Surviving In A DeCarbonized World

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Surviving In A De-Carbonized World

• What The Future WillBring And How We Can
  Influence It

Jim SimsWestern Business Roundtable
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Those WhoDont Know
Those Who Know
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Our SingleBiggest ProblemTelling Our Story
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1) Them 2) Us
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Electricity1) Unified Resource2) First
Flashpoint
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The Story

• America Needs More of Everything
• Limiting Options Is Dangerous
• Climate Solutions Costs Are High
• We Have The Moral High Ground

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What We Know
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What We Know
Transmission Investment On Steady Decline
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What We Know
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Western Region Faces Serious ProblemsRight Now
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What We Know
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What Else We Know

• Carbon management is coming
• Political demand curves exceeds technology
  development curves
• Vendor competition is fueling unrealistic
  demandcurves in the political arena

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What Else We Know

• Consumers want it all
• Endless and secure energy supplies
• Low prices
• No pollution
• Less global warming
• No new power plants
• No new oil and gas drilling near people or
  pristine places

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What We Know

• Consumers Are Being Told They Can HaveIt All And
  It WontCost Them AnyMore

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Consumers Cant HaveIt All
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What We Dont Know

• Structure of carbon policy
• Cost to industry and to consumers
• Which capture technology will win
• If sequestration can be done
• Whether deploymenttimetables will meetgovt
  mandates
• Whether any of this willhave any
  measurableimpact on climate

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What Are Climate Policy Outcomes?
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Outcome 1

• Achieve tech breakthroughs and benefits of
  standardization
• Begin de-carbonizing and meet mandated goals
• Capture tech exportmarkets
• Safely absorb hit to GDP
• Keep cost increases toconsumers lt 25
• Dont affect climate inany measurable way

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Outcome 2

• Tech challenges slow deployment and we miss
  deadlines
• Suffer from tech balkanization
• GDP hit larger than expected
• China / India eclipse USglobally
• Costs to consumers soarpast 50
• We dont affect climate inany measurable way

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Outcome 3

• Capture / sequestration strategies fail in most
  deployments
• GDP hit leads to prolonged recession
• PUCs deny full cost recovery
• Customers reject costs
• We dont affectclimate in any measurable way

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Outcome 4

• We dont affect climate in any measurable way
• We destabilizethe grid anddeliver thisto
  consumers

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How Do We Avoid This?
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Building Your Own

• If you could construct the U.S. energy system,
  what choices would you make?

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Ground Rules

• There is no real substitute for growing the
  entire energy pie
• Substituting one resource for another is bad
  policy
• Substituting domestic energy for foreign energy
  is good policy
• Nearly all substitutions costs you more

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Realities To Deal With
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Realities To Deal With
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Realities To Deal With
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A Case Study Colorado

• Colorados need for electricity will increase
  significantly by 2025 by4,900 MW

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Building Your Own

• SCENARIO 1
• 4,900 megawatts total need
• 980 MW (20 efficiency)
• 980 MW (20 rps)
• - 637 MW (35 capacity factor)
• 1,323 MW
• REMAINDER 3,577 MW of need beyond efficiency
  gains / renewables

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Building Your Own

• SCENARIO 2
• 4,900 megawatts total need
• 1,255 MW (25 efficiency)
• 1,470 MW (30 rps)
• - 956 MW (35 capacity factor)
• 1,769 MW
• REMAINDER 3,131 MW of need beyond efficiency
  gains / renewables

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Building Your Own

• SCENARIO 3
• 4,900 megawatts total need
• 1,470 MW (30 efficiency)
• 2,450 MW (50 rps)
• - 1470 MW (40 capacity factor)
• 2,450 MW
• REMAINDER 2,450 MW needed beyond efficiency
  gains / renewables

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Lesson 1

• Renewables cant meet all our needs because most
  are not baseload resources.

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Lesson 2

• Intermittent Renewables Need Natural Gas

• Natural gas-fired plants are used to offset the
  variability of wind.
• One plant in Colorado cycles several hundred
  times a month to offset a nearby wind farm.
• Cancelled coal plant in KS killed wind farm

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Lesson 3

• Those who say renewables and efficiency can
  replace all fossil fuels now are not telling you
  the truth.

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Lesson 3

• Options Are Limited For New Baseload Generation

• Coal
• Natural Gas
• Nuclear
• Hydropower
• Imports
• Demand Destruction

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Option 1 Coal
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BTU Conversion
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Option 2 Natural Gas

• If we want to continue to benefit from natural
  gas for electricity generation and other uses, we
  need to continue to drill and produce natural
  gas.

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Option 3 Nuclear

• Safety record speaks for itself
• Waste issue can be solved
• Favorable emissions profile
• Proliferation concerns better handled if we
  remain a player
• Reprocessing anefficiency strategy
• Higher start-up costs

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Option 3 Nuclear

• Opposition by anti-nuke activists and anti-nuke
  politicians may delay deployment
  and raise
  costs so much
  as to make
  nuclear
  too
  expensive.

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Option 4 Hydropower

• Its renewable
• Its clean
• Its inexpensive
• Enviro opposition has almostkilled it as a
  viablealternative

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Option 5 Foreign Energy
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Option 5 Foreign Energy

• As our economy grows, we need more energy from
  all sources, including the fossil fuels that now
  meet more than 80 percent of all U.S. energy
  needs.
• Discouraging production of American oil and gas
  forces us to rely more on foreign imports even
  assuming a lot more energy conservation.
• Some of those foreign nations that gladly take
  our petro-dollars are led by dictators that
  support foreign terror groups aligned against
  America.
• The more petro-dollars we send overseas, the more
  we indirectly support the very terrorists that
  our brave men and women in uniform are currently
  fighting.

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Option 6 Demand Destruction

• Extended Economic Recession or Depression
• High prices that force production overseas
• Government regulation that discourages economic
  growth

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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Effects Of Lieberman-Warner Climate Bill
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Option 6 Demand Destruction
Lieberman-Warner And Colorado
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Conclusions

• Good Substitutions
• Domestic energy ? Foreign energy
• Conservation ? Energy use
• Low cost options ? High cost options

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Conclusions

• Bad Substitutions
• One resource ? Another
• High cost options ? Low cost options
• Economic growth ? Conservation

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Conclusions

• Biggest threat System reliability and
  weakening our ability to keep the lights on

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Conclusions

• Biggest question Can we afford the climate
  change solutions that are being proposed now?

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Conclusions

• Biggest challengeEnsuring that government
  regs dont outpace technological capabilities

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Conclusions

• Moral High GroundThose of us who work to keep
  economy growing and keep the lights on are
  helping low-income families and the working poor
  climb the ladder of economic success

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Conclusions

• Morally ChallengedThose who work to constrict
  energy supply and generation choices are forcing
  prices higher, which are disproportionately felt
  by the poor.

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Finding The Right Balance

• And Wrestling With Some Inconvenient Truths

Jim SimsWestern Business Roundtable