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| From the pages of: World Energy, v8n4 |
Path to a Cleaner Tomorrow by David Slump Scientific evidence continues to validate that increased greenhouse gases, largely from burning fossil fuels, are a contributing factor in creating the warming trends seen around the world. Studies of average land and ocean temperatures, decreasing ice cover in the Arctic, glacier retreats and shifts in animal habitat all are consistent with the effects of global warming. What remains to be determined is the precise timing and magnitude of future climate change responses to increased greenhouse gas emissions, as forecasts indicate continued exponential population and energy-use growth in developing countries. If we accept that climate change science may not be precise but that it signals an indisputable trend, then one thing is extremely clear: We need to be working now on finding ways to limit the impact of these emissions in the future. The U.S. Energy Information Administration (EIA) estimates that world energy consumption will grow more than 50 percent by 2025, with increased use of nearly every type of fuel. Robust economic growth worldwide, particularly in China, India and Eastern Europe, is expected to result in a 54 percent overall increase in energy consumption, with growth rates of 33 percent in the industrialized world and 91 percent in the developing world. According to EIA projections, this increased energy consumption will be dominated by fossil fuel sources such as coal and natural gas, resulting in a significant increase in greenhouse gases, particularly carbon dioxide (CO2). In its 2005 International Energy Outlook, EIA estimates that world CO2 emissions will grow from 24.4 billion metric tons in 2002 to 38.8 billion metric tons by 2025. These projections underscore the fact that the world is at a critical juncture for determining how the energy demand of the future will be satisfied and what the impact on the environment will be, while still maintaining economic growth and a reliable and affordable energy infrastructure. Protocols and Partnerships While the U.S. has yet to impose national mandatory controls on greenhouse gases, many countries have already taken action unilaterally or as part of a multi-country agreement. The most significant international agreement to date is the Kyoto Protocol, which calls for participating countries to reduce their collective emissions of six key greenhouse gases by at least 5 percent by 2012, compared to 1990 levels. However, commitments among the individual participating countries vary, and progress in reducing emissions among developed countries has been inconsistent. As part of its overall plan to implement the Kyoto Protocol, the European Union (EU) established an emissions trading scheme (ETS). Since Jan. 1, 2005, approximately 12,000 large industrial plants in the EU have been assigned carbon emission caps and issued tradable allowances permitting them to release only that amount of carbon dioxide into the atmosphere. These allowances have recently been trading at €20 per ton. This level of pricing creates an incentive to adopt low-emission and emission-reducing technologies, although the full potential impact of such pricing is limited by the fact that the ETS extends only through 2012. In July 2005, the United States joined Australia, China, India, Japan and South Korea in forming the Asia Pacific Partnership to facilitate the development of voluntary programs for improving energy security and addressing the long-term challenges of climate change. Unlike the cap-and-trade approach of the Kyoto Protocol, this Asia Pacific program is based on the belief that the best way to encourage environmental improvement is to help nations economically through the adoption of cleaner, affordable energy technologies. While these efforts are encouraging, there remains a lack of focused, committed leadership to address the impact of global warming on a worldwide basis. Against this backdrop, there is a growing consensus among business and political leaders that the United States should take a leadership role in this process by establishing a clear and consistent policy on cleaner energy and taking steps to reduce the growth of, and subsequently limit, greenhouse gas emissions. As Senator Pete Domenici, chairman of the U.S. Senate Energy and Natural Resources Committee, stated at a July 2005 hearing, "The question is no longer whether the U.S. should act, but what, how, who and when." A Shifting Scenario A few years ago, economists and environmentalists anticipated a steady shift from "dirtier" coal-fired power plants to "cleaner" natural gas turbines. Unprecedented weather events, recent volatility in natural gas pricing and rapid increases in energy demand have altered that scenario. It is now highly likely, absent countervailing policy measures, that over the next few years there will be an upsurge in the construction of pulverized coal plants as project developers turn to easily accessible, abundant natural resources and an established technology that will facilitate cost recovery from regulatory authorities. The outcome of such near-term decisions could result in far greater future costs on electricity generators and society at large as countries worldwide continue to implement limits on carbon emissions. In the carbon-constrained world of the future, the decision to install a traditional pulverized coal plant (instead of a more advanced technology plant that can address environmental issues now or offer the capability to add cost-effective emissions-reduction technology in the future) could lead to potentially larger and costlier problems. Clear policy directives and long-term strategy commitments are critical in enabling the energy sector to make effective decisions. Commitment to a clear policy, implemented in the form of laws or regulations, will help electricity generators make cost-effective decisions on capital investments today that will keep energy prices affordable in the future, while also meeting environmental requirements. Effective energy policy addresses the long-range planning requirements of the energy industry and the projected growth in demand for energy. In the case of the United States, there is a critical need to transcend the four-year political cycle and offer electricity generators the security and certainty of a permanent policy that ensures them a stable operating environment with clear guidelines for capital expenditures. The development of a comprehensive energy policy requires the consideration of several key principles, including: Encouraging the innovation and adoption of new technologies. Significant reductions in greenhouse gases will occur only through the adoption of cleaner, more energy-efficient production and consumption technologies, including technologies to capture and sequester emissions. This must be a primary objective of any energy policy. Policies that do not provide technology incentives will not be effective in addressing the long-range challenges of climate change. Many cleaner energy technologies already exist or are entering commercialization (see sidebar). A meaningful technology portfolio needs to serve all fuel sources including