970 While Emissions Have Been Significantly Improved Index = % 150% 100% GDP 203% 182% Electricity from Coal 50% Energy Consumption Population 47% 47% 0% % Total Emissions -42% Source: Energy Information Administration, Annual Energy Review, June 2007; U.S. EPA Air Emissions Trends Data, July

8 The Use of Coal is Critical to Sustaining Affordable Electricity in the U.S. Retail Cost Per kwh & Percent of Coal Generation % = average retail price per kilowatt hour for CY 2007 % = percent of total generation from coal for CY % 6.4 8% % 5.1 1% % % % Source: Energy Information Administration Mar % % % % % % % % % % % % % % % % % % % % % % % % % % < 7.0 > < 8.5 > < 10.0 > < 11.5 > < 13.0 > 13.0 Hydro % % % % % % % NH % VT % MA % RI % CT % NY % NJ % DE % MD % 8

9 New Advanced PC Continues Trend of Abundant, Low-Cost Baseload Electricity Comparison of New Baseload Generation Options (not Including CCS or Required Carbon Credits/Taxes) $100 $90 $80 $/MWH $70 $60 $50 $40 $30 $20 $10 $1.60/mmBtu $8/mmBtu Does not include the cost of: Natural Gas Back-up, nor Transmission Upgrades $0 Coal Natural Gas (Combined Cycle) Nuclear Wind Cost of Capital Fixed O+M Variable O+M Fuel 9

10 India and China: The Second Industrial Revolution is Underway Population vs. Projected 10-Yr. Growth in Total Energy Demand per Capita 12% 33% 5% 27% 7% 17% 13% 20% 88% 36% 4% 4% 37% Industrial superpowers are competing with developing nations for access to energy resources Source: U.S. Census Bureau, International Data Base; U.S. Energy Information Administration, International Energy Outlook

11 The Dash to Gas : Trend of Natural Gas Replacing Coal is an Emerging Issue North American Reliability Corporation (NERC), October 2008: Fuel-switching from Coal to Natural Gas Could Negatively Impact Reliability Coal-based generation is critical in: helping to mitigate natural gas pricing & volatility by displacing natural gas demand for electricity maintaining load balance on the U.S. electric grid Expecting natural gas generation to displace coal-fired generation is, at best, problematic. (DOE, April 2008) Increased demand for natural gas will put a severe strain on the gas supply infrastructure, which could lead to serious reliability problems. (Springfield, IL CWLP to NERC, Nov. 2008) If such fuel switching were to occur quickly, the bulk electric system would be unable to accommodate relocated generating facilities, which, in turn, would have an adverse impact on [electric transmission] system reliability. (FirstEnergy to NERC, Nov. 2008) Households, businesses & factories cannot afford: To compete with power companies for access to natural gas Higher priced, less reliable electricity Cumulative Gas Capacity Additions (GW) Source: DOE- NETL; Natural Gas & Electricity Cost and Impacts on Industry, April 2008 Electric Power is now the fastest growing consumer in the U.S. natural gas market: 19% in 1990; 22% in 2000, 30% in 2007 (DOE, June 2008) Average HH Natural Gas Price ($/mmbtu) 11

12 Energy Reliability is Highly Critical to Low-Income Households & Small Businesses The Association believes that given the socioeconomic profile of many minority-based communities, the consequences of extended energy shortages are more severe, including: Lost goods sold & services rendered for small businesses from interruptions in production August 2003: New York City Blackout Lost revenue for small businesses, which may result in price increases for local consumers Lost wages from inability to work or travel to work Job losses if small businesses are severely affected Disruptions in mass transit Health & mortality concerns Impacts on families if schools are closed 12

13 Energy & Economic Prosperity as the Key to Racial Equality in U.S. President-Elect Barack Obama: Race is still an enormous factor in our society, but economics can overcome a lot of racial division. National Urban League Conference; July 27, 2007 A new economic turbocharger is going to have to be found, and there is no better potential driver that pervades all aspects of our economy than a new energy economy that s going to be my No. 1 priority when I get into office. TIME Magazine; October 22, 2008 The Association believes that in order for economic equality to be achieved in the U.S., all citizens must have access to affordable, appropriate, abundant, reliable energy. 13

14 Green Jobs for Blacks? Many Blacks Are Not Close to Wind & Solar s True Potential The Black Belt Over 50% of the U.S. Black Population New Regional Coal Plants U.S. Wind Potential U.S. Solar Potential 14

