A Lower-Cost Option for A Lower-Cost Option for Substantial COSubstantial CO22 Emission Emission ReductionsReductions

Ron EdelsteinGas Technology InstituteNARUC MeetingWashington DCFebruary 2008

Issue

> States and regions are beginning to develop strategies to reduce CO2 and other greenhouse gas (GHG) emissions.– Current focus is to reduce emissions by sector

– Superior approach is to take a holistic view and utilize the energy source that provides the least cost, most efficient, lowest carbon-footprint solution to meet a given energy need

> This approach requires a full fuel cycle analysis

Why Full Fuel Cycle Analysis is Important

> For every Btu of energy of coal in the mine, only 0.26–0.29 Btu of that energy gets delivered to the end-use customer through the electric grid.

> For every Btu of natural gas in the well, 0.91 Btu is delivered to the end-use customer through the gas lines. – Thus natural gas, due to a very efficient “full

energy cycle,” is delivered to a home with much lower energy losses than coal-derived electricity and many other fuel sources

CO2 Production by Fuel Type(pounds per million Btu)

0 50 100 150 200 250

Coal

Oil

Gasoline

Wood

Propane

Natural Gas

Source: DOE/EIA(1) Energy lost during generation, transmission, and distribution of electricity

Residential & Commercial Energy Use

Costs of Selected CO2 Abatement Options

Opportunity> Optimizing how the U.S. uses energy has

the potential to reduce CO2 emissions by 375 – 565 million metric tons per year

> Energy efficiency gains, using full fuel cycle analysis, are almost 4 quads per year

Strategy

> In the near term, aggressive deployment of high-efficiency natural gas equipment in the nation’s homes, offices, and industries can achieve substantial CO2 savings

> In the midterm, additional GHG savings by reducing methane leakage from the nation’s natural gas production, transmission, and distribution systems

> In the long term, renewables-based gas can be fed into the pipelines to create a sustainable, zero-carbon option

Reference Case: CO2 Emissions from Natural Gas Systems and End Uses*

* Excludes natural gas fired electricity generation

0

200

400

600

800

1,000

1,200

1,400

1,600

1990 1995 2000 2005 2010 2015 2020 2025 2030

Net CO2 Emissions

Millions of metric tons

Near Term Approach> Displacement of electric-resistance-heating and oil

based stationary applications

> Displacement of lower-efficiency natural gas appliances

> Goals: – Generate up to 4 quads per year of energy savings

– Reduce CO2 emissions by 300 million metric tons per year

> This approach will lessen the increasing pressure to use natural gas for power generation as the growth in overall residential and commercial electricity use should be lower than current projections, and is less expensive than nuclear or CO2 sequestration

Average Single Family Heating System Carbon Emission Rates

0

2

4

6

8

10

12

Electric Fuel Oil Nat Gas(80%)

Nat Gas(94%)

Me

tric

To

n/Y

ea

r

Based on electric resistance heating systems only

Average Single Family Heating System Carbon Emission Rates

0

2

4

6

8

10

12

Electric Fuel Oil Nat Gas(80%)

Nat Gas(94%)

Me

tric

To

n/Y

ea

r

Based on electric resistance heating systems only

Full Fuel Cycle CO2 Emissions

Near-Term Strategy: Deployment of Gas Energy Efficiency Technologies

0

200

400

600

800

1,000

1,200

1,400

1,600

1990 1995 2000 2005 2010 2015 2020 2025 2030

Near Term Strategy

Net CO2 Emissions

Millions of metric tons

Midterm Approach --

> Reduced emissions from natural gas production, transport and distribution systems– Goal: reduce methane emissions by 50%

> NGV deployment– Goal: Displace 10 billion gallons of oil

> Achieve incremental CO2 equivalent (CO2 e) reductions of another 100 million metric tons per year

