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Energy Technology Choices: Shaping Our Future

July 1991OTA-E-493

NTIS order #PB91-220004



Recommended Citation:U.S. Congress, Office of Technology Assessment, Energy Technology Choices: Shaping Our Future, OTA-E-493 (Washington, DC: U.S. Government Printing Office, July 1991).

For sale by the Superintendent of DocumentsU.S. Government Printing Office, Washington, DC 20402-9325

(order form can be found in the back of this report)



Foreword

This assessment responds to a request by the House Committee on Energy andCommerce, the House Committee on Government Operations, and the Senate Committee onEnergy and Natural Resources to provide an evaluation of the technical risks and opportunitiesfacing our Nation’s energy future.

The report provides a broad overview of energy choices facing the Nation. It is not anexhaustive analysis of any one technology; rather, it draws together the main themes of OTAreports from the past 16 years, and other documents, into an outline of the main directions thecountry could follow. We hope that the report will be used as a ‘‘roadmap,’ not anencyclopedia. It reviews options for increasing energy supply and using energy more

efficiently in the face of resource constraints and the contrasting goals the Nation faces. It thenanalyzes packages of options that would be appropriate to meet national objectives. There isan old Chinese proverb that is appropriate to U.S. energy strategy: “If we don’t changedirection, we’re very likely to end up where we’re headed. ”

OTA appreciates the invaluable assistance provided by the project’s advisory panel andreviewers during the course of this study.

w D i r e c t o r



Advisory Panel —Energy Technology Choices: Shaping Our Future

Charles A. Berg

Mechanical EngineeringNortheastern University

James H. Caldwell, Jr.Consultant

Daniel A. DreyfusStrategic Analysis and Energy ForecastsGas Research Institute

Frederick J. EllertConsultant

David Lee KulpFuel Economy Planning and ComplianceFord Motor Co.

Edwin RothschildCitizen Action

Maxine SavitzGarrett Ceramic Components Division

Jessica MathewsWorld Resources Institute

Reviewers

John Sampson TollUniversity Research Associates

Jack W. WilkinsonSun Company, Inc.

Mason Willrich

Corporate Planning and Information SystemsPacific Gas and Electric Co.

Rosina BierbaumOffice of Technology Assessment

Robert FriResources for the Future

Robert FriedmanOffice of Technology Assessment

William FulkersonEnergy DivisionOak Ridge National Laboratory

Karen LarsenOffice of Technology Assessment

Steven PlotkinOffice of Technology Assessment

Richard E. RowbergScience Policy Research Division

\ Congressional Research Service



OTA Project Staff—Energy Technology Choices: Shaping Our Future

Lionel S. Johns, Assistant Director, OTA

Energy, Materials, and International Security Division

Peter D. Blair, Energy and Materials Program Manager

Project Staff

Alan T. Crane, Project Director

Andrew H. Moyad, Research Analyst Joanne M. Seder, Analyst

Administrative Staff

Lillian Chapman, Office Administrator Linda Long, Administrative Secretary

Phyllis Brumfield, Secretary

Contributors

Robin RoyKathryn Van Wyk



Contents

PageOverview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 1: Introduction: The Changing Context for Energy Technology Policy . . . . . . . . . . . . 7

Chapter 2: Technologies Affecting Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Chapter 3: Technologies for Energy Supply and Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Chapter 4: Potential Scenarios for Future Energy Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Chapter 5: Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135



Overview

The energy crisis of the early seventies hasevolved into a more complex and subtle nationalsituation that still entails major dangers. Some fuels,gasoline in particular, are actually cheaper now inreal terms, and none shows any signs of imminentresource constraints. Energy is used with far greaterefficiency than 20 years ago and with less environ-mental damage per unit of consumption. However,the long-term problems of our growing energyuse-accumulating environmental degradation, thenational security costs of imported oil supplies, anda worsening trade imbalance from rising levels of oilimports-are as intractable as ever.

Improved technology is a major reason for thepresent lull in attention to energy. A vast number of options that improved overall energy efficiencyallowed the economy to grow 39 percent from 1972to 1985 with essentially no increase in energyconsumption. New technology has also improvedthe production of oil and natural gas and thecombustion of coal. Success in moderating demandand improving supply has led to the present situationof ample supplies at moderate cost. Technology cancontinue to provide new benefits in the future. Manymore technologies for the conversion and use of energy are well along in the development processand can be expected to be cost competitive withfurther refinement or energy cost increases. Tables1 and 2 show the technologies that are available orunder development for greater efficiency or alterna-tive energy sources.

The three greatest uncertainties facing energypolicymakers are: how to assure a long-term supply

countries indicates that an increasing share of production will be from the Middle East. If theinstability of the last several decades continues inthat region, it is likely that major disruptions of supply, possibly exceeding our ability to protect theeconomy against them, will occur. U.S. productionof natural gas, the cleanest conventional fuel, mayrise some, but it is likely that within a decade thelowest cost resources will be significantly depleted.Oil and gas supply almost two thirds of our energydemand, so the economic cost of price increases willbe great unless alternative modes of production orsubstitutes are available. Failing to prepare for newenvironmental concerns could lead to extremelycostly impacts if global warmin g develops into amajor threat. Complacency on energy issues entailsa major risk for the country on all counts-security,economic, and environmental.

High energy prices in the seventies and earlyeighties were largely responsible for the rapiddevelopment and implementation of energy savingtechnologies that reduced energy demand and led totoday’s relatively low energy prices. Conversely,these low prices, while good for the economy, arelimiting further efficiency, resource exploration, andalternative fuel investments.

Energy investments, whether supply or demand,typically last for decades. Thus, the energy system isslow to change, and problems that are unlikely to becritical for 20 years or more will be far more difficultto manage then if not addressed now. These criticalproblems include responding to the threat of globalclimate change, securing affordable supplies of



2 q Energy Technology Choices: Shaping Our Future

Table l—Technologies Affecting Demand

Technology Sector Availability Comments- . . .-. -. . .

Variable speed heat pump. . . . Residential/commercial

Scroll-type compressors (heatpump/air conditioning).... . . Residential/commercial

Thermally active heat pump. . . Residential/commercialLow-emissive windows . . . . . . . Residential

Heat pump water heaters. . . . . Residential/commercialAlternative insulation materials. Residential

Refrigerator insulation . . . . . . . . Residential

Efficient lighting products . . . . . Residential/commercial

Building energy management

and control systems . . . . . . . Residential/commercialIndustrial process changes:

—Separation . . . . . . . . . . . . . Industrial

—Catalytic reaction . . . . . . . . Industrial

—Computer control and

sensors . . . . . . . . . . . . . . . Industrial

Advanced turbine:-Steam-injected gas turbine

(STIG) . . . . . . . . . . . . . . . . . lndustrial/utility —Intercooling (ISTIG) . . . . . . lndustrial/utility

Electric motors. . . . . . . . . . . . . . Industrial

C,N

c

RC,R

cR

R

C,N,R

C,N

C,N,R

C,N,R

C,N

C,NN

c

Improves energy efficiency and provides more flexible control.Widely used in Japan. Increasing market share in United States.

Newer scroll-type compressors are 10 to 20 percent more efficientthan reciprocating ones. Widely produced in Japan. .

Could have significant impact in 10 to 20 years.Significant impact on reducing thermal energy loss in homes.

Research needed on improving durability, lowering emittance,and reducing condensation.

Offers significant reduction in electricity use; premium cost.Commonly used in Scandinavia.Needed to counter loss of chlorofluorocarbon-blown insulation.

Now being developed and tested.Greatest potential for appliance efficiency improvements. New

products include vacuum insulation, compact vacuuminsulation, and soft vacuum insulation.

Combination of lighting options can cut commercial energy usesignificantly. Improved fluorescents, compact fluorescents, andelectronic ballasts commercially available. Research anddevelopment continuing on improving phosphors.

Greatest potential for savings in the commercial sector. Advancesin this technology have been continual.

Improvements in separation and control, and the use of membranetechnology and solvent extraction could reduce energy useconsiderably.

By increasing reaction rates, Iower temperatures and pressures canbe used that reduce heating and compression requirements.Discovery and use of new synthetic zeolites have contributed toenergy efficiency gain in petroleum refining and chemicalsindustries.

Improved monitoring and control optimizes conversion anddistribution of energy. Potential savings range from 5 to 20percent.

Currently used in cogeneration applications.Has potential to raise efficiency to about 50 percent. May be better

suited for utility applications; pilot-plant stage.Adjustable-speed drive and new high-efficiency motors account for



Overview . 3

Table 2—Major Technologies for Energy Supply and Conversion

Technology Availability Comments —.

OilDeepwater/arctic technologies

Enhanced oil recovery techniques —thermal recovery —miscible flooding-chemical flooding

0il shale and tar sands —Surface retorting

—Modified in situNatural gas —Hydraulic fracturing

Coal —Atmospheric fluidized-bed combustion (AFBC) —Pressurized fluidized-bed combustion (PFBC) —Integrated gasification combined cycle (IGCC)

—Flue-gas desulfurization (FGD) —Sorbent injection

-Staged combustionNuclear

—Advanced light water reactor

—Modular high-temperature gas reactor(MHTGR)

—Power Reactor inherently Safe Module(PRISM)

Electricity —Combined cycle (CC)

—Intercooilng Steam injected Gas Turbine(ISTIG)

—Fuel ceils

—Magnetohydrodynamics (MHD) —Advanced batteries

C,R

C,R

C,N

c

N,R

N

cC,N

R

c

N,R

R

c

NR

RR

Existing technologies that are promising for deepwater areas includeguyed and bouyant towers, tension leg platforms, and subseaproduction units. Advances in material and structural design critical;innovative maintenance and repair technologies important.

Widely adopted over the past two decades.

Uneconomic at present oil prices.

Very complex process; not well understood although successful for someformations. Key to unlocking unconventional gas reserves.

Small-scale units commercial. Utility-scale AFBC in demonstration stage.PFBC is less well developed; pilot-plant stage.

Demonstration stage. Primary advantages are its Iow emissions and highfuel efficiency.

Mature technology; considerable environmental advantages.Commercially available control technology. Can remove nitrogen oxides

up to 90 percent.Has potential to remove up to 80 percent of nitrogen oxides.

Incorporates safety and reliability features that could solve past problems;public acceptance uncertain.

improvements to familiar technology; incorporates passive safetyfeatures; design of modular reactor completed.

Conceptual designs expected to be completed this year.

Conventional CC is a mature technology; advanced CC is indemonstration stage.

Pilot-plant stage. *Several types being developed. Fuels cells that use phosphoric acid as

electrolytes are in demonstration stage. Molten carbonate and solidoxide are alternative electrolytes that are less developed. Late 1990savailabiiity, at the earliest.

Difficult technical problems remain, especially formal-fired MHD systems.Research and development needed in utility-scale batteries to improve

lifetime cycles, operations maintenance costs. Promising batteries are




Table 2—Major Technologies for Energy Supply and Conversion-Continued

Geothermal N

—Dual flash —Binary cycle

Solar thermal electric —Central receiver R

—Parabolic solar trough c

—Parabolic dishes R

Photovoltaic N,R

—Concentrator system —Fiat-plate collectorWind power c

Ocean thermal energy conversion (OTEC) R

Single-flash system used extensively. Little commercial experience withdual flash. Binary cycle system maybe available in 40 to 50 MWerangeby 1995.

Several plants built, including one in California; 30-MW plant in Jordan ismajor project today.

several commercial plants built in California;additional capacity plannedappears to be marketable.

Testing being conducted in new materials and engines such as free-pistonstirling engine.

Improvements needed to make photovoltaic cells economic in the bulkpower market advances in microelectronics and semiconductors canmake photovoltaics competitive with conventional power by 2010.

Renewable source closest to achieving economic competitiveness in thebulk power market. Current average cost is 8 cents/kWh.

Research focused on dosed and open cycle systems; no commercialplants designed. May be competitive in 10yearsforsmallislandswheredirect-generation power is used. Use of OTEC domestically for electricpower is unlikely except for coastal areas around Gulf of Mexico andHawaii.