15 The Illinois Basin Example: Abundant Coal Reserves Located in the Middle U.S. The State of Illinois alone has more energy in coal resources than all the oil in Saudi Arabia, Iran, Iraq and Kuwait combined 15

16 Coal as a Cornerstone for Obama s Energy Economic Turbo-Charger The impacts of a typical Midwestern coal conversion plant creating: 3,000 jobs during construction 150 permanent jobs w/ 2,000 indirect & others from a stimulated local/regional economy $200 million in additional income $3 billion gain in total output $600 million in additional tax revenues (over life of plant) 16

17 Chain of Value: The IL Basin to Gulf States Example 20 million tons of CO 2 /year from 3 Midwest CTG plants Requires a new 30 diameter CO 2 pipeline from the IL Basin to the Gulf States Enough CO 2 for EOR of 54 million barrels/year Assuming $80 per barrel crude oil, over $4.3 billion annually of American money stays here At Home! 17

18 Coal, Coal Conversion & CO 2 -EOR Can Be The Foundation of a New Energy Economy An American Energy Strategy Illinois Basin & Gulf States as Primary Energy Manufacturing Centers Enormous Benefit Products, Businesses & Jobs -- Could be Generated through Energy Development Feedstocks Illinois Basin Coal Stranded Oil Reserves Value Added Processes Coal Production CTG Production CO 2 EOR Oil Refining Consumer & Manufacturing Benefit Coal CTG Crude Oil Gasoline Products, Businesses, Jobs 18

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21 What is the American Association of Blacks in Energy? The American Association of Blacks in Energy ( Association ) is a national association of energy professionals founded and dedicated to ensure the input of African Americans and other minorities into the discussions and developments of legislative and regulatory policies, regulations, R&D technologies, and environmental issues. The purposes of the Association are the following: To serve as a resource for policy discussion of the economic, social and political impact of environmental and energy policies on African Americans and other minorities. To ensure involvement of African Americans in governmental energy policymaking by recommending capable, sensitive and informed personnel to appropriate officials. To encourage both the public and private sectors to be responsive to the problems, goals and aspirations of African Americans in energy-related fields. To encourage African American students to pursue careers in energy-related fields and to provide scholarships and other financial aid for such students. 21

22 What is AABE s LIPP committee? The Legislative Issues & Public Policy (LIPP) committee is charged with tracking legislative and public policy issues the Association may have an interest in and developing position papers on these issues to be presented to the Association's Board of Directors for approval. Through the development and dissemination of its position papers, the committee must ensure that African-Americans and other minorities have a voice in the development and implementation of U.S. energy/environmental polices. In 2008, the LIPP committee is focusing three main areas: Climate Change: What are the potential impacts of climate change legislation on African-Americans and other minorities? How do you minimize the impact of the cost of compliance on low-income consumers? What must U.S. climate change legislation and carbon management strategy include to ensure economic growth and energy security and avoid unfairness? Energy Efficiency: How significant a role can energy efficiency play in the future? How can African-Americans benefit from and actively participate in energy efficiency programs from the residential and commercial perspectives? Renewable Technology: How much can increased renewable capacity contribute going forward? How can African-Americans get involved in the renewables industry? 22

23 LIPP General Principles AABE recognizes that minority communities contain higher concentrations of low and fixed income households, and therefore, are more sensitive to changes in energy and environmental policy AABE recognizes the need for increased participation in the discussion of global energy and environmental policy by the African American community and the important need for enhancing current and future business opportunities in those communities which sound energy and environmental policy provide AABE recognizes that access to reliable and affordable energy is essential to low and fixed income households, and it is an important element for sustaining business development and economic growth both domestically and internationally AABE supports efforts to enhance US energy development and energy awareness 23

24 LIPP Principles dealing with Advanced Coal Technology Climate Change Principle #8: AABE recognizes that there is no silver bullet for addressing the GHG issue. Options that must be pursued include but are not limited to the development, commercialization and deployment of: Advanced clean coal technologies (including advanced PC & IGCC) Carbon capture and storage Advanced nuclear energy generation Energy efficiency Renewable energy technologies Energy Efficiency Principle #1: AABE supports enhancements to U.S. energy infrastructure through the development and implementation of technologies, which optimize the utilization of domestic and foreign energy resources while promoting: Energy security Economic prosperity Environmental solutions Renewables Principle #2: AABE believes that renewable programs must carefully balance: Availability of renewable technologies Cost effectiveness of such technologies Environmental benefits 24

