Steve Clemmer

1
Renewing Americas EconomyFrom Crisis to
Opportunity

• Steve Clemmer
• Research Director, Clean Energy Program
• Union of Concerned Scientists
• www.ucsusa.org
• The Southeast Mid-Atlantic
• Regional Wind Summit
• Raleigh, NC
• September 19, 2005

2
The problem Surge of new natural gas plants
Source EIA, Annual Energy Outlook 2004
3
While US gas productivity declines
28 Decline in 2003
Source Richard Levitan IHS Energy, Petroleum
Information Corp., EOG Resources
4
Helping to drive gas higher higher
Hurricane Katrina
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13
12
12
11
11
Daily price history of 1st-nearby
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10
NYMEX natural gas futures contract
9
9
8
8
7
7
Nominal /MMBtu (Henry Hub)
Nominal /MMBtu (Henry Hub)
6
6
NYMEX
5
natural gas
4
futures strip
3
from 09/13/2005
2
1
Source LBNL
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

• 8.8 Bcf or 17 of U.S. natural gas production
  capacity initially lost due to Hurricane Katrina

5
High gas prices are hurtingthe economy

• EIA 52 increase in total consumer natural gas
  expenditures this upcoming winter
• 71 increase in gas home heating bills for the
  Midwest
• 31 increase in fuel oil costs for the Northeast
• 17 increase in residential electricity bills for
  the South
• Cut U.S. economic growth by 2.1 a few years ago
• Federal Reserve Bank of Dallas
• Forcing industrial users like the petrochemical
  industry to move their operations overseas.
• U.S. chemical workers lost 78,000 jobs between
  2000-2004.
• Wall Street Journal, 2/17/04.
• Farmers are also feeling the pain because natural
  gas accounts for 90 percent of fertilizer costs

6
Increasing dependence on gas imports from
overseas
U.S. Natural Gas Net Imports, 1990-2025
Source EIA, Annual Energy Outlook 2004.
7
New LNG terminals and tankers will increase our
vulnerability
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Leading to new coal plant proposals and higher
carbon emissions

• 17 advanced IGCC plants
• No plans to capture and store CO2
• Economic risk of future CO2 limits

9
Coal has other importantfuel cycle impacts

• Mountaintop removal mining in West Virginia

10
Coal mining jobs declining
Source EIA
11
Coal imports a drain on many state economies
Expenditures for imported coal for electricity
Source EIA
12
Fossil Fuels are Changing Climate Projected
Changes in Gulf Coast by 2100

• Warmer Temperatures
• 3-5F rise in winter lows
• 3-7F rise in summer highs
• July heat index could rise by 10-25F
• Precipitation
• Drier in most coastal zones
• Wetter or drier in upland regions
• More extreme events
• More frequent intense rainfall events
• Longer dry periods in between
• Hurricanes more intense
• Sea-level rise
• 13 inch average rise by 2100
• local land sinking

13
Nuclear Renaissance?

• Safety
• New plants proposing to eliminate back-up safety
  systems to save money
• Security risk
• Nearly half of NRCs force-on-force security
  tests with mock intruders at 68 sites have failed
• NRC a real attack would have put the nuclear
  reactor in jeopardy with the potential for core
  damage and a radiological release.
• Accident or attack at Indian Point, New York,
  could kill up to 518,000 people and result in 2
  trillion in damages (UCS, 2004)
• Waste disposal
• By the time Yucca Mountain is filled to its legal
  limit of 70,000 metric tons, 42,000 metric tons
  of nuclear waste will be stored at 63 sites in 31
  states almost as much as there is now (DOE)
• Radioactive for hundreds of thousands of years
• Cost
• Price-Anderson Act insurance subsidy 3.4
  billion/yr (Cato Institute)
• 145 billion in subsidies 1943-1999 (Goldberg,
  2000)

14
Myth The Southeast isnt windyWind Power Class
at 80m
Class 6
Class 7
The greatest previously uncharted reservoir of
wind power in the continental United States is
offshore and near shore along the southeastern
and southern coasts
Source Archer C, Jacobsen M, 2003
15
North Carolina has significantwind potential
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Offshore Wind Technical Potential
Total Shallow 97,975 MW (8.0 U.S.
electricity) Deep 809,725 MW (66.0)
Source Musial W, Butterfield S., 2004
17
Offshore Wind Costs are Falling
Source NREL/DOE Wind Program????
18

Renewable Electricity Standards
Nevada 20 by 2015, solar 5 of annual
New York 24 by 2013
Minnesota 19 by 2015
Maine 30 by 2000
Wisconsin 2.2 by 2011
Iowa 2 by 1999
Illinois 8 by 2013
Montana 15 by 2015
MA 4 by 2009
RI 16 by 2019
CT 10 by 2010
NJ 6.5 by 2008
DE 10 by 2019
Maryland 7.5 by 2019
California 20 by 2017
Washington D.C 11 by 2022
Pennsylvania 8 by 2020
Arizona 1.1 by 2007, 60 solar
New Mexico 10 by 2011

• 21 States D.C.