KEY: C - commercial; N = nearly commercial; R - research and development needed.SOURCE: Office of Technology Assessment, 1991.

new options. The Federal Government can contrib- q

ute directly to ameliorating energy problems bytaking advantage of highly cost-effective measuresto reduce energy purchases for Federal facilities by

q

at least 25 percent. q

Initiatives generally could be aimed at improving A

minimizing the use of energy as far as istechnologically possible,

emphasizing renewable energy sources, and

emphasizing nuclear energy.

the efficiency of use of energy and the supply of Any of these scenarios could be the most appro-

energy. This report contrasts a baseline scenario (no priate path depending on the resolution of uncertain-

ties over climate changes induced by the greenhousemajor initiatives or surprises) with five variationsrepresenting different paths the Nation could follow: effect, technological developments, and resource

discoveries. Each scenario presents risks as well asq emphasizing production of conventional fuels, opportunities. This report describes the choicesq improving efficiency of use to the economic available to policymakers and the implications of

optimum, choosing one path versus another.



Chapter 1

Introduction:

The Changing Context forEnergy Technology Policy



CONTENTS Page

THE ENERGY POLICY CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7TRENDS SHAPING ENERGY POLICY AND TECHNOLOGY CHOICES . . . . . . . . . . 9

Declining Energy Intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Sharply Increasing Dependence on Foreign Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Change in the Electric Utility Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Changing Environmental Dimensions of Energy Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . .14The Nuclear Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Renewable Energy Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Technology Research, Development, and Demonstration . . . . . . . . . . . . . +.. . . . . . . . . . . . 16

CANDIDATE ENERGY POLICY GOALS TO REFLECT A NATIONALENERGY STRATEGY . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Limit Oil Import Dependence and Diversify Supply Sources . . . . . . . . . . . . . . . . . . . . . . . 17Improve Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Improve Environmental Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Implications of Goals on U.S. Oil Import Dependence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Linking U.S. Energy Strategy to Global Climate Concerns . . . . . . . . . . . . . . . . . . . . . . . . . 18

CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Boxes

Box Pagel-A. National Energy Strategy: A Historical Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10l-B. Changes in U.S. Oil Supply and Demand Since 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . .13l-C. The Changing U.S. Electric Utility Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Figures Figure Page1-1. Index of U.S, GDP, Energy Intensity, Energy Use, and Electricity Use . . . . . . . . . . . 111-2. U.S. Oil Imports, 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .121-3. Total Oil Use and Imports U.S., Europe, and Japan, 1973 and 1988 . . . . . . . . . . . . . .121-4. U.S. Electricity Consumption, 1989 Base Case to 2020 . . . . . . . . . . . . . . . . . . . . . . . . . .14

TableTable Page1-1 OTA Reports That Address Energy Technologies 8



Chapter 1

Introduction: The Changing Context forEnergy Technology Policy

In the 17 years since the Arab oil embargo of 1973-74, our perceptions of the role of energy in theUnited States and world economies have changedconsiderably. Throughout the 1970s, concern aboutenergy price and availability spurred the develop-ment of a wide range of new energy supply anddemand technologies. The dramatic increases inenergy efficiency of the U.S. economy were secondonly to Japan’s during that period. Those efficiencyimprovements coupled with the decontrol of oil andgas prices initiated during the late 1970s led toincreases in supply and falling energy prices in themid- 1980s. The result is that current policy concernsabout energy are not driven by the sense of urgencyabout price and availability typical of the 1970s, butrather by other factors such as environmentalquality, international competitiveness, and nationalsecurity.

In addition, our understanding of how energy isproduced and used has matured significantly sincethe 1970s, and we are much better equipped to makesystematic, long-term decisions about energy policyand its interactions with other social, economic, and

environmental policy. Today, a comprehensive,strategic national energy policy cannot be viewed asan end in and of itself. Rather, its direction mustcome from broader and more fundamental nationalgoals of economic health, environmental quality,and national security. Therefore, as we consider thesteps necessary to articulate a national energy

New energy technology has always been a corner-stone of our strategies for dealing with current andlong-term energy policy issues. Such technologieshold promise for cleaner and more efficient energyuse, safer and more efficient recovery of energysupplies, and a smooth transition to a postfossil fuelera. Indeed, after two decades of mixed experienceswith new energy technology, we understand muchbetter the role of new energy technology in energypolicy. In this overview report we review a numberof the long-term U.S. energy technology and policytrends, discuss their interaction and implications,and finally consider a range of strategic energytechnology policy options. Further, we reflect onsome of these experiences and examine the risks andopportunities offered by major energy supply anddemand technology options.

OTA has examined new energy technologies forthe Congress since 1975 (see table l-l). This report,designed to be an overview of energy supply anddemand, is drawn largely from past OTA reports.Hence, it is not an exhaustive analysis of any onefactor. Rather, it tries to draw together the main

thoughts of a whole series of OTA reports and otherdocuments into a broad outline of the main direc-tions the country could follow with energy. Weexpect the report will be used by Congress as aroadmap, not an encyclopedia.



8 . Energy Technology Choices: Shaping Our Future

Table l-l-OTA Reports That Address Energy Technologies a

Energy and Materials Program: Energy Efficiency in the Federal Government: Government by Good Example? OTA-E-492 (May1991).

Energy in Developing Countries, OTA-E-486 (January 1991).Rep/acing Gasoline: Alternative Fuels for Light-Duty Vehicles, OTA-E-364 (September 1990).Energy Use and the U.S. Economy, OTA-BP-E-57 (June 1990).Physical Vulnerability of Electric Power Systems to Natural Disasters and Sabotage, OTA-E-453

(June 1990).High-Temperature Superconductivity in Perspective, OTA-E-440 (April 1990).Electric Power Wheeling and Dealing: Technological Considerations for Increasing Competition,

OTA-E-409 (May 1989).Biological Effects of Power Frequency Fields Electric and Magnetic Fields-Background Paper,

OTA-BP-E-53 (May 1989).Oil Production in the Arctic National Wildlife Refuge: The Technology and the Alaskan Oil Context,

OTA-E-394 (February 1989).Starpower: The U.S. and the International Quest for Fusion Energy, OTA-E-338 (October 1987).U.S. Oil Production: The Effect of Low Oil Prices, OTA-E-348 (September 1987).New Electric Power Technologies: Problems and Prospects for the 1990s, OTA-E-246 (July 1985).U.S. Natural Gas Availability: Gas Supply Through the Year 2000, OTA-E-245 (February 1985).U.S. Vulnerability to an Oil Import Curtailment: The Oil Replacement Capability, OTA-E-243

(September 1984).Nuclear Power in an Age of Uncertainty, OTA-E-21 6 (February 1984).lndustrial Energy Use, OTA-E-198 (June 1983).lndustrial and Commercial Cogeneration, OTA-E-1 92 (February 1983).Increased Automobile Fuel Efficiency and Synthetic Fuels, OTA-E-185 (September 1982).Energy Efficiency of Buildings in Cities, OTA-E-168 (March 1982).Solar Power Satellites, OTA-E-144 (August 1981).Nuclear PowerPlant Standardization: Light Water Reactors, OTA-E-134 (April 1981).World Petroleum Availability: 1980-2000, OTA-TM-E-5 (October 1980).Energy from Biological Processes, OTA-E-124 (September 1980).An Assessment of Oil Shale Technologies, OTA-M-1 18 (June 1980).The Future of Liquefied Natural Gas Imports, OTA-E-110 (March 1980).Residential/ Energy Conservation, OTA-E-92 (July 1979).

The Direct Use of Coal, OTA-E-86 (April 1979).Application of Solar Technology to Today’s Energy Needs, OTA-E-66 (September 1978).Enhanced Oil Recovery Potential in the United States, OTA-E-59 (January 1978).Gas Potential From Devonian Shales of the Appalachian Basin, OTA-E-57 (November 1977).Analysis of the Proposed National Energy Plan, OTA-E-51 (August 1977).Nuclear Proliferation and Safeguards, OTA-E-48 (June 1977).

Oceans and Environment Program: Changing by Degrees: Steps To Reduce Greenhouse Gases, OTA-O-482 (February, 1991).



Chapter 1--Introduction: The Changing Context for Energy Technology Policy q 9

in 2015. The National Energy Strategy’s CurrentPolicy Base projects U.S. energy consumption willreach approximately 115 quad by 2010. 2 With nochanges in policy, the sources of energy we use tofuel the economy are expected at that time to be verysimilar to what they are today: about 40-percent oil,23 percent each for natural gas and coal, and14-percent renewable and nuclear power. 3 Still,some important features of U.S. energy supply anddemand balance are changing and, in turn, arechanging the environment within which policydecisions will be made, especially decisions abouttechnology.

various “national energy plans” have beeninitiated frequently since 1939 (see box l-A),usually instigated by concerns over resource short-ages. Perhaps the lesson to be learned from thisrepeated attention is that energy policy must befundamentally grounded in long-term strategies butmust also accommodate short-term perturbations.Oil price disruptions have been the major perturba-tions in recent years, such as the 1990 price increasestemming from the Persian Gulf crisis.

However, reducing vulnerability to oil supplyshortages will require more than a large petroleumreserve. Without policy action, imports of oil arevery likely to increase substantially. Increasingdependence on imports, especially those from unsta-ble regions, will necessitate a gigantic and extremelyexpensive reserve to maintain present protectionagainst an extended import supply disruption. In-creasing efficiency and fuel flexibility in the trans-portation fleet, the sector most dependent on oil, willbe increasingly attractive These measures would

plan to achieve those goals through periods of both

crisis and calm and through periods of varying oilprices. During the past decade, steady supplies, easyefficiency gains, and a retreat in the price of oilseduced us into largely abandoning efforts to pushresearch in energy efficiency and alternative sup-plies. The war in the Middle East generated concernsover energy security reminiscent of the 1970s. None-theless, as the current crisis passes, we may be onceagain beguiled into a false sense of energy compla-

cency.

TRENDS SHAPING ENERGYPOLICY AND TECHNOLOGY

CHOICESThe trends that have significant implications for

long-term energy policy choices are: 1) the decliningenergy intensity of the U.S. economy between the1970s and mid- 1980s, 2) the sharply increasing U.S.reliance on foreign sources of oil, 3) the changingstructure of the electric utility industry, and 4) thechanging relationship between energy and the envi-ronment. This section discusses these trends andthree areas of particular interest for energy technol-ogy policy: nuclear power, renewable energy, andresearch and development.

Declining Energy IntensityFor many years most observers believed that

energy use and the gross national product (GNP)were firmly linked, moving upward in lock step. Welearned from the energy shocks of the 1970s, however,that ingenuity can substitute for supply when the




Box 1-A--National Energy Strategy: A Historical NoteIn 1939 PresidentFranklin Roosevelt appointeda National Resources PlanningBoard to examine the Nation’s

resources policy options. The Board recommended Government support of research to promote "efficiency,economy, and shifts in demandto low-grade fuels” and thata “national energyprepared that “would be more than a ‘simple sum’ of policy

resources policy” should bedirected at specific fuels.”1

Later efforts included : arefinement of the Board’s recommendations.

in 1947 by President Truman‘s NationalSecurity Board; Truman's Mat erials Policy Commission of 1950-52 (known as the Paley Commissionafter its Chairman William s. Paley); President Eisenho wer’s 1955 Cabinet Advisory Committee on Energysupplies and Resources Policy the 1961 National Fuels and Energy Study commissionedby the U.S. Senate duringPresident Kennedy’s term; President Johnson’s 1964 “Resources Policies for a Great Society Report to the

President by the Task Force on Natural Resources”; President Nixon’s 1974 “Project Independence Blueprint”;President Ford’s 1975 Energy Resources Councilreflected in hisomnibus proposal “Energy Independence Act of 1975’ ‘; President Carter's 1977 “National Energy Plan”; PresidentReagan’s 1987‘ ‘Energy Security” report; and,of course most recently, PresidentBush’s 1991 “National Energy Strategy (NES).”

