THE CLIMATE CRISIS

1
THE CLIMATE CRISIS

• AN OPPORTUNITY FOR
• THE NATURAL GAS INDUSTRY

By John C. Topping, Climate Institute
www.climate.org Natural Gas and Climate Change
an Earth Day Conference Natural Gas Roundtable,
Washington, D.C., April 22, 2008
2
WE MAY BE ON THE VERGE OF SUDDEN AND DISRUPTIVE
CLIMATE CHANGE

• IPCC 4th Assessment Report (2007) presented
  ominous findings but scientific findings and
  energy trends since indicate our prospects may be
  even more foreboding.
• A vicious cycle of feedbacks may be amplifying
  warming associated with human industrial and
  agricultural activity.
• Loss of Arctic sea ice is likely to result in
  less reflection back to space of incoming solar
  radiation.
• Ocean absorption of CO2 may be rapidly declining.
• Permafrost thaw in the Arctic may also be
  releasing large quantities of greenhouse gases.

3
TRENDS IN GLOBAL FOSSIL FUEL BURNING HARDLY
ENCOURAGING

• GLOBAL EMISSIONS ROSE 3.1 ANNUALLY FROM 2000 TO
  2006

4
WE ARE DANCING PERILOUSLY CLOSE TO TIPPING POINTS
THAT COULD IN TWO TO THREE CENTURIES INUNDATE
MOST OF THE EARTHS COASTAL CITIES

• About 127,000 years ago when global temperatures
  were about 1 -2 degrees C above todays there was
  a melting of about half of the Greenland Ice
  Sheet.
• Once that got underway, sea levels worldwide
  rose at about a half meter per decade ( coral
  studies provide a footprint).
• If such were to recur, we could expect to lose
  before the end of this century such coastal
  regions and cities as New Orleans Alexandria,
  Egypt Venice, Italy and Bangkok, Thailand.
• In the 22nd or 23rd century many more of Earths
  great cities would be likely to succumb to the
  sea-among them perhaps Miami, New York City,
  Shanghai, Tokyo, Sydney, Acapulco and Rio de
  Janeiro.
• Ultimately this could render uninhabitable not
  only most of Earths coastal cities but also
  Washington, DC, Baltimore, and London.

5
TRENDS IN POLAR REGIONS DISCONCERTING

• Greenland ice cover rapidly shrinking
• Also disturbing findings in the West Antarctic

6
SOME OF APPROACHES OF INDUSTRIAL COUNTRIES
PAINFULLY COUNTERPRODUCTIVE

• Focus on biofuels for transportation, especially
  ethanol from corn, has been a real factor
  aggravating the current global food crisis,
  causing hardship in many nations, and threatening
  political stability.
• Not only have biofuels transport policies pressed
  by the US and EU proven very costly, their net
  effect from a greenhouse standpoint has been
  negative.
• Meanwhile the Power Sector that is responsible
  for about 40 of fossil energy greenhouse
  emissions in most countries, is only 33
  efficient in the US and has not improved since
  1960.

7
OPPORTUNITIES ABOUND FOR POWER SECTOR
EFFICIENCIES WITH RIGHT INCENTIVES

• In 1960 efficiency of US fossil power sector was
  33 in 2007 it was still 33.
• In 1960 efficiency of Denmarks power sector was
  33 by 2007 it had risen to about 60.
• A huge factor combined heat and power plants
  that recycle wasted energy produce about 50 of
  electricity in Denmark versus 6.5 in the US.
• Similar situation elsewhere in North America- 9
  of power from recycling in Canada, 3 in Mexico.
• Besides Denmark three other Northern European
  countries get over 30 of electricity from
  recycling-Netherlands, Latvia and Finland.
• Efficiencies can be achieved both through
  construction of combined heat and power (CHP)
  plants and by recycling industrial waste heat
  into heat and electricity, e.g. steel mills,
  refineries, paper mills and gas transmission
  facilities.

8
ELIMINATING DISINCENTIVES TO LOCAL GENERATION
WILL PROTECT THE CLIMATE AND SAVE BILLIONS
ANNUALLY

• Electricity line losses from remote central
  generation facilities in the US are about 7.5
  versus only 1 from local generation.
• Yet prices paid for local generation seldom
  include avoided transmission capital or line
  losses.
• By not rewarding efficiency, regulatory rules
  focus utilities on electric only plants, which
  then cannot recycle their thermal energy use due
  to distance from end users.
• This blocks energy recycling, requires more TD
  investment, increases line losses, and also
  necessitates building much greater redundancy
  into the power system.
• Considerable backup capacity is required against
  the possible failure of a 1500 megawatt plant
  than for more diversified local generation
  plants, e.g. thirty 50 megawatt plants will
  require less backup and much less capital
  investment.
• Once one calculates savings from lessened line
  loss and need for redundancy Tom Casten shows
  local generation is often far cheaper.