gas, coal, nuclear, solar, wind and waste gas. In addition to these technologies, new alternative, emerging technologies need continued exploration to expand the energy landscape of tomorrow. Research partnerships between industry and government have long been recognized as the incubator of new technologies. An example of this is the partnership between GE and the U.S. Department of Energy to develop a highly efficient power system, based on a multi-megawatt solid oxide fuel cell (SOFC), that can operate on coal. Fostering technology applications that reduce greenhouse gas emissions. Government policies should facilitate access to technologies that reduce greenhouse gas emissions. One example would be the elimination of customs duties on clean-energy power-generating equipment. In developing countries such as Brazil and India, these tariffs can range from 14 percent to more than 50 percent, thus deterring the application of clean-energy technologies. Minimizing the impact of cleaner energy initiatives on economic growth. Companies that implement advanced technologies need assurance that they will not be penalized for early adoption of new technologies prior to mandatory controls. No country or company wants to participate in accelerating the introduction of new technologies if doing so only raises the bar for steps it will be required to take in the future. The recently passed Senate resolution on climate change calls for mandatory measures to be taken that will not "significantly harm the U.S. economy." Internationally, growing countries like China and India will not participate in any program that prevents their ability to grow and improve the quality of life for their people. As U.K. Prime Minister Tony Blair said: "The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge." Addressing energy security needs and promoting fuel diversity. Climate change policies should not increase the world’s vulnerability to future energy supply disruptions and price spikes. In the near term, this means these policies must support a continued and productive role for all fuels, including coal and nuclear technology, as sources of energy. Encouraging international cooperation. Climate change is a global issue. The geographic location from which greenhouse gas emissions originate is irrelevant to the overall greenhouse effect. Given the increases in emissions expected in developing countries such as India and China, an international response is the only hope to effectively address the problem. Using market-based mechanisms to give value to carbon reduction. Market-based systems that give value to greenhouse gas emission reductions will change the economics of thousands of private-sector decisions, altering those decisions in favor of emissions-reducing technologies. Current examples being utilized in various countries around the world include carbon cap and trade policies, green energy certificates and feed-in tariffs. A Corporate Commitment to Cleaner Energy More than a century ago, GE founder Thomas Edison said: "I find out what the world needs, and then I proceed to invent it." Evoking the spirit of Edison, GE recently launched ecomagination, a corporate-wide commitment to develop and drive technologies of the future that will protect and clean our environment, promote energy efficiency, lower emissions, reduce the use of fossil fuels and increase the supply of usable water. During an address at George Washington University to announce ecomagination, GE Chairman Jeff Immelt said, "We’ve taken a long look around and here’s what we see: a diminishing domestic supply of oil and natural gas, continued dependence on foreign sources of energy, increasingly scarce resources like water in an ever-more populated world, and the signs of global climate change. This is a convergence of forces that demands a revolution in technology so that our country can stay competitive. We plan to lead that revolution and open a new door to a new age." As part of ecomagination, GE will: • Double its investment in research and development. GE will invest $1.5 billion annually in cleaner energy technology development by 2010, up from $700 million in 2004. • Introduce more ecomagination products each year. GE plans to double its revenues from products and services that provide significant and measurable environmental performance advantages to customers from $10 billion in 2004 to at least $20 billion in 2010, with more aggressive targets thereafter. These products include renewable energy options such as wind and solar, and technologies and materials that make energy production and consumption more efficient. • Reduce its own greenhouse gas emissions and improve its energy efficiency. In addition to helping customers meet their environmental goals, GE has committed to reduce its greenhouse gas emissions 1 percent by 2012, and the intensity of its greenhouse gas emissions 30 percent by 2008 (both compared to 2004 levels). Based on the company’s projected growth, GE’s greenhouse gas emissions would have risen 40 percent by 2012 without further action. • Keep the public informed. GE has pledged to publicly report its progress in meeting these goals. We initially identified 17 products that meet ecomagination criteria, and GE Energy recently added two new products to its ecomagination portfolio: the LMS100™ gas turbine and the Jenbacher coal mine methane gas engine. These products continue the commitment to significantly and measurably improve customers’ environmental and operating performance. Examples of ecomagination in action include products that are significantly more energy efficient than existing technologies, renewable resource technology such as wind power and products that meet third-party efficiency or environmental standards. GreenOrder, an environmental consulting firm, provided independent, quantitative environmental analysis of GE’s products and verification of the product claims. Above all, ecomagination is a GE commitment to the success of our customers, who deal with some of society’s toughest environmental and sustainability challenges. Ecomagination is designed to create products that help customers find the optimal solutions to these issues. That’s good both for the environment and for business. David Slump is responsible for marketing and growth initiatives within GE Energy. Mr. Slump joined GE Energy in July 2003 from ABB Ltd., where he was group senior vice president, Marketing & Business Strategy, for ABB’s Automation Technologies business.Before joining ABB, Mr. Slump spent most of his career in activities related to the electric utility industry, working for the Electric Power Research Center of Iowa State University, Omaha Public Power District and Commonwealth Edison. He joined ABB from Commonwealth Edison in 1996. He later developed the Strategic Marketing capabilities of ABB Power T&D Company Inc. Mr. Slump then moved on to ABB Transmission and Distribution Management Ltd. in Zurich, Switzerland, where, as vice president of Marketing and Sales, he was responsible for global product marketing and sales for the Medium Voltage Technologies business. He returned to the United States in 2001 as president, Utilities Division USA.
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