The major stated goals of the NES are the following:q encourage the adoption of cost-effective energy efficiency technologies in all sectors, including electricity

generation;q increase the use of renewable energy in electricity generationand the residential and commercialsectors;q in the industrial sector, increase fuel flexibility and decrease waste generation, particularly by recycling

wastes andincreasing their use as process feedstock;q in the trans portation sector, expand the use of alternative fuels, accelerate the scrappage of older, leas

efficient automobiles, promote mass transit and ride sharing, and evaluate whether the corporate average fueleconomy (CAFE) standards should be changed

l reduce U.S. vulnerability to fossil-fuel supply disruptions by improving and implementing advanced oilrecovery technology, increasing U.S. and global oil and natural gas production generally, and expandingstocks (a major focus of supply expansion will include increased outer continental shelf (OCS) and ArcticNational Wildlife Refuge ( ANWR) exploration and development);

l revive the growth of nuclear power by standardizing powerplant design, accelerating the introduction of advanced designs, reforming the powerplant licensing process to hasten the growth of new nuclear capacity,

and site a permanent waste facility, andl enhance Federal research and development to reduce oil use, increase oil supplies, and develop alternativefuels.

The above list of NES goals is not complete, but it represents the key elements of the plan. There have beendisputes over the goals of the strategy, whether the policy approaches suggested m thedocument match these goals,and whether it offers a viable mix of demand control and supply enhancement options. These issues are forpolicymakers to resolve. For its part, the NES is a broad plan that premises to affect the way Some of our most




Figure I-l—Index of U.S. GDP, Energy Intensity,Energy Use, and Electricity Use

, ~ 1972 s 1.00

1.61.41.2

1

0.8

0.6 0.40.2

01952 1956 1960 1964 1968 1972 1976 1980 1984 1988

— B t u s — G D P ( 1 9 8 2 $ )

~ Intensity (Btus/GDP) ‘ - Elec t r i c i t y

SOURCE: U.S. Energy Information Administration, Month/y Energy Re-view, March 1991, DOE/EIA-0035(91 /03) (Washington DC:U.S. Government Printing Office, Mar. 28, 1991).

in 1990. This is addressed in OTA’s 1987 report U.S.Oil Production: The Effect of Low Oil Prices, and inits 1989 report Oil Production in the Arctic NationalWildlife Refuge: The Technology and the AlaskanOil Context.

Moreover, the fraction of total imports comingfrom Persian Gulf nations has increased from about4 percent of total U.S. consumption (10 percent of total U.S. oil imports) to over 10 percent (26 percentof current U.S. imports), as shown in figures 1-2 and1-3. As the Soviet Union, the United States, andother non-OPEC (Organization of Petroleum Ex-porting Countries) nations deplete their lowest cost

nomic or political cost. For example, if the recentGulf War had also interfered with Saudi Arabian oilexports, U.S. supply losses would have been muchmore severe.

Dependence on imported oil also strains ourinternational balance of payments considerably. Inthe first half of 1990, the U.S. imported 24 billion

dollars’ worth of oil, an amount equal to 57 percentof our total trade deficit for that period. High levelsof oil imports do not by themselves lead to poor tradebalances (Japan is one counter example), but such ahigh cost warrants strenuous efforts to ensure that oilis used with optimal efficiency. Many opportunitiesfor increasing energy efficiency are noted in thisreport.

In addition, even in peacetime, the Pentagonspends many billions of dollars to protect oilsupplies. With the conclusion of Operation DesertStorm, military expenditures linked to preserving oilsupplies rose substantially. Rebuilding the war-torncountries of the Middle East may also prove veryexpensive. These are part of the costs of importedoil, even though they are not reflected in the price of oil and oil products.

Some characteristics of today’s U.S. oil use,domestic supply, and import dependence are similarto those of the 1970s, e.g., the almost total relianceof our transportation sector on oil. Other features,however, have evolved considerably, including theefficiency of oil use in many industries lower




Figure 1-2—U.S. Oil Imports, 1989 (millions of barrels per day)

Asia 0 .80.3

1.22

Total: 8.1 million barrels per day Total: 2.1 million barrels per day

Total U.S. oil consumption, 17.3 million barrels per day

SOURCE: U.S. Central Intelligence Agency, International Energy Statistical Review, 1990.

Figure 1-3-Total Oil Use and Imports U.S., Europe,and Japan, 1973 and 1988

Million tons of oil equivalent

“ o o o ~ ~80 0

i

6 0 0 -

4 0 0 -

200-

o ’ m-U.S. Europe Japan U.S. Europe Japan

1973 1988

rates, delays in construction schedules and, in somecases, poor management. The higher costs of fueland capital meant higher electricity costs, andutilities sought higher rates for the first time indecades. Most utilities (and industry analysts) seri-ously underestimated the price elasticity of electric-ity demand. Demand growth plumm eted from 7percent a year in the early 1970s to less than 2.5percent by the end of the decade. Though consumersbegan using electricity more frugally, powerplantconstruction schedules did not shrink accordingly,and an oversupply of capacity resulted, adding toutilities’ problems.

The outlook for the electricity generating industry



Chapter Introduction: The Changing Context for Energy Technology Policy q 13

Box l-B-Changes in U.S. Oil Supply and Demand Since 1973

Energy Efficiency of the US. Economy As noted above,energy efficiency has risen considerably in all sectorsof the economy, often through permanent structuralchanges driven by economics. Changes include improvementsin both the efficiency and flexibility of energy-using technologies. 1 For example, automobile, industrial boiler, andelectric powerplant fuel efficiency have all improved substantially. Nonetheless, many opportunities still remain,although they may be more difficult to secure without higher energy prices, 2

Strategic Petroleum Reserve (SPR,): “TheUnited Statesnow h as an SPR containing approximately 585 millionbarrels of crude oil,3 the equivalent of about 100 days of oil imports at current levels. Similarly, Europe and Japanhave also added to their strategic storage, although not to the same extent as the United States.

Diversified World Oil Production: Sources of world oil production have become substantially more diversified

since the 1970s, with the OPEC share of the world oil market declining from 60 percent in 1979 to approximately35 percent today. For several years, at least, no single country or cohesive group of countries will be able to controlas large a share of the world market as was possible previously. Eventually, however, OPEC will regain substantialmarket share, especially as U.S. and Soviet production declines.

Concentrated World Oil Reserves: Despite diversified world oil production, nearly all recent reserve additionshave been in the Middle East. Moreover, the costs of exploration,field development, and production in the MiddleEast remain considerably below that of other oil producing regions and are likely to remain so.

Increased Flexibility of Oil Use: A considerable portion of any increase in oil consumption both in the UnitedStates and in the remainder of the free world is reversible. For example, much of the increase in Us. oil use in

transportation over the last decade involves changes in consumer behavior, e.g., increased driving, that could bequickly reversed in case of an oil shortage or large price increase. In the industrial sector, many of the shifts to oilfor a boiler fuel can be rapidly reversed with a shift back to coal or natural gas. Similarly, in the electric utility sector,a substantial portion of any increased oil use is likely to involve the use of existing oil-fired generatingcapacity-removed from baseline service when oil prices rose in the 1970s--in favor of coal, gas, or even nuclearplants. As long as the industry retains excess generating capacity, this use can be readily reversed, and even withdiminishing capacity, fuel switching capability is much more common now than in the 1970s.

New International Oil Trading Mechanisms: Most of the world’s oil is now traded through spot markets, incontrast to the long-term contracts of the 1970s. Coupled with an active futures market, this new oil trading situationmakes single country embargoes, which could never be airtight even in the past, still less of a threat.

Increased Availability of Natural Gas: The widespread concern in the 1970s about scarcity of natural gasresources has given way to aggressive increases in natural gas use, especially in industry, commercial space heating,and electric power generation.

International Agreements on Oil Sharing: The International Energy Agency (IEA) was created in the 1970sin part to coordinate maintenance of strategic stocks of petroleum as well as plans for demand reduction for useduring an emergency. In early 1991, the IEA governing board voted to draw on 2 billion bards of crude oil reserves




Figure 1-4--U.S. Electricity Consumption,1989 Base Case to 2020

Millions of GWH,

6

5

4

3

2

1

0

19901995 2000 2005 2010 2015 2020

E%?%! Coal Z Z O i l ~ G a s

~~ Nuclear ~ Other (nonfossil)

SOURCE: Gas Research Institute Baseline for 1989.

q the anticipated effects of the Clean Air ActAmendments of 1991; and

. the long-term implications of policies concern-ing global climate change.

These changes are certain to affect future technol-ogy choices, operating characteristics, and regula-tory policy. Box 1-C summarizes these changes inmore detail.

Changing Environmental Dimensions of Energy Policy

Much of the energy policy enacted in the lastdecade has actually been driven by environmentalconcerns. Moreover, the impetus for accelerateddevelopment of some new energy technologies hasbeen spurred primarily by environmental concerns,e g clean coal technologies such as gasifiers and

last viable order for a new nuclear powerplant wasmade in 1974.

In 1984 OTA delivered its report Nuclear Power in an Age of Uncertainty, which addressed the issuesinvolved in keeping nuclear as an option, andconcluded: “Without significant changes in thetechnology, management, and level of publicacceptance, nuclear power in the United States isunlikely to be expanded in this century beyondthe reactors already under construction. ” Theconclusion is still valid today, but increasing con-cern over CO 2 emissions, which nuclear can helpcontrol, greatly increases the importance of resolv-ing the issues.

Most of the major issues besetting the nuclearoption are related to the technology:

q

q

q

q

Are reactors sufficiently safe?Can they be built, operated and eventuallydecommissioned economically?Can nuclear waste be disposed of safely?Does nuclear power significantly increase therisk of the spread of nuclear weapons?

Several technological approaches to these issues,e.g., improved safety and economics, are discussedin chapters 3 and 4. Whether these efforts will beenough to improve public opinion is still uncertain.

Renewable Energy Technology

Some renewable energy technologies are alreadymature, e.g., hydropower, solar collectors, andpassive solar design features. At the other extreme,solar power satellites would require decades of research and development (R&D). Some renewabletechnologies e g photovoltaics and wind are




Box 1-C-The Changing U.S. Electric Utility Industry

Uncertainty in Electricity Demand Growth: A crucial legacy of the 1970s and 1980s is the uncertainty in futureelectricity demand growth. The experience of the 1970s reveals that users of electricity are able to alter the quantitythey use much more quickly than utilities can accommodate these changes with corresponding changes ingenerating capacity. The current range of published forecasts is about 1-to 4-percent average annual peak demandgrowth, This translates to a range of around a 30-gigawatt (GW) surplus of electric generating capacity to a 280-GWshortfall of capacity beyond currently planned additions and retirements by 2010. Even within individual forecasts,the range of uncertainty is typically very high. For example, the North American Electric Reliability Councilprojects that total electricity demand (summer peak demand) for 1999 with an 80-percent probability band will be128,000 megawatts (MW)--amounting to a 1OO-GW shortfall or about a 28-GW surplus at the ends of the

uncertainty range compared to currently planned additions and retirements.1

Shifting Electricity Markets: Compounding the demand uncertainty is the changing nature of demand. Forexample, in the residential sector there is saturation in some markets, e.g., many major appliances in homes, butthere is also intense competition between natural-gas-fired space heating and electric heat pumps. The future of industrial demand is clouded as some large industrial users of electricity are experiencing declines in domesticproduction due to foreign competition while others, like steel, are improving. At the same time, rapid growthcontinues in other areas, e.g., space conditioning for commercial buildings and electronic office equipment.Predicting the net impact of these offsetting trends, along with continued movement toward increased efficiency,has greatly complicated the job of forecasting demand.

Increasing Costs of Electricity Generation: Increased attention to environment and safety issues over the lasttwo decades has contributed to both extending leadtimes in the siting, permitting, and construction of newpowerplants as well as to rapidly rising per kilowatt costs of these plants, especially coal and nuclear plants. In the‘‘old’ days (1960s for the utility business) of steady demand growth, falling marginal costs (due largely toimproving technology) and low interest rates, an excess of new capacity was not all that costly and demand growthwould quickly erase the excess. Now, uncertainty about demand growth dominates. It is not only greater, but alsomore important, and overcommitting to new capacity can be very costly.

More Flexible Planning Strategies: Uncertainty has forced utilities to plan for contingencies. They now planfor a range of plausible future scenarios rather than committing to a fixed plan. When load growth exceedsexpectations, as in New England and the Mid-Atlantic Regions in the 1980s, shorter leadtime resources such as

demand-side management (DSM) and combustion turbines are called upon. Also, some utilities are performingpre-construction planning and site preparation to reduce the time required to construct new units, in case demandgrows rapidly.