Midterm Strategy: Reduction of Methane Emissions

0

200

400

600

800

1,000

1,200

1,400

1,600

1990 1995 2000 2005 2010 2015 2020 2025 2030

Mid Term Strategy

Near Term Strategy

Net CO2 Emissions

Millions of metric tons

Long-Term Approach> Expanded renewable gas generated from forest and

crop residues, municipal solid waste, and cattle and swine feedlots– Pipeline quality gas from biomass including forest residues

and agricultural wastes can be produced at efficiencies ranging from 60-70%. This compares to biomass-to-liquid-fuels efficiencies of 45-60% and biomass-to-electricity efficiencies of 20-35%.(1)

> Goals:– Up to 1 quad of pipeline gas from renewable resources– Incremental reduction of CO2 e of another 70 million metric

tons per year.– May be able to triple (or more) goal by 2040 depending on

resource acquisition, market forces and U.S. energy policy

(1) http://sgc.se/Rapporter/Resources/seminar_screen.pdf, p.305

Long-Term Strategy: Renewable Natural Gas

0

200

400

600

800

1,000

1,200

1,400

1,600

1990 1995 2000 2005 2010 2015 2020 2025 2030

Long Term Strategy

Mid Term Strategy

Near Term Strategy

Net CO2 Emissions

15% reduction in CO2

emissions below 1990

levels

Millions of metric tons

How will we get there?

> Aggressive deployment of high-efficiency gas appliances

> Development funding for breakthrough technologies

> Upstream CO2 credits for energy efficiency and methane emissions reductions

> Deployment of renewables into pipeline gas

Implementing this strategy will require appropriate regulatory and market structures, enhanced development and deployment of energy technologies, maintaining and expanding our nation’s current natural gas infrastructure, and expansion of current renewables incentives.

Recommendations> Congress and policy makers should consider a holistic

approach to reducing CO2 emissions and move away from

the current practice of reviewing each energy sector independently

– By taking a holistic approach, a more reasonable and less costly

means to a lower carbon future can be discovered.

If the approach outlined in this presentation is coupled with a robust use of renewables (solar and wind) for electricity production, expansion of distributed energy opportunities, and a more inclusive focus on “full energy cycle” and end use product and system efficiency, the nation can lessen the near-term need for new nuclear and coal-fired facilities, reduce electricity demand, and improve the economics of energy use for U.S. consumers.

Appendix

Carbon Emissions:

Residential and commercial sector fastest

growing carbon emission levels

Residential and Commercial Carbon Emission Trends

0

200

400

600

800

1000

1990 1992 1994 1996 1998 2000 2002 2004

Mill

ion

Me

tric

To

ns

CO

2

Natural Gas (Res) Electricity (Res)

Natural Gas (Comm) Electricity (Comm)Source: DOE/EIA - GTI

Increases Tied To Electricity

Implementation

> Implementing this strategy will require…– appropriate regulatory and market

structures,– enhanced development and deployment of

energy technologies, – maintaining and expanding our nation’s

current natural gas infrastructure– expansion of current renewables incentives.

Full-Fuel-Cycle EfficiencyExtraction Process-

ing

Trans-

portation

Conver-

sion

Distrib-

ution

Cumula-

tive

Efficiency

Natural

Gas

96.8% 97.6% 97.3%% ---- 99.2% 91.2%

Electricity

Coal-

based

99.4% 90.0% 97.5% 33.4-

36.2%

92.0% 26.8%-

29.1%

Gas -

Based

96.8% 97.6% 97.3% 33%-50% 92.0% 27.9%-

42.2%

Ref: A.G.A. “A Comparison of CO2 Emissions Attributable to New Natural Gas and All-Electric Homes, October 31, 1990

U.S. Natural Gas Industry GHG Emissions (MM Metric Tons CO2e)

Ref: GTI projection of EIA data

Gas Industry Emissions (MM Metric tons)

0

20

40

60

80

100

120

140

160

180

200

1990 1995 2000 2005 2010 2015 2020 2025 2030

Distribution

Transmission & Storage

Processing

Production