The Future of Fuels: Toward the Next Decade of Energy Policy for Renewables. Douglas J. Arent Executive Director RFF 60 th Anniversary November 2012 1
World Outlook: Power Generation Net Annual Capacity Additions GW WEO, 2012 2
US Outlook: Natural gas, wind and other renewables account for the vast majority of capacity additions from 2010 to 2035 Capacity additions 2010 to 2035 2010 capacity Nuclear Hydropower* Coal 9 (4%) 3 (1%) 11 (5%) Nuclear End-use coal Other renewables 101 (10%) Hydropower* 6 (2%) Coal 34 (14%) 101 (10%) 313 (30%) Other Other fossil renewables 1 (0.4%) Wind 16 (2%) 235 30 (13%) 1,036 gigawatts gigawatts Wind 39 (4%) End-use coal 4 (0.4%) Natural gas Other fossil 142 (60%) Natural gas 111 (11%) 350 (34%) * Includes pumped storage Source: EIA, Annual Energy Outlook 2012 3
Alternative Scenarios: Non-hydro renewable sources grow 3-4x, with economic growth, or with a price on CO 2 non-hydropower renewable generation billion kilowatthours 2025 2035 Wind Biomass Solar Geothermal Municipal waste Coal Economic Gas Coal Economic Gas Cost Growth Price Cost Growth Price Source: EIA, Annual Energy Outlook 2012 4
Other Policy Options: Clean Electricity Standard 6,000 6,000 6,000 CES High-EUR CES Low-EUR CES High-EUR, No-CCS Offshore Wind 5,000 5,000 5,000 Onshore Wind Annual Electricity Generation (TWh) Annual Electricity Generation (TWh) Annual Electricity Generation (TWh) PV CSP 4,000 4,000 4,000 Other RE Hydropower NG-CCS 3,000 3,000 3,000 NG-CT NG-CC Oil/Gas Steam 2,000 2,000 2,000 Coal-CCS Coal-New Coal-Existing 1,000 1,000 1,000 Nuclear Demand 0 0 0 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 • A CES generally leads to greater NG power generation in the near-term followed by reliance on RE (and to a lesser degree, CCS and nuclear) in the long-term • Under a CES, 2050 RE power generation is significant even with high EUR and CCS deployment: 38% wind, 9% solar, 7% hydro, 3% other RE • New nuclear capacity expansion is more limited under cost assumptions used 5
Renewable Electricity Futures Study 100% Wind 90% PV % of Total Generated Electricity 80% RE-ITI scenarios CSP 70% 60% Hydropower 50% Geothermal 40% Biomass 30% Natural Gas 20% 10% Coal 0% Nuclear Baseline 30% RE 40% RE 50% RE 60% RE 70% RE 80% RE 90% RE Variable Generation Percent RE 80% RETs meets ―resource adequacy‖ reliability criteria and hourly supply and demand Renewable Electricity Futures Study (2012) 6
Emerging Energy Policy Dynamics 7
Some Observations… • Globally – 118 Countries with supportive policy environments – Continued Growth: 2-4x by 2035 • Fulfilling Announced Commitments – G20, Durban, SE4All… • Policy Stability Critical • Addressing Climate Change directly or through ―2 nd Best‖ Policies 8
U.S. Policy Landscape Internationally: Work within WTO, Trade Agreements, etc to recognize and leverage global learning into local deployment and local jobs. E.g., 21 St Century Power Partnership under Clean Energy Ministerial Domestically: Near Term: Transitional Fiscal Policies & Access to New Financial Structures MLPP Act, REITs, PTC/ITC Policy Actions that Mindfully Address the Interdependencies and Critical Nature of Energy:; e.g., Synergies with Natural Gas over medium to long term — e.g. CES + NSPS Innovation: Energy Systems Integration & Technology Advancements Modernization: Resilient, Efficient and ―Smart‖ Infrastructure State Policies will continue to play strong role: RPS, FITs, Carbon, Leasing, Net Metering, etc 9
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