More Technology Options: Utilities now seek technology that comes in smaller unit sizes that can much moreflexibly meet uncertain demand growth. The uncertainty in load growth provides the opportunity to dramaticallyexpand the role of DSM and smaller-scale, shorter leadtime generating technologies (e.g., natural gas-firedcombined cycle units) in utility resource plans. In addition, the prospects for advanced coal technologies renewable




application in the 1990s, but not at their current rateof technical development. For most renewable, the

goal of research, development, and demonstration(RD&D) remains to reduce costs and increaseperformance so that these technologies can competewith the conventional energy sources under tradi-tional terms. 5 Performance improvements, cost re-duction, and resolution of uncertainties will alloccur, but the rate at which these improvementsoccur will depend on sustained progress in RD&Dand survival of an industry infrastructure. Moreover,

as we gain experience with some renewable, welearn more about their own adverse environmentalimpacts, e.g., hydropower’s aquatic ecosystemsimpact and wind energy’s noise impacts.

Technology Research, Development, and Demonstration

Many technologies are available to supply energy

or improve its use. Many more will be available asR&D programs are pursued. Some of these werenoted above. A continued Federal presence inRD&D is essential to sustain energy technologydevelopment. OTA’s 1985 report New ElectricPower Technologies: Problems and Prospects for the 1990s identified a number of alternative policyoptions aimed at accelerating the commercial availa-bility of technologies potentially useful in the

electric power industry. These options apply inmany respects to other new energy technologies aswell since they focus on reducing cost, improvingperformance, and resolving uncertainty in both costand performance. The major policy questions are onthe level and direction of the Federal programs, andwhether it should include commercialization initia-

renewable energy option would be necessary, andmost of these could be made available sooner with

greater funding. These technologies are discussed inthe following chapters.

Under less drastic conditions, the current levelmay be adequate, but shifts in emphasis amongprograms may be considered, depending on theresults desired. The scenarios in chapter 4 assemblethe technologies according to the conditions underwhich they would be most useful.

The current U.S. R&D strategy assumes thatprivate industry will commercialize new energytechnologies as they become viable. This strategyreflects the desire to avoid repeating prematurecommercialization failures, e.g., the Synthetic FuelsCorporation. However, it is legitimate to ask if thisstrategy may not be an overreaction to past failures,especially since the Federal Government may havea greater interest in promoting particular technolo-

gies than has private industry. In particular, privateindustry is not traditionally expected to includeket considera-environmental concerns or nonmar

tions of foreign policy and national security incorporate investment decisions. The Federal Gov-ernment plays the principal role in encouraging andsponsoring technology development for such rea-sons. Of particular concern is assuring availability of liquid fuels as substitutes for oil and improving

efficiency in the use of oil, on which virtually ourentire transportation system relies. Another concernis finding more environmentally acceptable ways toprovide energy services. The current period of lowand stable world oil prices, which may well continuethrough the 1990s, provides a window of opportu-nity for developing supply substitutes and new, more




mostly gauged by its ability to sustain such societalgoals. The following prospective energy goals areaimed at this end.

Limit Oil Import Dependence and DiversifySupply Sources

Candidate goals to reflect a strategy of limitingoil import vulnerability are: 1) to limit overall oilimports to a fraction of total U.S. oil use (perhaps50 percent); and 2) to diversify sources of world

oil production and, therefore, U.S. sources of imports to regions of the world outside theMiddle East, where such imports can be alignedwith other U.S. policy interests. The latter includesthe transfer of technology to the Soviet Union toimprove oil production from depleted wells. Suchtransfers were discussed in 1981 in the OTA reportTechnology & Soviet Energy Availability. Sincethese decisions are primarily political not technolog-ical, this report focuses on the first goal.

Supply mechanisms to limit oil imports includesustaining or slowing the decline in domestic oilproduction, and developing and producing alterna-tive transportation fuels. Demand and fuel-switching mechanisms include improved efficiencyof use in all sectors and shifting industrial, residen-tial, and commercial oil use to other sources, e.g.,

natural gas or electricity.All of these options imply commercial develop-

ment of new technologies. Some technology op-tions, however, may lead to policy conflicts. Forexample, the current strategy for developing alterna-tive transportation fuels is driven by the need toi i q lit i b Lik l ti

Improve Energy Efficiency

OTA’s studies over the past decade have consist-ently shown that energy efficiency is an essentialcornerstone to a comprehensive energy policy frame-work. About two-thirds of the growing U.S. energyproductivity of the last decade is attributable toimproving energy efficiency. Efficiency gains havealso affected electricity use, which historically hasgrown faster than the economy but, in the lastdecade, has fallen back to the same rate of change asGNP. Moreover, these efficiency gains generallyhave been realized with net cost savings and withoutsacrifice of comfort or dollars. Considerable futureenergy efficiency gains are still possible in allsectors of the economy using existing technology.Even greater cost savings and efficiency gains willbe possible with technologies under current R&D.An efficiency goal of sustained improvement of 2percent per year 6 is realistic for the United States.With more vigorous research on energy efficiency,coupled with investment and policy leadership, thisgoal can be met or exceeded-and with options thatare no more costly than pursuing the supply-sidepath. Moreover, pursuing such a goal supports allthree policy interests of economic health, environ-mental quality, and energy security.

Improve Environmental Quality

A responsible energy policy should complementas much as possible a responsible environmentalpolicy. Clearly there are some activities that can spurour economy and enhance national security but runcounter to environmental goals (e.g., aggressivelypursuing a long-term strategy of alternative trans-




existing environmental goals need to be signifi-cantly compromised to achieve energy goals. En-

ergy and environmental goals are, of course, closelylinked and, therefore, neither energy nor environ-mental policies should be developed, assessed, orchanged in isolation.

Implications of Goals on U.S. Oil Import Dependence

In chapter 4 we consider several aggressivestrategies in supply, efficiency, and fuel shifting forreducing U.S. oil import dependence. The optionsinclude improving efficiency of energy use intransportation, industry, and buildings; increasingdomestic production of oil; and encouraging the useof alternative fuels.

It is clear that vigorous and sustained effortswould be required to stabilize oil import dependence

over the next several decades-even at a level of 50percent. The biggest opportunities for this lie on thedemand side. Fortunately, these can provide impor-tant new economic activity and strength at home. Tothe extent that we improve efficiency cost-effectively,supplies will last longer, environmental problemswill be eased, and international tensions lessened.But improved efficiency is unlikely to be enough.The opportunities on the supply side, e.g., enhanced

domestic production in the lower 48 States, offshore,and in Alaska, are more modest than increaseddemand efficiency, but still potentially important.And, as noted earlier, there are opportunities forusing alternative transportation fuels, e.g., methanoland electricity. These fuels have extensive long-termimplications, however. The oil replacement poten-

the National Energy Strategy. In particular, theNational Energy Strategy projects that the imple-

mentation of its domestic oil production policiesalong with assumed increases in the use of alterna-tive fuels will lower net crude imports to just under41 percent of domestic demand by 2010. 7 As thisNational Energy Strategy projection of slackeningimport dependence is largely based on assumptionsabout domestic production increases from enhancedoil recovery technologies and yet unverified ArcticNational Wildlife Refuge reserves, OTA considers

this drop in the level of oil imports improbable andoptimistic. Coupled with aggressive efficiency ef-forts, however, this projection would appear morereasonable. In the following chapters we outline thetechnology dimensions inherent in alternative strate-gies for reducing import dependence.

Linking U.S. Energy Strategy to Global

Climate ConcernsFor decades we assumed that fossil fuels could

supply our energy needs for several more centuries.Our only serious “bet-hedging” to fossil fuels hasbeen nuclear power—fission and fusion. While thelatter goal remain s frustrating and elusive, theformer now accounts for 20 percent of U.S. electric-ity, or about 8 percent of our total primary energy

budget. Other nonfossil (mostly hydroelectric andbiomass) fuels add another 8 percent, so our presentnonfossil energy budget is about 16 percent. But thenuclear fission power enterprise, as noted earlier, isin deep trouble. Our long-term efforts to harnesssolar energy have been inadequate to produceoptions that could be widely deployed at reasonable



Chapter 1--Introduction: The Changing Context for Energy Technology Policy . 19

CONCLUSIONSIn addition to providing for contingencies and

interruptions, a priority policy consideration is todecide whether it is wise to constrain the growingU.S. appetite for imported oil. Another key policyavenue is the need to make an explicit commitmentto a smooth, multidecade transition to the postfossilfuel age as well as an era of constantly advancingenergy productivity. If we want to accomplish suchgoals at minimum cost, it will take more than adecade from whenever we start to stabilize ourdependence on imported oil, and it will take ahalf-century or more to get beyond fossil fuels.

Our long-term economic, environmental, and na-tional security future hangs on such transitions,and the specter of global warming could greatlyforeshorten the time we once thought we coulddepend on coal and other carbon-rich fossil fuels.The relationships among the long-term goals of economy, environment, and security provide someimportant guiding principles-principles fromwhich a systematic, integrated, and comprehensiveenergy strategy, which is responsive to all threegoals, can logically follow. In the following chapterswe ex amine the technology dimensions of affectingthese transitions.



Chapter 2

Technologies Affecting Demand



CONTENTS Page

U.S. ENERGY USE . . . . . . . . . . . . . . . . . . . . ....23Changes in Energy Use From 1972 To 1988.23Future Energy Use . . . . . . . . . . . . . . . . . . . . . . . 26Energy Use by Sector-An Overview ....., 27

OPPORTUNITIES FOR ENERGYEFFICIENCY IMPROVEMENTS IN THERESIDENTIAL AND COMMERCIALSECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Opportunities for Improving Space Heating

and Cooling Efficiency . . . . . . . . . . . . . . . . . 30Opportunities for Improving Building

Envelope Efficiency . . . . . . . . . . . . . . . . . . . . 32Opportunities for Improving Water Heating

Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Opportunities for Improving Lighting

Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

Opportunities for Improving ApplianceEfficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Opportunities for Improving EnergyManagement and Control Systems . . . . . . . 37

OPPORTUNITIES FOR ENERGYEFFICIENCY IMPROVEMENTS IN THEINDUSTRIAL SECTOR . . . . . . . . . . . . . . . . . . 37Computer Control and Sensors . . . . . . . . . . . . 38Waste Heat Recovery . . . . . . . . . . . . . . . . . . . . . 38Cogeneration q . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Separation . . . . . . . . . . , . . . , . . , , . . . . . , , . , . . 40Catalytic Reaction . . . . . . . . . . . . . . . . . . . . . . . . 40Combustion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Electric Motors . . . . . . . . . . . . . . . . . . . . . . . . . . .41P l d P I d 42

PageEnvironmental Concerns . . . . . . . . . . . . . . . . . . 54Appliance Efficiency Standards . . . . . . . . . . . . 55Building Energy Codes . . . . . . . . . . . . . . . . . . . . 56Corporate Average Fuel Efficient (CAFE)

Standards . . . . . . ., . . . ., . . ., ., ., 57Electric Utility Programs-Demand-Side

Management . . . . . . . . . . . . . . . . . . . . . . . . . . .57Oil Supply and Price Uncertainties . . . . . . . . . 58Fuel Switching . . . . . . . . . . . . . . . . . . . . . . . . . . .59

Figures Figure Page2-1. Furnace Replacement Accumulated

Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312-2. Potential Energy Savings With Improved

Sensor Technology . . . . . . . . . . . . . . . . . . . . . 38

Table 2-1.2-2.

2-3.

2-4.

2-5.

2-6

Tables Page

Technologies Affecting Demand . . . . . . . 24Energy Overview, Selected Year S,1970-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Consumption of Energy by Sector,

1970-89. . . . . . . . . . . . . . , . . . . 26Household Energy Consumption byApplication and Fuel Source, 1978,1980-82, 1984, and 1987.......,,.... 28Comparison of Residential Energy UseForecasts . 29Comparison of Commercial Energy Use



Chapter 2

Technologies Affecting Demand

After the oil crises of the 1970s, the United Statesmade tremendous strides in improving energy effi-ciency. This was accomplished by technologicaladvances in energy-using equipment and productionprocesses and structural shifts in the economytoward less energy-intensive products and services.By the mid-1980s, however, stable oil prices and

supplies shifted the Nation’s focus away fromenergy efficiency to other issues. As a result, energyuse began to rise and energy efficiency improve-ments slowed. Many opportunities for improvingefficiency were not realized. Recent events in theMiddle East have renewed concerns about U.S.dependence on foreign energy supplies and stimu-lated interest in energy efficiency. There are avariety of technologies that have the potential for

improving energy efficiency over the next 20 years.New technologies are constantly being added. Thischapter describes some of these technologies. (Seetable 2-l.) But first, the chapter characterizes energyuse today, the changes that have occurred since theearly 1970s, and what we can expect in the future.Also, this chapter discusses nontechnical factors thatinfluence energy use.