9
(No Transcript)
10
THERE IS AN URGENT NEED FOR LARGE SCALE NEAR TERM
GLOBAL GREENHOUSE REDUCTIONS

• Persistence of the recent 3 annual global
  growth in GHG emissions from fossil burning will
  likely move us soon past crucial tipping points
  and demoralize climate protection efforts
• What we need now first is to go after low hanging
  fruit, reductions often at negative societal
  economic cost
• The most obvious of these are in the power
  sector-
• Transforming lighting worldwide to energy
  efficient bulbs,
• Changing incentives to remove barriers to
  recycling and local generation and
• Creating a smarter power grid.
• Pakistan distribution of 10 million free compact
  fluorescent bulbs
• The largest near term greenhouse reductions are
  achievable by removing barriers to energy
  recycling and local generation - annual savings
  of tens of billions of US dollars and a reduction
  of as much as 20 in US GHG emissions.

11
THE NATURAL GAS INDUSTRYS ROLE IN AVERTING A
CLIMATIC CATASTROPHE

• Electric only generation with natural gas
  produces only about half the greenhouse emissions
  per kilowatt-hour of a typical coal plant, but
  with high cost fuel. However
• Natural gas is an ideal fuel for local generation
  that recycles waste energy to cut net fuel use
  per kilowatt-hour in half and drop GHG emissions
  to 25 of electric only coal plants.
• Moreover, gas facilities scale easily, enabling
  excellent matches with thermal loads with less
  need for redundancy and associated capital cost.
• Recycling the exhaust heat from gas turbines at
  all gas gathering and gas compressor stations
  could provide pristine electricity with no
  incremental greenhouse emissions and with
  delivered costs below those from new central
  plants using any fuel.

12
TYPES OF FACILITIES THAT MAY YIELD GAINS
50 MW Combined Cycle GT with waste heat to U.S.
Steel plating facility in Northern Indiana (85
annual efficiency)
13
Backpressure Turbine-generators Extract
Electricity from Gas/Steam Pressure Drop (Tom
Casten, to NC Leg. C. 2006)
Low Pressure steam out
High Pressure steam in
Extracted kWh reduces steam price
Potential applications save money at industrial
plants, hospitals, universities, and district
energy systems and natural gas city gates
14
NEED FOR RENEWABLES, GAS INDUSTRY AND GREENS TO
SEEK ENERGY REFORM

• Electric generation inefficiency is the ELEPHANT
  IN THE ROOM that every pundit ignores. The world
  cannot mitigate climate change without at least
  doubling fossil efficiency of generating and
  delivering electricity.
• Why has this large Industry not improved its
  efficiency in 50 years?
• Why is there no Federal Express, Microsoft,
  Intel, Google or McCaw Cellular in the
  electricity space?
• We need clean energy, but bickering between
  renewable energy and energy recycling folk has
  resulted in very little change at the national
  level in power generation.
• Many key leaders of the renewable and recycling
  industries and environmental groups are seeking
  to pool efforts the natural gas industry would
  be a key ally.

15
TENNESSEE REFORM A POSSIBLE PRECURSOR TO
NATIONAL ACTION

• In December 2007, Tom Casten, Chair of Recycled
  Energy Development (RED), on behalf of RED,
  Southern Alliance for Clean Energy (SACE) and the
  Climate Institute briefed Tennessee Gov. Phil
  Bredesen and leaders of TVA on opportunities for
  great savings by dropping barriers to energy
  recycling.
• Gov. Bredesen has established a clean energy task
  force on which SACE Chair John Noel serves.
  Reform legislation is moving through the
  Tennessee legislature to remove barriers to
  recycling and efficiency.
• Meanwhile the TVA is working to implement a Clean
  Energy Standard Offer Program (CESOP) that would
  enable suppliers of clean power to receive
  long-term contracts to supply power to utilities
  if they can supply it for only 80 of what TVA
  calculates would be the real cost of generating
  and delivering power from a new centralized power
  plant.
• The Ontario Power Authority is considering a
  similar CESOP.
• As CESOP is implemented, it could be a model for
  similar action at the State, Provincial or
  National level in both the US and Canada.

16
THERE ARE OTHER AREAS FOR NATURAL GAS INDUSTRY TO
LEAD IN CLIMATE PROTECTION

• The greatest immediate opportunities in the
  climate protection effort for the gas industry
  are likely to be in industrial recycling, where
  it will be a virtual zero GHG emitter or new
  power generation (often CHP) more attractive to
  environmentalists than a new coal plant.
• Generally the gas industry will be a beneficiary
  from carbon caps or emission fees and CCS
  requirements for any new coal plants.
• Opportunities are likely more limited in the
  transportation field, still such vehicles would
  help diversify US transport fuels without the
  negative greenhouse implications of corn-based
  ethanol and the pressures on already dwindling
  global grain reserves.

17
RESEARCH OPPORTUNITIES

• Releases from permafrost thaw in the Arctic and
  methane hydrates from offshore sites can become a
  threat to climate.
• Can these emissions be harnessed for economic
  use?

Permafrost methane bubbling
18
CLOSING SUMMARY

• Growing demand for fossil efficiency is the gas
  industrys friend.
• Natural gas is the fuel of choice for many energy
  recycling plants that double fossil efficiency.
• Deployment is held back by century-old rules that
  reward inefficiency.
• The natural gas industry could help by joining
  forces with other clean energy providers to
  demand modernized rules that reward efficiency.

THANK YOU!