Cost of Greenhouse Gas Mitigation

download report

Transcript Cost of Greenhouse Gas Mitigation

The Cost of Greenhouse
Gas Mitigation: A Brief
Overview
AT 760: Global Carbon Cycle
Jonathan Vigh
December 18, 2003
The Problem


Increasing Greenhouse Gas (GHG) emissions
may cause considerable global and regional
climate change leading to significant economic,
environmental, and ecological costs over the
next century.
Global Warming Potentials (over 100 y):



CO2
CH4
N2O
1
23
296
World GHG Emissions by Sector§
Sector
Buildings
Transport
Industry
Agriculture
Total Emissions
CO2 Emissions (GtC)
1.73
1.22
2.34
0.22
5.5
Share
31%
22%
43%
4%‡
growth rate†
+1.8%
+2.5%
+1.5%
+3.1%
rate trend
decelerating
steady
decelerating
decelerating
100%
+1.8%
decelerating
(Total energy emissions accounted for 5.5 GtC emissions in 1995).
§ Energy usage only, does not include other emissions such as cement production, landfill emissions,
and land-use changes such as forest management, etc.
† Average annual growth rate from 1971-1995
‡ The agriculture sector accounts for 20% of CO2 equivalents because of methane emissions.
[Adapted from Price et al. 1998, 1999, out of table in Climate Change 2001: Mitigation, 3rd
Assessment Report (TAR), IPCC Working Group 3]
Current Energy Usage of USA
[U.S. EPA Inventory of Greenhouse Gas Emissions, April 2002]
Worldwide Energy Trends



The average annual growth rate of global energy consumption was 2.4%
from 1971-1990, but dropped to 1.3% from 1990-1998.
The average annual growth rate of global energy-related CO2 emissions
dropped from 2.1% to 1.4% in the same periods.
Why?





Improved energy efficiencies
Increased fuel switching to less carbon-intensive sources
Adoption of renewable energy sources
Dramatic decrease in countries with economies in transition (EIT) as a result of
economic changes
Why aren’t emissions dropping then?

Countervailing trends of population growth, economic growth, increased energy
usage per capita, and development of the Third World.
Costing Methodologies

Top-down approach



Uses integrated macro-economic models to estimate
the cost of GHG reduction activities.
Good for examining the effectiveness of overall
mitigation policies.
Bottom-up approach


Estimates the cost of GHG reduction from a given
technology or mitigation activity.
Must compare to some baseline emissions from
current or expected technology portfolio.
What is the ‘cost’ anyway?

Direct (levelized) costs of delivered energy includes:







Capital costs (plant infrastructure)
Cost of capital (depends on interest rates)
Operation costs (personnel, etc.)
Maintenance costs
Fuel costs (mining, drilling, transport)
Transmission costs
Indirect costs





Waste disposal
Environment
Climate
Opportunity cost of land use
Distortion to the economy




Opportunity cost of capital, export of capital for import of energy
Competition for resources (physical and personnel)
Effect on economic stability – energy security
Equality on local, regional, and global scales
Cost of GHG reductions





Compare a current energy production method or
portfolio to an alternative one
Compute difference in GHG emissions
Compute difference in direct and indirect costs
Arrive at cost of GHG avoidance ($/tC)
Proper analysis includes direct and indirect
costs, and macroeconomic effects
Mitigation of Greenhouse Gases



Energy Efficiency
Low or no carbon energy production
Sequestration
Electricity

The U.S. spends over $216 billion on electricity each year (out of a total energy
expenditure of $558 billion, mostly petroleum)
Current installed capacity is 816 GW, average production is ~750 GW, or 5000 TWh/y
Growth rate is ~1.6% per year

Current electrical production portfolio of the USA is:


Type
Coal
Nuclear
Gas-fired
Hydro
Biomass
Geothermal
Wind power
Solar
Share
52%
20%
16%
7%
~3%
~2%
0.2%
minute
Efficiency
33%
~30%
60%
10%?
-
Current best efficiency
48.5%
60%
-
2020
55%
70%
-
Lifecycle Emissions
g/kWh CO2
Japan
Sweden
Finland
coal
975
980
894
gas thermal
608
1170 (peak, reserve)
-
gas combined cycle
519
450
472
solar photovoltaic
53
50
95
wind
29
5.5
14
nuclear
22
6
10-26
hydro
11
3
-
Estimated total costs of various
forms of electricity production
For power production in Switzerland
The human cost of energy
production
Current U.S. Electrical Trends


To a good approximation,
all additional electrical
capacity over the next 5
years will be natural gas
fired turbines.
Natural gas-fired turbines
are roughly twice as
efficient as existing coalfired power plants and
emit roughly half as much
C per unit energy
produced
30
25
20
kg C emitted
per GJ energy
delivered
(combustion)
15
10
5
0
Natural
Gas
Coal
Wind Power






Wind energy has become cost-competitive with other sources of
production for high wind classes.
The doubling time of installed capacity is now 3-4 years
For each doubling, costs drop ~15%
Costs in 2006 should be 35-40% less than costs in 1996
By 2030, the wind farms in the best wind classes could be as low as
2.2 ¢/kW-h, cheaper than even natural gas-fired electricity.
In the U.S.