U.S. ENERGY USEIn 1989, the United States used a record-breaking

amount of energy. (See table 2-2.) Low oil pricesstimulated economic growth (3 percent in 1989) andan increase in energy demand. Petroleum consump-i d f h li ’ h (42 ) f

domestic production accounted for the increase. 2

The U.S. Department of Energy (DOE) indicatesthat petroleum net imports for 1990 declined by2 percent. 3

All sectors of the economy experienced increasedenergy use in 1989. In fact, the residential/ commercial and transportation sectors used moreenergy than ever before. 4 (See table 2-3.) Whileenergy use increased, energy intensity 5 declined by1.7 percent. According to the U.S. Energy Informa-tion Agency (EIA), favorable weather conditionscontributed to the decline.

Changes in Energy Use From 1972 To 1988 6

From 1972 to 1988, two trends in energy con-

sumption are discernible. The frost trend, from 1972to 1985, can be characterized by decreasing energyuse per dollar of gross domestic product (GDP) andrising energy prices. This was a departure from the1950s and 1960s when energy use and GDPincreased at the same rate. From 1985 to 1988, thetrend of steady decreases in energy intensity wasbroken.

Changes in Energy Use From 1972 To 1985Between 1972 and 1985, energy use remained

essentially flat (0.3 percent per year) while theeconomy experienced an average growth rate of 2.5 percent per year. This relatively flat level of energy use coupled with economic growth resulted

d b




Table 2-l—Technologies Affecting Demand

Technology Sector Availability CommentsVariable speed heat pump . . . . Residential/commercial C,N Improves energy efficiency and provides more flexible control.

Scroll-type compressors (heatpump/air conditioning) . . . . . .

Thermally active heat pump. . .Low-emissive windows . . . . . . .

Heat pump water heaters. . . . .

Alternative insulation materials.

Refrigerator insulation. . . . . . . .

Efficient lighting products . . . . .

Building energy managementand control systems . . . . . . .

Industrial process changes: —Separation . . . . . . . . . . . . .

-Catalytic reaction . . . . . . . .

—Computer control andsensors . . . . . . . . . . . . . . .

Advanced turbine: —Steam-injected gas turbine

(STIG) . : . . . . . ;. . . . . . . . . —Intercooling (ISTIG) . . . . . .

Electric motors . . . . . . . . . . . . . .

2-stroke engine . . . . . . . . . . . . .

Direct injection/adiabaticdiesel . . . . . . . . . . . . . . . . . . .

Residential/commercial

Residential/commercialResidential


Residential

Residential



Industrial

Industrial

Industrial

Industrial/utilityIndustrial/utilityIndustrial

Transportation

Transportation

C

C,R

cR

R

C,N,R

C,N

C,N,R

C,N,R

C,N

C,N

cR

C,R

‘Widely used in Japan. Increasing market share in United States.

Newer scroll-type compressors are 10 to 20 percent more efficientthan reciprocating ones. Widely produced in Japan.

Could have significant impact in 10 to 20 years.Significant impact on reducing thermal energy loss in homes.

Research needed on improving durability, lowering emittance,and reducing condensation.

Offers significant reduction in electricity use; premium cost.Commonly used in Scandinavia.

Needed to counter loss of chlorofluorocarbon-blown insulation.Now being developed and tested.Greatest potential for appliance efficiency improvements. Newproducts include vacuum insulation, compact vacuuminsulation, and soft vacuum insulation.

Combination of lighting options can cut commercial energy usesignificantly. Improved fluorescent, compact fluorescents, andelectronic ballasts commercially available. Research anddevelopment continuing on improving phosphors.

Greatest potential for savings in the commercial sector. Advancesin this technology have been continual.

Improvements in separation and control, and the use of membrane

technology and solvent extraction could reduce energy useconsiderably.By increasing reaction rates, lower temperatures and pressures can

be used that reduce heating and compression requirements.Discover and use of new synthetic zeolites have contributed toenergy efficiency gain in petroleum refining and chemicalsindustries.

Improved monitoring and control optimizes conversion anddistribution of energy. Potential savings range from 5 to 20percent.

Currently used in cogeneration applications.Has potential to raise efficiency to about 50 percent. Maybe bettersuited for utility applications; pilot-plant stage.Adjustable-speed drive and new high-efficiency motors account for

about half of the total potential savings in U.S. motors.Holds promise for long term. Questions remain about ability of

engine to comply with emissions standards.

Limited passenger car application in Europe; offers considerableefficiency improvements for both light-duty vehicles and heavyt k Q ti i di ti t i t




Table 2-3-Consumption of Energy by Sector, a 1970-89 (quadrillion Btu)

Residential ElectricYear and commercial b Industrial b Transportation b utilities Total

1970 . . . . . . . . . . . . . . . . . . . . . . .1971 . . . . . . . . . . . . . . . . . . . . . . .1972 . . . . . . . . . . . . . . . . . . . . . . .1973 . . . . . . . . . . . . . . . . . . . . . . .1974 . . . . . . . . . . . . . . . . . . . . . . .1975 . . . . . . . . . . . . . . . . . . . . . . .1976 . . . . . . . . . . . . . . . . . . . . . . .1977 . . . . . . . . . . . . . . . . . . . . . . .1978 . . . . . . . . . . . . . . . . . . . . . . .1979 . . . . . . . . . . . . . . . . . . . . . . .

1980 . . . . . . . . . . . . . . . . . . . . . . .1981 . . . . . . . . . . . . . . . . . . . . . . .1982 . . . . . . . . . . . . . . . . . . . . . . .1983 . . . . . . . . . . . . . . . . . . . . . . .1984 . . . . . . . . . . . . . . . . . . . . . . .1985 . . . . . . . . . . . . . . . . . . . . . . .1986 . . . . . . . . . . . . . . . . . . . . . . .1987 . . . . . . . . . . . . . . . . . . . . . . .1988 . . . . . . . . . . . . . . . . . . . . . . .1989 . . . . . . . . . . . . . . . . . . . . . . .

21.7122.5923.6924.1423.7223.9025.0225.3926.0925.8125.6525.2425.6325.6326.5026.7326.8327.6229.0029.50

28.6328.5729.8631.5330.6928.4030.2431.0831.3932.6130.6129.2426.1425.7527.7327.1226.6427.8729.0129.46

16.0916.7217.7118.6018.1218.2519.1019.8220.6120.4719.6919.5119.0719.1319.8720.1020.7621.3622.1922.38

16.2717.1518.5219.8520.0220.3521.5722.7123.7224.1324.5024.7624.2724.9625.9826.4826.6427.5528.6329.20

66.4367.8971.2674.2872.5470.5574.3676.2978.0978.9075.9673.9970.8570.5274.1073.9574.2476.8480.2081.35

aDatadonotindude~nsum@ion ofwoodenergy(otherthan thatconsumed bytheelectric utility industry) which amounted toan=timatd 2.4qudrillbnBtuin1987.Thistabledoesnotindudesmallquantities ofotherene~yformsforwhich~mistenthkton~l&taarenotavaNable,su&~~otherma~We,wind, photovoltaic, orsolarthermal energy sources except that consumed byeleetticutilities.

blnd~estho~fo~flfuels ~nsum~dir~t[y in thesector, utility electricity salestothesector, and energy losses intheconversion and transmission ofelectricity.Conversionand transmission losses areallocated tosectors in proportionto electricity salestosectors.

NOTE: Sum of components may not equal total due to independent rounding.SOURCE: U.S. Energy Information Administration, Amtua/ Enegy Review1989, DOE/EIA-0384(69), May 24, 1990; MorIth/y Energy Review Apn/ 7991,

DOE/EtA-0035 (91/04), April 26,1991, p. 35.

decline slowed considerably to -0.8 percent per yearduring this period.

An increase in the level of overall spending and ashift in spending toward more energy-intensiveproducts are two of the factors that contributed to theincrease in energy use. For example, Federal Gov-ernment spending dramatically changed as nonde-fense purchases fell by 16 percent over the 3-yearperiod, and defense purchases grew by 1O percent. In

dd h h ld d h f d f

energy use and improvements in energy efficiencyare likely to continue in the future.

The impact of technology on future energy use isspeculative. A variety of energy-saving technologiesare available and have the potential for significantenergy efficiency gains. The critical factor iswhether there is a willingness to implement thesetechnologies. Implementation or adoption will de-



Chapter 2—Technologies Affecting Demand q 27

Energy Use by Sector—An Overview

Residential/Commercial SectorIn 1989, energy use in the residential and com-

mercial sectors accounted for about 36 percent of total U.S. energy use. (See table 2-3.) Space heatingand cooling accounted for almost 59 percent of thetotal energy used in the residential sector in 1987(the most recent year for which data are available),as shown in table 2-4.9

Natural gas is the primary energy source for spaceheating in the residential sector. Electricity isessentially the only energy source for air condition-ing and the major source for appliances, whichcommonly include refrigerators, TVs, ovens, andclothes washers.

In the commercial sector, a few end-uses accountfor a major portion of total energy use: space

heating, cooling and ventilation, and lighting. Elec-tricity is the predominant energy source in commer-cial buildings, followed by natural gas. In 1986 (themost recent year for which data are available),electricity accounted for almost half of total com-mercial sector energy use, followed by natural gas(34 percent) and fuel oil (9 percent). 10

From 1979 to 1986, energy consumption perhousehold declined considerably. A number of factors were responsible for the 20-percent drop inresidential energy intensity: reduced household size,improved shell and equipment efficiencies, andlifestyle changes. In the commercial sector, energyuse per square foot declined from 115,000 Btus in1979 to about 89,000 Btus in 1986. The 23-percent

technologies are absorbed and new constructionpractices are implemented, but the level of decline

will slow due to the proliferation of electronicequipment, such as personal computers, copiers, andcommunications equipment. From 1984 to 1989, thenumber of computer workstations increased from6.5 to 25.3 million.12Modern office equipment nowrequires as much electricity as is used for lighting. Inaddition, some modern, more powerful electronicequipment may require more electricity than oldermodels. For example, a laser printer requires 5 to 10times as much electricity as an old impact printer.And, more powerful desktop computers use almosttwo times as much electricity as the previousgeneration.

A number of organizations forecast residentialand commercial energy use. A few of these arepresented in tables 2-5 and 2-6. Each of the forecaststook into account a number of variables, including

energy prices, GNP growth, and building andhousing stock expansion. With the exception of theAmerican Gas Association (AGA) forecast, residen-tial electricity demand was projected to rise. Theelectrification of space and water heating was citedas one of the major reasons for the increase inelectricity demand. AGA projected no increases inresidential electricity demand from the period 1985to 2000. 13

These forecasts for commercial energy use are ingeneral agreement for 2000; however, by 2010forecasts diverge. The variations are a result of different assumptions, perspectives, and forecastingapproaches. For example, the EIA forecast assumeselectricity prices decrease at an average rate of 0.7




Table 2-4-Household Energy Consumption by Application and Fuel Source, 1978,1980-82, 1984, and 1987

Consumption (quadrillion Btu)

Application and fuel source 1978 1980 1981 1982 1984 1987Space heating: Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.26Electricity a, ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.41Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . . . 2.05Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.23

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.95Air conditioning. b

Electricity a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.31Water heating: Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04Electricity a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . . . 0.14Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.06

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.53Appliances: Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28Electricity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.46Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.03

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.77Total b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.56

Natural gas b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.58

Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.47Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . 2.19Liquefied petroleum gases. . . . . . . . . . . . . . . . . . . . 0.33

3.320.281.320.255.17

0.32

1.240.310.240.071.86

0.381.550.041.979.324.94

2.461.550.36

3.810.301.130.225.45

0.33

1.100.33 0.210.06 1.69

0.49 1.53

0.032.059.515.39

2.481.330.31

3.310.271.050.194.81

0.30

1.080.330.090.061.56

0.391.520.041.958.624.77

2.421.140.29

3.510.301.100.215.13

0.36

1.100.320.150.061.62

0.351.53

0.041.929.044.98

2.481.260.31

3.380.281.050.224.94

0.44

1.100.310.170.061.64

0.341.720.042.109.134.83

2.761.220.32

alnd~es elWt~ity generat~ for distrihtion from wood, waste, geothermal, wind, photovoltaic, and Soiar thermal elwttiity.b[nd~es a small amount of natural gas used for air conditioning.