Texas 5,880 MW (4.2) by 2015
Colorado 10 by 2015
Hawaii 20 by 2020
Includes requirements adopted in 1994 and 2003
for one utility, Xcel Energy. No specific
enforcement measures, but utility regulatory
intent and authority appears sufficient.
19
Most New Wind Capacity Installed in States with
Renewable Standards
New Wind Capacity, 1998-2003 (MW)
283
537
66
235
1
48
53
44
0.2
2
283
129
470
3.6
14
50
0.2
66
223
114
634
2
176
0.1
207

• 74 (3,620 MW) in states with RES

1,264
1
Source UCS AWEA
20
Renewable energyexpected from state standards
Projected development assuming states achieve
annual RES targets. Assumes regulatory
enforcement of voluntary RES.
21
Texas Wind Spurs New Jobsand Rural Development

• Texas standard resulted in 913 MW of new wind in
  2001
• supported 2,500 jobs
• 11.7 mil./yr in tax revenues to school districts
  in 10 counties

Source Virtus Energy Research Associates, 2002.
Source Virtus, 2003
22
Wind Power CreatesNew Manufacturing Jobs

• 90 companies in 25 states currently mfg wind
  turbine components
• Southeast Mid-Atlantic have potential to
  create 38,260 new jobs
• Assuming 50 GW of wind capacity in US
• 9 states in top 20
• Foreign companies are building wind turbine mfg
  plants in US
• Spanish company Gamesa is building new plant in
  PA, creating 1,000 new jobs over next 5 years
  40 mil. in new investment
• Gamesa CEO credits PA renewable standard,
  creating market for up to 3,600 MW of new wind
• GE manufactures blades in Pensacola FL and has
  office in Greenville, SC

REPP, 2004
23
Wind dominates under national renewable
electricity standard

• Wind generation 6-10 of US electricity use by
  2020

Source UCS, using EIA model
24
Renewable Energy Creates Jobs
20 by 2020 RES
10 by 2020 RES

• Nearly twice as many jobs as fossil fuels

Source UCS, using EIA model
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Renewable energy conserves natural gas supplies
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20 by 2020 RES
12
10 by 2020 RES
10
1/4 of residential gas use
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Trillion cubic feet
6
4
2
0
2005
2010
2015
2020
Source UCS, using EIA model
26
Renewable energy saves electric natural gas
consumers money

• Savings in all customer classes
• Res. 7.9 bil
• Comm. 11.3 bil
• Ind. 9 bil
• EIA 10 RES saves 23 billion
• 20 RES saves 49 billion by 2020

5.4 billion gas savings
22.8 billion electricity savings
Excludes Transportation.
Source UCS, 2004.
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All regions of thecountry save money

• Total cumulative savings 38 billion by 2025
• Source UCS, 2004.

28
Renewable Energy Reduces Emissions and Compliance
Costs
Reduces growth in U.S. CO2 emissions by 59
Source UCS, using EIA model
29
More votes for renewable fuels vs.electricity
standard

• Both policies require a percentage of energy
  from renewable sourcesbut they have received
  different levels of support at the federal level

Senate votes to amend the 2005 Energy Bill
RFS - 70 Votes
Votes in favor of the Domenici amendment.
The RFS by 2012 was passed with the final Energy
Bill. The RES was rejected by the House in
conference committee.
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Conclusions

• Wind and other renewable energy sources can
  conserve natural gas supplies and provide a hedge
  against future prices increases and supply
  shortages
• Wind power can provide insurance against future
  limits on greenhouse gas emissions
• Wind power can provide significant energy
  diversity and security benefits
• Wind power can strengthen the US economy and
  rural areas
• Renewable energy can meet a significant portion
  of US electricity needs and save consumers money
• Efficiency AND renewables best combination. UCS
  Clean Energy Blueprint up to 31 less natural
  gas 27 reduction in gas price
• Any policy evaluation of RE should extend beyond
  the power sector, to include gas sector impacts
  as well