Total installed US Wind Power capacity is now 5.3 GW as of Oct. 27,
2003 (0.6% of total installed electrical capacity)
1.6 GW of new U.S. wind capacity coming online by the end of 2003
1.5 ¢/kW-h production tax credit (expires Dec 31, 2003) has provided
~$5 billion subsidy over the past 10 years
U.S. Installed Capacity (MW)
Total Installed U.S. Wind Energy Capacity: 5,325.7 MW as of Oct 27, 2003
[American Wind Energy Association]
U.S. Installed Wind Capacity (MW)
1981-2003
6000
5000
4000
3000
2000
1000
0
1981 1986 1991 1996 2001
Wind Capacity
(MW)
Conclusions: Best Strategies

The most cost effective short-term (2-20 y) strategies for avoiding emissions due to
electricity production are:





For the longer term (20-100 y), the following methods of electricity production may
become cost effective as fossil fuel costs increase:





Substitute natural gas for coal
Substitute nuclear for coal
Substitute wind for coal
Substitute hydro for coal
More wind, nuclear, and hydro
Biomass and energy cropping
Coal fired electricity, hydrogen production with sequestration
Solar
Technology wildcards that probably aren’t likely, but could radically alter the mix:



Artificial photosynthesis
Nuclear fusion
Other?
Conclusions: Costs




Current cost of energy in the U.S. is 5% of GDP
If the cost of mitigation is $100/tC avoided, then this
would add an expense of $200-300 billion per year, or 23% of GDP
Perhaps up to half of the initial reductions actually have
negative direct costs (due to energy saved)
How does this compare with other economic costs?


Total health care expenditures in 2001 were 13.9% (8.4%
average for OECD countries)
Total spending on defense in the U.S. has fallen to 3-5%
Defense Spending

[Defense and the National Interest web page]
Other outcomes

Even if we ignore the climate effects, other issues
could come into play
Recommended Policies: Kyoto
Measures, American-style








Institute a moderate carbon tax on refined gasoline, coal
Reduce or eliminate subsidies for oil and coal
Promote increased infrastructure capacity for natural gas
transport, eventual hydrogen transport
Modernize the electrical grid, allow for distributed
generation
Continue R&D on ‘clean’ coal technologies (with
sequestration), with transition to hydrogen production
Continue R&D towards commercialization of solar
energy, biomass
Increase tax credits and incentives for use of renewable
sources (wind, solar, biomass)
Continue tax credits and incentives for efficiency
improvements
General Conclusions for the GHG
Problem





We (the U.S.) can definitely afford to keep moving
towards a lower carbon-intensive economy.
Accelerating our movement on this path will incur
nominal additional costs for our energy.
Future costs of GHG emissions avoidance may be even
lower as technologies mature.
Stabilization to 550 ppm will not be excessively hard to
achieve, but 450 ppm will be very expensive.
We still have a bit of time left – stabilization will be much
harder with departures beyond 2030 (T. Wigley, 1997).
References







The primary reference for this presentation is Climate Change 2001: Mitigation, the 3 rd Intergovernmental Panel on Climate Change
(IPCC) report, Working Group 3. Chapter 3 was most relevant to this presentation. The report can be obtained online at:
http://www.grida.no/climate/ipcc_tar/wg3/index.htm
A secondary reference for energy issues can be found in the World Energy Assessment: Energy and the Challenge of Sustainability,
2000. United Nations Development Programme (UNDP). This report can be obtained online at:
http://www.undp.org/seed/eap/activities/wea/drafts-frame.html
Price, L., L. Michaelis, E. Worrell, and M. Khrushch, 1998: Sectoral Trends and Driving Forces of Global Energy Use and Greenhouse Gas
Emissions. Mitigation and Adaptation Strategies for Global Change, 3, 263-319.
Price, L., E. Worrell, and M. Khrushch, 1999: Sector Trends and Driving Forces of Global Energy Use and Greenhouse Gas Emissions:
Focus on Buildings and Industry. Lawrence Berkeley National Laboratory, LBNL-43746, Pergamon Press, Berkeley, CA.
Wigley, T. M. L., 1997: Implications of recent CO2 emission-limitation proposals for stabilization of atmospheric concentrations. Nature,
390, 267-270.
Williams, Robin. H., 2001: Nuclear and Alternative Energy Supply Options for an Environmentally Constrained World: A Long-term
Perspective. Prepared for the Nuclear Control Institute Conference Nuclear Power and the Spread of Nuclear Weapons: Can We Have
One Without the Other? Washington, D.C., April 2001.
On the web:










Statistics on U.S. wind energy production (American Wind Energy Association): http://www.awea.org/projects/index.html
Current News on Wind Energy Production Tax Credit: http://www.awea.org/news/news031125ptc.html
Defense Spending as % of GDP (Defense and the National Interest webpage): http://www.d-ni.net/charts_data/defense_percent_gdp_1940_2000.htm
U.S. Inventory of Greenhouse Gas Emissions (EPA): http://yosemite.epa.gov/oar/globalwarming.nsf/content/Emissions.html
Terasen Gas Greensheet: Natural Gas and the Environment
Energy Information Administration (EIA), U.S. Department of Energy (DOE): http://www.eia.doe.gov
External costs of electricity production, GaBE Project – Comprehensive Assessment of Energy Systems, Paul Scherrer Institut:
http://gabe.web.psi.ch/eia-external%20costs.html
Energy subsidies and external costs, UIC Nuclear Issues Briefing #71: http://www.uic.com.au/nip71.htm
“‘Too Little’ Oil for Global Warming”, New Scientist, Oct 2003: http://www.newscientist.com/news/print.jsp?id=ns99994216
Upsalla Protocol: http://www.isv.uu.se/uhdsg/UppsalaProtocol.html