NOTE: Sum of mmponents may not equal total due to independent rounding.SOURCE: U.S. Energy Information Administration, Annudf%ergy Review 1989, DOE/EIA-0384(89) May 24, 1990.

“Opportunities for Energy Efficiency Improve-ments in the Residential and Commercial Sectors. ”

Industrial Sector

In 1989, energy use in the industrial sectoraccounted for about 36 percent of total U.S. energyuse.15 Energy is used for direct heat, steam genera-tion, machinery operation, and feedstocks. Oil isfrequently used for the production of direct heat or

petroleum’s share ranged from 33 to 41 percent to itspresent 37-percent share. Natural gas use was very

similar to that of petroleum. During the same period,electricity use increased from 7 to 14 percent. 16

Since 1972, the industrial sector has takennumer-ous steps to reduce its energy use per unit of output.A number of process changes and the application of new technologies, such as sensors and control




bile and light-duty fleets are the largest availabletargets for reducing U.S. oil use.

Over the last two decades, tremendous strides inautomobile fuel efficiency have been made. The fuelefficiency of the new car fleet has essentiallydoubled between 1974 and today. The potential forfurther reducing energy use in the transportationsector is promising if the industry is given enoughlead time. A number of new energy-saving technolo-gies are either on the market or under investigation.They offer the potential to significantly improve

fleet fuel economy in the long term (by 2010). Inaddition, recent interest in developing alternativetransportation fuels can have positive effects onenergy demand by diversifying fuel supplies and/orreducing demand for gasoline. In the short term,however, a number of factors are expected to slowdown the rate of efficiency improvement. Theseinclude increasing sales of new high performanceand luxury cars, growth in the use of light trucks for

passenger travel, and a continued demand for certainolder car models. A discussion of promising technol-ogies and alternative fuels follows in the section“Opportunities for Energy Efficiency Improve-ments in the Transportation Sector. ’

OPPORTUNITIES FOR ENERGYEFFICIENCY IMPROVEMENTS

IN THE RESIDENTIAL ANDCOMMERCIAL SECTORS

From 1974 to 1986, technical advances in energy-using equipment and building construction practicesand materials have significantly improved energyefficiency in the residential and commercial sectors.

over the last decade. Increasing Federal R&Dsupport could accelerate the development and de-ployment of energy saving technologies. The fol-lowing section discusses opportunities for improv-ing energy efficiency in the residential and commer-cial sectors.

Opportunities for Improving Space Heating and Cooling Efficiency

Space heating and cooling are the most energy-consuming applications in households and commer-cial buildings. Space heating alone accounts forabout two-thirds of total residential sector energyuse. 18

In homes and commercial buildings that use fuelsfor space heating, newer more energy efficientfurnaces and boilers are already common. The GasAppliance Manufacturers Association (GAMA) es-timates that about 47 percent of all new gas furnaces

sold have efficiency ratings of between 65 and 71percent. Gas furnaces with efficiency ratings of 80percent make up about 33 percent of the market, and90-percent efficient furnaces make up about 20percent of the market. l9 Since the early 1980s, thesehighly efficient furnaces have been promoted bymanufacturers and relatively well-received by con-sumers.

The decision to purchase a super efficient furnacemust weigh the increase in initial cost against theincreased savings. An Illinois Department of Energyand Natural Resources survey indicates that naturalgas furnaces in the 90+-percent efficiency range coston average about $2,100 to $2,600. An 80-percentefficient furnace can be installed for an average of




Figure 2-l—Furnace Replacement AccumulatedSavings (60 percent efficient v. 80 and 92 percent)

Dollar savings (thousands)

I 1 1 1 , 1

3 4 5 6 7 8 9 10Years after replacement

80% efficient + 92% eff ic ient

80% payback s 92% payback

With 5-percent escalation included, 92 percent efficient furnaces take2 years more to pay for themselves than the 80 percent efficient furnaces.

SOURCE: “Furnace Replacement: The High Cost Efficiency Payoff,” Home Energy, vol. 7, No. 3, May/June 1990.

as flame-retention burners, electric ignition, powerburners, and condensing heat extractors. Flameretention burners are a cost-effective measure for oilfurnaces. Double-digit energy savings with pay-backs of 2 to 5 years are typical for this retrofit.However, other retrofit programs have had mixed

success, indicating that investments have to bechosen carefully .21

In homes and commercial buildings that useelectricity to space heat, heat pumps offer a majoropportunity for improving energy efficiency. Heat

Current heat pump technologies do not operatenear their maximum theoretical efficiency. Thus, the

opportunities for improvement are significant. Forexample, the development of variable speed controlsfor capacity modulation will improve efficiency andprovide a better match between output and spaceconditioning needs. One estimate notes that variablespeed heat pumps will use 25 to 50 percent lesselectricity than typical heat pumps installed in themid-1980s. 23Incorporating variable speed controlsalso provides quieter operation, more flexible con-trol, better dehumidification capability, and thepossibility of self-diagnostic features.

Variable-speed heat pumps have been available inJapan since the early 1980s. About one-half of allheat pumps in Japan use variable-speed control. 24

Variable-speed heat pumps are also available in theUnited States. The number of manufacturers offer-ing this technology is growing; and newer, more

efficient models are continually being tested andmarketed.

Improvements in compressors for heat pumps andair conditioners also promise to have higher effi-ciency rates than conventional types. For example,newer scroll-type compressors have efficiencies of 10 to 20 percent higher than reciprocating compres-sors. In addition, scroll-type compressors are

smaller, lighter, and quieter. They are widely pro-duced in Japan and are expected to be produced andused in the United States in the near future.

The next major advance in heating/cooling tech-nology may be the thermally active heat pumps(TAHP) A TAHP is similar to a conventional




have to be competitive with conventional systems interms of first cost and maintenance.

Both DOE and the Gas Research Institute (GRI)have funded research on TAHPs. A number of advanced TAHPs have been developed. Theseinclude internal combustion engine-driven units,Ike-piston Stirling engine systems, and absorptionsystems. In the United States, the internal combus-tion engine-driven units are in the prototype stageand have been tested in the laboratory. The Japaneseare also doing research in this area and havemanufactured and field-tested a number of internalcombustion-driven systems. The best performancesare comparable to the best electric systems incooling, about 75 percent better in heating, and verycompetitive in operating costs. 26

Several Stirling engine-driven heat pumps havebeen developed and tested. Stirling engines areattractive as heat pump drivers because they have the

potential to be highly efficient, quiet, and longlasting. The performance of Stirling engine-drivenheat pumps has been similar to that of the internalcombustion engine. 27

Similar progress has been made in advancedabsorption systems. A number of advanced absorp-tion systems are under development and have beentested in the laboratory. They are about 20-percentmore efficient in cooling than the best absorptionchillers 28 available. 29 Cost studies have shown thatthe installed cost for a small absorption heat pumpis in the range of installed costs for a gas furnace plusan electric air conditioner. 30

Other refrigeration equipment efficiency improve-

Opportunities for Improving Building Envelope Efficiency

Efforts are being directed at improving thethermal efficiency of building envelopes. Much of the research has focused on materials that havehigher thermal resistance per unit thickness and newenvelope configurations that are more thermallyresistant.

For wall systems, alternative construction prac-tices have promising potential for improving effi-ciency. These include innovative designs that keepthe structural elements away from the exterior shelland retrofit insulation practices that shield existingthermal bridges (highly conductive heat flow paths).Thermal bridges can reduce the overall thermalefficiency of some wall systems by 30 percent.Demonstration homes in Minnesota that use newinsulation techniques use 68-percent less heat thanthe average U.S. home.

32

Prospects for new high-thermal-resistant productsfor wall systems are being explored. These includeevacuated or foam cores molded to conform to theexterior shape of the building and molded fiberwalls. 33

Improving the thermal resistance of roofs issomewhat difficult because roofing materials arecompact and not much can be done to improvethermal resistance per unit thickness except to focuson materials. Alternatives to chlorofluorocarbonfoam insulation are being developed and tested. Inaddition, waterproof membranes must be developed



Chapter 2—Technologies Affecting Demand . 33

A number of successful innovations have im-proved the thermal efficiency of windows. As much

as 25 percent of residential and 4 percent of U.S.total energy use escapes through windows. 35Thus,the potential for reducing energy use is significant.

The introduction of two coatings technologies hasimproved window performance substantially. Onetechnology applies a heat reflective coating directlyon the glass, and the other applies similar coatings toa clear polyester film that is mounted inside sealed

insulating glass. Low-emittance (low-e) coatingsand films have increased glass insulation values upto as much as R-4.5. For example, the addition of low-e coatings to a double-pane glass increases theinsulation value of a window up to as much as R-3.(A single-pane glass is roughly the equivalent of R-1; double-pane, R-2; and triple-pane, R-3.) Toincrease further the insulation value, a colorless inertgas, such as argon, can be added inside a sealed

low-e window unit, thereby increasing the R valueto R-4. Using a heat reflective coating on a clear,colorless film mounted inside a double-pane win-dow unit can increase the R value to R-4.5. 36

In January 1990, a window with an R-8.1 insulat-ing value was introduced. The use of multiple-coated films mounted inside sealed insulated glassmade this development possible. This windowachieves almost the thermal resistance of an ordinaryinsulated stud wall, thus greatly reducing a majorheat leakage. In addition, it reduces sound transmis-sion much more effectively than ordinary windows(important near highways and airports) and virtuallyeliminates ultraviolet light, which damages fabrics.However, it is significantly more expensive. Hurd

Two of the most important advantages of improv-ing window insulation performance are: 1) reducing

energy costs and 2) increasing the capacity of existingheating, ventilation, and air conditioning (HVAC)systems or allowing the use of smaller HVACsystems in new construction and renovations. 37

Many new window products that incorporate theseinnovations are already on the market. In fact, a fewlarge window manufacturers have standardized loweglass products. And, DOE indicates that demand forlow-e windows has increased 5 percent annuallysince the products were introduced in 1983.

38

Additional research is being conducted on improv-ing the durability of the coatings and lowering theiremittance and reducing condensation.

Opportunities for ImprovingWater Heating Efficiency

Incremental efficiency improvements have beenachieved by adding insulation wraps or installingconvection-inhibiting heat traps to existing waterheaters. Also, more efficient conventional waterheaters are commercially available at a modestincrease in first cost of about $20 to $100. Thesemore efficient water heaters provide 10- to 25-percent energy savings with a 1 1 /2- to 3-yearpayback.

Innovative water heaters were developed andcommercialized in the 1980s. Heat-pump waterheaters, for example, use about 50-percent lesselectricity than conventional electric water heaters.A heat-pump water heater can cost anywhere from




source of heat for the heat-pump water heater. Suchsystems are commonly used in Scandinavia. 40

Highly efficient gas- or oil-fired water heating ispossible by coupling a hot water tank to a high-efficiency space heating furnace. This achieveswater heating efficiencies of 80 to 85 percent andsaves fuel. A similar technology recently introducedis a high-efficiency integrated space and waterheating system. It features electric ignition, a power

burner, and flue gas condenser to provide both spaceand water heating at efficiency levels of 85 to90 percent. Neither the heat-pump water heater northe high-efficiency integrated gas-fired space andwater heating system has significantly penetratedthe marketplace. Low sales are attributed to highfirst cost and limited availability .41

GRI has supported the development of a gas waterheater with pulse combustion and flue gas condensa-tion (similar to the most efficient gas furnaces). It isestimated that the water heater will use 25 to40 percent less fuel than conventional gas heaterscurrently produced. The estimated retail cost isabout $900, roughly three times that for a standardwater heater. 42

Opportunities for Improving Lighting Efficiency

Lighting is the second largest end-use in thecommercial sector and a significant portion of totalenergy use. Fluorescent lights are heavily used incommercial buildings.

Fluorescent lamps are being improved throughi d i h d i F l i hi

Photo credit: Chris Calwell, courtesy of Home Energy Magazine

The availability of energy-efficient lighting products hasincreased significantly in recent years.

