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Profitably Reducing Carbon Emissions in Maine
Presentation to Governor BaldaccisEnergy
Efficiency SummitThomas R. Casten Chairman,
Recycled Energy Development, LLCApril 3, 2008
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Thoughts on Global Warming

• Global Warming threatens life as we know it.
• Overwhelming evidence that human actions are
  causing climate change.
• Conventional wisdom assumes energy system is
  optimal. We know this is not true
• Electricity is protected from competition, but
  pundits assume free market principles prevail.
  We know this is not true
• The world must improve electric generation
  efficiency to mitigate climate change

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Presentation Summary Profitably Mitigating
Climate Change

• Describe economic and environmental inefficiency
  of electric generation
• Show how to reduce US carbon emissions by 20 and
  save 70 billion/year
• Describe Recycled Energy Developments Approach
• Propose Maine Actions to promote profitable
  greenhouse gas reductions

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Homer Simpsons Power Plant (Springfield, ?)
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Electric Generation Plant (Craig, CO)
Two-thirds of the fuels energy is vented to
atmosphere.
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Inefficient US Electric Generation
Related Headlines
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Electric Generations Increasing Contribution to
Domestic CO2 Emissions
US Electric Power Sectors CO2 Emissions
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US Carbon Dioxide Emissions, 2005
Breakdown of Emitting Sources
Heat Power 69 of all fossil fuel CO2
emissions
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U.S. Electric System Efficiency Since 1960
End User
Power Plant
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Combined Heat and Power Options
33 units Waste Energy
CHP Plant
Recycle Waste Heat
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Recycling Industrial Energy Even Better
Electricity Steam Hot Water
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US Energy Recycling Potential

• EPA and DOE studies identify 200,000 megawatts
  CHP waste energy recycling potential
• (750,000 MW US peak load)
• Capital investment of 350 billion
• Society could save 70 billion per year
• Energy Recycling can profitably eliminate 20 of
  U.S. CO2 emissions (1.4 of the 7.2 gigatons)

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U.S. Grid is Less Efficient than 100 Years Ago

• CHALLENGE OPPORTUNITY
• 70 billion potential energy savings if U.S.
  returned to 1920s model
• 1.4 gigaton GHG reduction/year

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US Energy Recycling (CHP) Potential

• EPA and DOE studies identify 200,000 megawatts
  CHP waste energy recycling potential
• Capital investment of 350 billion
• Society could save 70 billion per year
• Profitably eliminate 1.4 gigatons of CO2
  emissions
• Many other benefits including
• Improve manufacturing competitiveness, add jobs
• Reduce need for transmission wires
• Reduce vulnerability to extreme weather and
  terrorists
• Improve balance of payments

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Examples of Local Generation Projects that
Recycle Waste Energy

• Projects RED and its predecessor companies have
  developed

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Efficiencies of Energy Recycling Projects
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95 MW Recycled from Coke Production (Gary, IN)
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Silicon Production, Alloy WV

• Plant uses 135 MW
• 60 million investment
• Recycles exhaust into 44 megawatts
• Plant will use power to expand production by 20
• We are taking silicon production back from China!

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Operating Maine Projects by RED Subsidiary
Turbosteam

• Livermore Falls, ME
• 2002
• 2,980 kW
• 4,713 tons CO2 saved annually

• Colby College
• Waterville, ME
• 1998
• 600 kW
• 480 tons CO2 saved annually

• Huhtamaki
• Waterville, ME
• 2004
• 605 kW
• 1,043 tons CO2 saved annually

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Potential Clean Energy ProjectUniversity of
Maine at Orono

• Profitably reduce greenhouse gas emissions by
  recycling waste energy with a backpressure steam
  turbine.
• The University currently generates steam at 150
  psig and distributes at 50 psig
• A Turbosteam backpressure steam turbine could
  generate 684 kW of electricity for roughly 3
  cents per kWh and avoid 540 tons per year of
  CO2/year
• RED offers greater savings and emission
  reductions could by replacing oil boilers with
  biomass
• Project delayed by interconnection agreement with
  Bangor Hydro

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REDs Goals with Respect to Climate Change
Mitigation

• Deploy 1.5 billion to profitably reduce
  greenhouse gas emissions
• Cause a societal tipping point, with public
  demanding removal of all barriers to efficiency
• Change the debate from
• Who pays to mitigate climate change? to
• How can we induce profitable climate change
  mitigation?

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Maine Actions to Spur Profitable Carbon Reduction

• Enact a Clean Energy Standard Offer Program
  (CESOP)
• Allow all clean energy to qualify for Maine
  renewable portfolio standard rules
• Remove barriers to efficiency
• Treat clean energy projects as Pollution
  Control devices for environmental permitting

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Clean Energy Standard Offer(CESOP)

• Calculate delivered cost of electricity from best
  new base load central electric-only plant
• Include generation and TD capital amortization,
  fuel OM, line losses, utility profits and
  expected carbon costs
• Offer 20 year contracts for CESOP power at 80 of
  the delivered cost from the best new base load
  central station.
• Define Clean Energy as all power plants with
  60 or better annual fossil efficiency, and
  include power from recycling waste energy
• Contract for up to projected 10-year net load
  growth
• Distribution utility keeps retail load, but buys
  power
• Distribution utility designs and installs
  interconnection to Clean Energy Projects, puts
  capital in rate base.

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CESOP Advantages

• Guarantees improved efficiency - requires 60
  overall efficiency versus 33 grid average
• Guarantees savings contract prices 80 of
  delivered cost of new central generation
• But calculation includes full avoided long run
  marginal costs, including transmission, line
  losses and carbon
• Utility keeps customers and its historic profits
  from distribution of electricity
• No standby rates to slow or discourage Clean
  Energy
• Utility manages interconnection at their expense,
  adds to rate base, just like central generation

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Effects of CESOP

• Induces power industry to build clean energy
  plants of all types
• Government does not pick technology or fuel, just
  forces economic and environmental efficiency
• Gives local clean energy projects benefit of low
  cost financing, comparable to financing costs of
  less efficient central plants
• All renewable energy qualifies along with all
  projects that recycle industrial waste energy
• Maine never builds another inefficient
  electric-only fossil fueled plant unless CESOP
  response falls short of needs.

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Possible Objections to CESOP

• Some clean energy projects will make
  extraordinary profits.
• Public can cry all the way to the bank
• Fossil fueled CHP could push out more expensive
  renewable projects
• CESOP keeps economic pressure on all technologies
  to reduce costs and at least double fossil
  efficiency
• The distribution utilities cannot control
  generation
• This is a soluble technical problem, worth the
  gain in efficiency

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Other Actions to Speed Clean Energy Deployment in
Maine

• Broaden Maine RPS to all clean energy
• Include all power from renewable energy sources
  and all power that meets clean energy
  definition in RPS and rename Clean Energy
  Portfolio Standard
• Strengthen percentages of Clean Energy required,
  but include new power under CESOP contract
• Treat clean energy project as a pollution
  control permit application for environmental
  approvals, greatly reducing time and cost of
  developing projects

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Thank You