25 AABE s Critical Role AABE Public Policy Jobs Education 25 Low income consumers Energy Organizations Students Public Policy Leaders Technology Leaders

26 Coal: Homegrown Energy Abundance in a World of Energy Shortfalls The Resource: 27% of the World s Coal is in the United States 250 Billion Tons of Recoverable Coal 26

27 U.S. Coal Reserves vs. Foreign Oil & Natural Gas Reserves Quadrillion BTU USA Coal Russia Iran Qatar Saudi Arabia Venezuela Natural Gas Crude Oil Coal Source: EIA,

28 50% of U.S. Electricity Comes from Coal What Does That Really Mean? Resources Needed Just to Replace U.S. Electricity from Coal SOLAR 4,000x More Solar Generation than Currently in Use WIND 500, MW Wind Turbines, Covering 59 Million Acres NUCLEAR 250 New Nuclear Plants NATURAL GAS 17 tcf Nearly Double U.S. Production HYDRO 500 Facilities the Size of Hoover Dam EFFICIENCY U.S. Would Need to Reduce Electricity Consumption 50% 28

29 Legislative Issues & Public Policy Vision Establish AABE as a valued resource for decision makers addressing social, energy and environmental issues impacting African-Americans, low and fixed income organizations Establish AABE as the preeminent organization identifying potential business opportunities in the energy and environmental areas for African-Americans, low and fixed income organizations Establish a cadre of experts on energy and environmental issues to implement this vision and encourage development within the African-American, low and fixed income community 29

30 Clean Coal Technology Provide the Path for Affordable & Adequate Energy Supplies Coal-to-Electricity New supercritical clean coal plants emit 15% less CO 2. FutureGen-type plants would have near-zero emissions. Coal-to-Gas Coal can be gasified to create NG for power plants and the CO 2 can be captured and stored. CTG from coal with CCS has better footprint than LNG. Coal-to-Liquids CTL with CCS can produce better fuels at the same rate of CO 2 emissions as imported oil. Adding biomass increases cost but improves CTL s carbon footprint. 30

31 The Enabling Technology: EOR & Carbon Storage Source: U.S. Department of Energy, Office of Fossil Energy, National Energy Technology Laboratory, Carbon Sequestration Atlas of the United States and Canada. 31

32 The Technology Path to Near-Zero Emissions from Coal New Supercritical Plants and CCS/EOR Demonstration Essential Advanced Supercritical Combustion Plants Demonstrating Carbon Capture/Storage (CCS) Commercial CTG/CTL with CCS/EOR Commercial IGCC with CCS/EOR Retrofitting PC Plants with CCS/EOR

33 Why Carbon Dioxide (CO2) is Valuable to U.S. Energy Security CO2 is: Essential for Sustaining Life on Earth (i.e. Plant Growth) Not Explosive Not Flammable Not Toxic Safely transported No significant injuries or deaths Transported through 5,500 mile of CO2 pipelines in the U.S. CO2 Enhanced Oil Recovery (EOR) is: Proven technology Practiced in the U.S. for over 30 years Currently use in producing about 200,000 barrels of oil per day in Texas (25% of Texas Oil Production) Capable of increasing domestically produced energy (oil & natural gas) beyond just Gulf States 33

34 And The Stranded Oil Is There Texas alone has over 120 billion barrels of stranded oil More than 30% of the U.S. total. Billion Barrels About 350 billion barrels of oil are stranded in the continental United States * * Excludes Alaska and offshore 34

35 CO2 Pipelines in the US & Proposed Expansion Dakota Gasification 2-4 new coal plants in KY & IL will provide the pipeline with 20M+ tonnes of CO 2 per year Chevron Devon Gas BP, Amoco KinderMorgan Oxy, KinderM, Crosstimbers Denbury Resources Proposed CO 2 Pipelines Existing CO 2 Pipelines Pipeline Owner Trinity KinderMorgan Using the 20M+ tonnes of CO 2 provided by the KY & IL projects, EOR has the potential to recover 54M more Bbls of oil per year ; EOR makes an additional 2B+ Bbls of oil economically recoverable in East & Central Texas

36 The Scale of CO2 EOR s Potential Contribution CO 2 EOR could provide over 40 years of current U.S. production Data Source: NETL, 2008 The U.S. Strategic Petroleum Reserve: 700 M Barrels 36

37 What Two Million Barrels a Day from CO 2 EOR Would Do 37