Another option for improving fluorescent lightingefficiency is to develop more efficient phosphors.Phosphors currently in use are 40-percent efficient.Research is underway to develop phosphors thatconvert one ultraviolet photon into two visiblephotons, resulting in 75-percent efficiency andreducing energy use by 50 percent. 45

I h i l bi i f




The costs of retrofitting conventional lightingfixtures to more efficient ones are very site-specific.A recent lighting retrofit project conducted by theU.S. Postal Service showed a cost of $81 per lightingfixture. The retrofit included the installation of reflectors, magnetic ballasts, and new lamps. 47

In the residential sector, energy use for lightingaccounts for only about 7 percent of the total sectorenergy use. 48 Almost all residential lighting isprovided by incandescent lamps. One way incandes-cent bulbs can be improved is by placing a quartztube around the filament. The quartz tube has anoptical coating that passes visible light but reflectsinfrared radiation. General Electric has introduced a350-watt quartzline lamp that replaces a standard500-watt lamp, and it is expected that this develop-ment will eventually reach households. 49

In the early 1980s, compact fluorescent lampswere introduced to replace incandescent bulbs.Fluorescent lamps provide 3 to 5 times more lightper watt of power consumed and last 5 to 10 timeslonger. But, they cost between $10 and $20 each.Consequently, they have been marketed primarily tothe commercial and industrial sectors where lightsare used more extensively. The installation of compact fluorescent light bulbs in Newark, NewJersey schools, for example, cut electricity use by 15to 20 percent, reduced maintenance, and increasedillumin ation levels. 50

Because compact fluorescent lamps are largerthan incandescent types, have color rendering prob-

Opportunities for Improving Appliance Efficiency

Refrigerators and Freezers

In recent years, the energy efficiency of refrigera-tors and freezers has improved considerably. How-ever, there is still significant potential for improve-ments. About two-thirds of refrigerator/freezer en-ergy use is due to heat transfer through walls and notfrom door openings and food cooling. 52

New advances in insulation products are underdevelopment. These technologies take advantage of the heat-transfer properties of a partial vacuum ortrapped layers of gas to achieve higher insulationvalues. One type of vacuum insulation being exam-ined uses rigid steel barriers, glass spacers, and avery low pressure or hard vacuum. Others uselow-density fillers and a higher-pressure soft vac-

uum. Yet another concept uses no vacuum but trapsgas within a number of reflective barriers. 53

For soft vacuum insulation designs, silicon-basedgels and fine powders are being tested. Aerogelinsulation panels have been installed in standardrefrigerators for testing by DOE. Thermalux, aCalifornia firm that manufactures aerogel panels,estimates that they would cost appliance manufac-turers between $1 and $2 per square foot. 54

Materials that have been examined for powderinsulation fillers are fumed silica, precipitated silica,silica dust, perlite, glass fiber, glass wool, and flyash. Costs for these materials vary. For example,fumed silica is expensive but performance is high.P i i d ili fl h d li l k ll





have measured insulating values of R-16 to R-20 perinch of thickness. However, some concerns aboutpanel insulation durability and maintenance havebeen raised. These concerns will have to be ad-dressed before these products are used extensively inthe United States. 5G

The Solar Energy Research Institute (SERI) andthe Lawrence Berkeley Laboratory (LBL) havepursued different approaches to vacuum insulation.SERI has built a number of prototype panels thatincorporate steel outer layers and glass spacers. Theprototype panels, called compact vacuum insulation(CVI), are estimated to cost refrigerator/freezermanufacturers between $1 and $4 per square foot.Because the panel is very thin, the interior volume of a refrigerator/fkeezer could be increased. Applianceindustry estimates indicate that additional volumecould be worth $45 to $50 per cubic foot, and couldhelp offset the high cost of the insulation. Thus far,manufacturers have shown little interest in CVI. 57

LBL has been developing superinsulated gas-filled panels that resemble windows more thanrefrigerator/freezer insulation panels. The estimatedcost to the appliance manufacturer is $0.40 to $1.50per board foot. The panels use a number of sheets of low-e plastic separated by air gaps, which areloosely filled with very thin, crumpled low-e plasticmaterial. The entire panel is filled with low conduc-

tivity gas and sealed. LBL has applied for a patent.58

Another promising option is to shift from one totwo refrigeration systems. This improves thermody-namic efficiency and results in less dehydration of food in the refrigerator compartment. Refrigerator-freezers with dual refrigeration systems are manu-

Cooking and Laundry

There have been a number of promising develop-ments in cooking technology and clothes drying. Forexample, a high-efficiency electric oven, called thebiradiant oven, was developed and demonstrated inthe 1970s. Its features include highly reflective wallsand two heating elements that operate at relativelylow temperatures. Tests show that the biradiant ovenuses about 60-percent less electricity than conven-tional ovens. Manufacturers have shown little inter-est in producing the biradiant oven even though itappears to be technically and economically viable. 61

Another development, the infrared-jet impinge-ment burner for gas stove tops, promises fuel savingsof 15 to 25 percent. This burner utilizes a high degreeof radiative heat transfer from a ceramic flameholder. Other advantages of the infrared jet impinge-ment burner are a reduction in nitrogen oxide andcarbon monoxide emissions, uniform heating, fastresponse, and ease of cleaning. GRI field-tested theburner and is continuing to reduce production costand increase lifetime. G2

Some promising advances in clothes dryers are onthe horizon. A heat-pump clothes dryer has beendeveloped, and tests show electricity savings of 50to 60 percent relative to a conventional clothes dryer.(Larger-scale heat pump dryers at-e used for dryinglumber and food products.) The heat-pump clothesdryer has a drain pipe rather than an exhaust vent,which is advantageous in apartment buildings. Amajor disadvantage is its cost. The estimated retailprice of the dryer is $600 to $700, about twice thatof a conventional electric dryer. The payback on the

Ch 2 T h l i Aff i D d 37




Opportunities for Improving Energy Management and Control Systems

Energy management and control systems are usedto monitor and adjust heating and air conditioning,lighting, and other energy-using appliances, primar-ily in commercial buildings. Energy managementand control systems are diverse and vary from asimple thermostatic control to complex pneumaticcontrol systems with many sensors, microproces-sors, and other components.

Behavioral changes, particularly changes in in-door air temperatures, are an important element inbuilding energy management programs. The EIA,which has been tracking indoor air temperaturessince 1981, reports that winter indoor air tempera-tures dropped during the 1973-84 period. This dropwas an important factor in the decline in U.S.residential energy use during this time. 64

Improvements in control technologies and sen-sors, and diagnostic equipment could result inenergy savings as high as 10 to 15 percent of totalU.S. energy use. The commercial sector offers thegreatest potential for savings. 65

Strides have also been made in the residentialsector. Automated control systems comparable to

those used in commercial buildings are now beinginstalled in houses. These “smart” houses, as theyare commonly called, are being promoted by anumber of manufacturers, utilities, the ElectricPower Research Institute, and the National Associa-tion of Home Builders. For example, the SouthernCalifornia Edison Co and a n mber of local b ilders

for measuring oil and natural gas use in buildings.Also, humidity sensors need further development. 67

OPPORTUNITIES FOR ENERGYEFFICIENCY IMPROVEMENTS IN

THE INDUSTRIAL SECTOR 68

The industrial sector is both diverse and large. Ituses energy for probably a wider variety of purposesthan does any other sector of the economy. Energy

is used for direct heat, steam generation, machineryoperation, and feedstocks. The most intensive indus-trial processes involve the direct application of heatto break and rearrange molecular bonds throughchemical reactions. Processes such as smelting,cement manufacture, and petroleum refining typi-cally involve large amounts of heat.

Since it peaked in 1970, industrial energy use perunit of output (energy intensity) has been decliningdue to a number of factors: efficiency improvements,innovative process changes and the application of new technologies, changes in the product mix (leveland demand for products), and the price of energy.Many of the energy efficiency gains realized overthe last decade have been the result of good businesspractices.

Most firms regard energy efficiency in the context

of a larger strategic planning process. Investmentsare evaluated and ranked according to a variety of factors: product demand, competition, cost of capi-tal, labor, and energy. Thus, energy-related projectsare not treated differently from other potential invest-ments and must contribute to the corporate goals of




gy gy p g

more projects to be undertaken. Industries thatbelieve energy prices will continue to rise have astrong impetus to use capital for more energyefficient equipment. However, it should be notedthat growth in product demand is essential if investment is to take place, even with lower interestrates. The OTA report Industrial Energy Use pro-vides a more indepth discussion of corporations’investment behavior.

While the industrial sector has made impressivestrides in reducing energy use, opportunities for

further gains in energy efficiency have by no meansbeen exhausted. A number of promising develop-ments in crosscutting technologies are discussedbelow. They include computer control systems andsensors, waste heat recovery, cogeneration, cata-lysts, separation processes, combustion, and electricmotors. Also, opportunities for improving energyefficiency in four of the most energy-intensiveindustries-pulp and paper, petroleum refining,

chemicals, and steel industries-follows.Computer Control and Sensors

Computer control systems and sensors are addedto existing equipment, such as a boiler, to improvethe performance, or to an industrial process tomonitor the production line for wastage and qualitycontrol. In a production line, computerized processcontrol systems can be used to optimize such things

as paper thickness, polymer color, or petroleumviscosity. Almost any energy-using process can bemade more efficient if specific parameters at eachpoint in the process can be measured and conditionsoptimized. Figure 2-2 shows the potential for energysavings associated with improved sensor technologyf l i d i P i l i i h

Figure 2-2—Potential Energy Savings WithImproved Sensor Technology

Food

Textiles

Wood and lumber

Pulp and paper

Chemicals

Petroleum

Ceramics and glass

Primary metals

Energy

0 1 2 3 4 5 6 7Quads

use: m Current = Potential

SOURCE: U.S. Department of Energy, the DOE Industrial Energy Conser-vation Program, Research and Development in Sensor Technol-ogy, DOE/NBM-7012450, April 1987, p. 4.

for saving energy. Waste heat recovery systems canimprove the overall energy efficiency by recoveringheat from combustion gases in a steam boiler or fromexcess thermal energy from a process stream prod-uct. A great deal of waste heat recovery has beentaking place, especially since 1974.

Traditional approaches to heat recovery includetransferring heat from a high-temperature, waste

heat source (combustion gases) to a more usefulmedium, e.g., steam, for low-temperature use; orupgrading thermal energy to a level that can beuseful as a heat source. Heat exchangers are used forthe former approach and vapor recompression andheat pumps are used for the latter.





Cogeneration 71

Cogeneration is defined as the production of bothelectrical or mechanical power and thermal energyfrom a single energy source. In industrial cogenera-tion systems, fuel is frost burned to produce steam.The steam is then used to produce mechanicalenergy at the turbine shaft, where it can be useddirectly, but more often is used to turn the shaft of agenerator, thereby producing electricity. The steamthat leaves the turbine still has sufficient thermal

energy to provide heating and mechanical drivethroughout a plant.

The principal technical advantage of a cogenera-tion system is its ability to improve fuel efficiency.A cogeneration facility uses more fuel to produceboth electric and thermal energy. However, the totalfuel used to produce both energy types is less thanthe total fuel required to produce the same amount of power and heat in separate systems. A cogeneratorwill achieve overall fuel efficiencies 10 to 30 percenthigher than separate conventional energy conversionsystems.

Major industrial cogenerators are the pulp andpaper, chemicals, steel, and petroleum refiningindustries. The pulp and paper industry has been aleader in cogeneration because it has large amountsof burnable wastes (bark, scraps, forest residues

unsuitable for pulp) that can supply energy neededfor plant requirements. The industry considerspower production an integral part of the manufactur-ing process.

In the 1980s, a favorable economic and regulatoryclimate encouraged the growth of cogeneration in

Estimates of current and projected nonutilitycapacity vary considerably, however, so it is diffi-

cult to measure the growth of this industry withprecision. Although there is no definite count of nonutility capacity in the United States, the EdisonElectric Institute estimated that 40,267 megawatts(MW) of nonutility capacity was in operation at theend of 1989. Cogeneration accounted for 29,216MW, or about 73 percent of the total. 73

Estimates of future capacity growth also vary.Several estimates suggest that roughly 38,000 MWof capacity will be online by 1995. By the year 2000,other studies estimate that nonutility capacity will beas high as 80,000 MW. 74

In the 1980s, a favorable economic and regulatoryclimate encouraged the growth of cogeneration inthe industrial sector.

Advanced turbines have attracted renewed atten-

tion for cogeneration applications because they cansave energy and provide fuel flexibility. Over time,turbine efficiency and size have increased consider-ably as new turbine technologies and advancedmaterials allowed for hotter combustion tempera-tures. 75 Many of the advances in design and hightemperature materials for turbines result from mili-tary R&D for improved jet engines.

In addition to hotter combustion temperatures,capturing the energy of the hot exhaust gases tomake useful steam offers further options to improveefficiency. A process receiving increased attention isthe steam-injected gas turbine (STIG). In the STIG,steam is injected into the turbine’s combustor. Theresult is greater power and electrical efficiency. For




power and efficiency to nearly 50 percent. Technol-ogy transfer from future improvements in jet enginescould further raise efficiency to over 50 percent. 77

Turbines that can use coal or biomass gasificationas fuel could be a promising technology for cogener-ation applications.

Separation

Separation of two or more components in a mixtureis one of the most energy-intensive processes in the

industrial sector. Separations account for about 20percent of industrial energy use. Separation of liquids is commonly accomplished through thedistillation process, one of the most energy-intensive separation technologies. Other separationtechnologies include cryogenics, pressure swingadsorption, and mercury or asbestos diaphragmelectrolytic processes.

Distillation retrofit projects offer significant po-tential for energy savings. For example, a smallincrease in the number of trays in a distillationcolumn can reduce energy use. Also, improvementsin distillation control technologies will not onlyenhance product quality but lower energy consump-tion as well. It is estimated that improvements in thedistillation process can reduce energy consumptionby 10 percent. 78 Further reductions in energy use arepossible by using other currently available proc-esses: the use of membranes for reverse osmosis andmicrofiltration, or supercritical fluid (solvent) ex-traction.

Membrane technology is based upon the principlethat components in gaseous or liquid mixtures perme-ate membranes at different rates because of their

to capture a number of other markets, including foodand beverage processing.

Catalytic ReactionAnother crosscutting technology is catalytic reac-

tion. Catalysts are used in many industries tofacilitate chemical reactions. The petroleum refiningand chemicals industries rely heavily on catalysts toperform a variety of functions, including raisinggasoline octane level, removing impurities, andconverting low-grade hydrocarbons to higher value

products.Opportunities exist for improving energy effi-

ciency through catalytic reaction. By increasingchemical reaction rates, lower temperatures andpressures can be used, which in turn reduce heatingand compression requirements.

The discovery and use of new synthetic zeolites incatalytic processes also have contributed to energy

efficiency gains in both the petroleum refining andchemicals industries. These industries have spentconsiderable time and effort in identifying anddeveloping unique zeolites for use in synfuelsproduction, petrochemical manufacture, and nitro-gen oxide (NOX) abatement. 80

Also, energy efficiency can be improved by usingcatalytic reaction to recover organic acids in pulpand paper industry waste streams and in processedurban waste. Typically, these wastes are dumpedbecause there is no method for extracting the acidsunless the streams are first concentrated. A catalyticprocess could convert the organic acids to hydrocar-bons, which can be easily separated from water. 81




Chapter 2 Technologies Affecting Demand q 41

A number of opportunities exist to improve energyefficiency.

The pulsed gas or condensing furnace is a demon-strated improvement in the combustion process. Thefurnace uses a pulsed combustion technique toinduce a draft. This technique has been appliedprimarily to space heating systems, but there maybeother applications for this technology in industry. Inaddition, advances in cogeneration systems forindustrial and large commercial applications havethe potential to increase thermal utilization efficien-cies and reduce first cost.

Foremost among new technologies is atmosphericfluidized-bed combustion (AFBC). It is commer-cially available for industrial applications and hasthe potential to be widely used in cogenerationoperations. Its major advantages include fuel effi-

ciency, pollution control, and its small size. AFBCplants currently in use by cogenerators appear to beable to produce electricity at lower costs than otherconventional coal plants. However, this technologyis not without technology concerns. Difficulties withfuel and sorbent feeding systems are two of the mosttroublesome problems. According to ORNL, theAFBC, when perfected, is likely to be the coal-burning technology of choice for many industrial

applications because pollution control is relativelyeasy to accomplish.

In addition, combustion control systems havebeen extensively applied to industrial operations andare expected to play an even greater role in the

Electric Motors

Electric motors are the workhorses of the indus-trial sector. They power pumps, fans, and compres-sors, and drive heating and ventilation systems. Inthe industrial sector, motors use 65 to 70 percent of

82 Pumps alone account forindustrial electricity.about 31 percent of total electricity used by electricmotors in the United States. 83 Thus, there is asignificant potential for energy savings.

Standard electric motor efficiency generallyranges from 80 to 90 percent. By increasing the ironand copper content of the core and windings,respectively, energy efficiencies can be improved tobeyond 95 percent. This incremental increase maynot seem significant at first blush, but even smallincreases in electric motor efficiency could translateinto considerable savings. Electric motor capitalcosts are only a small fraction of their operatingcosts. 84 A typical large industrial motor uses elec-tricity that costs 10 to 20 times its capital cost peryear. Thus, even a 1 percent gain in efficiency couldtranslate into significant savings. 85

Crucial to achieving greater energy efficiencieswith electric drive is the ability to control motorspeed. Typically, pumps and fans need to vary speedto accommodate changing process needs. This isoften done by operating the pump or fan at full speed

and then throttling speed with a partly closed valveor damper. When this method is used, enormousenergy losses are realized. According to one esti-mate, industrial and commercial pumps, fans, andcompressors have average annual energy losses of 20 to 25 percent. 86 The adjustable-speed drive,

hi h i i ll il bl i ffi




Table 2-7—Estimated Energy Used To Produce Paper and Paperboard Products (in million Btu per ton produced)

From mixed recycled paperFrom 100%

. .Minimum virgin Change due

virgin wood fiber content to recyclingProduct Energy use (percentage) Energy use (percentage)

Paper products: Newsprint . . . . . . . . . . . . . . . . 44.33 0 34.76 –21 .6Printing paper . . . . . . . . . . . . . 67.72 16 43.43 -35.9Packaging paper . . . . . . . . . . 47.07 70 43.48 -7.6Tissue paper . . . . . . . . . . . . . . 68.52 0 29.46 -57.0Paperboard products: Liner board . . . . . . . . . . . . . . . 14.46 75 36.28 +150.9Corrugated board . . . . . . . . . 37.22 0 36.28 -2.5Box board . . . . . . . . . . . . . . . . 25.97 0 36.25 +39.6Food service board . . . . . . . . 29.19 100 N/AOther paper board . . . . . . . . .

—17.65 0 36.32 +105.8

Construction board . . . . . . . . 31.71 65 32.24 +1.7SOURCE: T. Gunn and B. Hannon, “Energy Conservation and Recycling in the Paper Industry,” Resources and ErMr,gy5:243-260, 1983.

speed drives account for about half of the totalpotential energy savings in U.S. motors. 88

Significant energy savings can also be realized by

better matching motor size to the load, improvedmaintenance, and the use of controls to regulate,among other things, the electricity supplied to themotor and the torque transmitted to the machine. 89

Pulp and Paper Industry

The pulp and paper industry is a major energyuser. In 1985 (the most recent year for which data areavailable), the industry used 2.21 quads, making itthe fourth largest energy user of primary energy inthe industrial sector. A number of opportunities existto improve efficiency. Several of the cross-cuttingtechnologies discussed earlier can offer significantenergy savings For example the use of computer

savings. They include biopulping, chemical pulpingwith fermentation and black liquor phase separation,and ethanol organosolv pulping. A substantial amountof research is still needed for each of these processes.

Recycling waste paper may provide further en-ergy savings. Recycled waste paper, or secondaryfiber, can be used to make various paper and paper-board products. Using recycled fiber for some paperproducts, like newsprint, printing paper and tissue,may require less energy. Savings can result fromreducing energy demand in the process of making

paper from waste paper and from a reduction in needto harvest and transport timber. However, savingscould be offset by the energy needed to collect,transport, and de-ink the waste paper .91 Based onstudies done in the early 1980s, estimates of energyused to produce paper and paperboard products areh i bl 2 7




Photo credit: American Petroleum Institute and Exxon Corp.

A large petroleum refinery complex.

Petroleum Refining Industry 93 heat exchange by better matching the heat sourceand heat sink A 1985 survey indicated that im




systems improve performance, increase output, andoptimize product specifications. A number of energymanagement control systems are available today.One control system company estimates that energysavings of 5 to 10 percent can be realized in thepetroleum refining industry. 95

Steel Industry

While the energy intensity of steelmaking hasdecreased over the years, steelmaking is still one of the most energy-intensive industries. The steelindustry includes blast furnace-based integratedmills; nonintegrated minimills; and independentproducers of wire, bars, and pipes who purchase andprocess semifinished steel.

All stages of steel production use energy to alterthe chemical composition of the metal or to work themetal into useful forms and shapes. The industry hasa number of options to save energy. These includethe electric-arc furnace and continuous casting. Theelectric-arc furnace saves energy by allowing thesubstitution of scrap metal for iron ore. This methoduses about 50-percent less energy than the blastfurnace or basic oxygen furnace methods.

Continuous casting saves energy by eliminating

the need for ingot stripping, heating, and primaryrolling. Continuous casting reduces energy use byabout 50 percent, as compared to ingot casting. Also,the yield is much greater than from ingot castingbecause less metal must be returned to the steelmak-ing process in the form of waste and unfilled ingot

Photo credit: American Iron and Steel Institute

Steel slab emerging from a continuous slab caster.

industry. The first commercial use of thin slabcasting in the United States is done at the NUCOR,Inc. plant in Indiana. 97

Also, the innovative direct and ore-to-powdersteelmaking processes could offer substantial en-ergy savings. The direct steelmaking process re-places the coke-oven/blast furnace steps with onecontinuous process. The key to its success iseffectively transferring heat from postcombustion tothe bath Another advantage of the direct steelmak




Table 2-8-Technologies for Improving Energy Efficiency in the Steel Industry

Investment option Energy efficiency-improving characteristicsDry-quenching of coke . . . . . . . . . . . . . .

Coke-oven gas desulfurization . . . . . . .Blast furnace top-gas turbine . . . . . . . . .External desulfurization of hot metal . . .

High-pressure blast furnace . . . . . . . . . .Electric-arc furnace (EAF) . . . . . . . . . . .

Water-cooled panel, EAF . . . . . . . . . . . .

Oxyfuel burners, EAF. . . . . . . . . . . . . . .

Open hearth, shrouded, fuel-oxygenlances. . . . . . . . . . . . . . . . . . . . . . . . . .

Basic oxygen furnace (BOF) gascollection. . . . . . . . . . . . . . . . . . . . . . .

Scrap preheating, BOF. . . . . . . . . . . . . .Secondary, ladle refining, EAF . . . . . . .Closed system ladle preheating . . . . . . .Continuous casting . . . . . . . . . . . . . . . . .

Thin slab casting . . . . . . . . . . . . . . . . . . .Continuous slab reheaters. . . . . . . . . . .Continuous annealing and reheating

systems. . . . . . . . . . . . . . . . . . . . . . . .Direct rolling . . . . . . . . . . . . . . . . . . . . . .Indication heating of slabs/coils.. . . . . .Steam-coal injection into the

blast furnace . . . . . . . . . . . . . . . . . . . .

Recovers waste heat of hot coke from ovens; saves coke; reduces environmental pollutionbecause coke is quenched in a closed system.

Natural gas substitute. Some loss of calorific value, but improved product quality.Recovers waste energy by cogeneration. Only possible with the best high-pressure furnaces.Saves coke by allowing lower slag volume and hot metal temperature in the blast furnace.

Some energy used in desulfurization.Lowers coke consumption.Allows for increased use of scrap, thereby lowering overall energy requirements for steel

production.Allows for higher productivity and net energy savings in melting when refractory consumption

is considered.Saves electrical energy and reduces melting time. Total energy consumption maybe

increased.

Reduces fuel requirements in the open hearth. May prolong useful life of open hearth.

Recovers calorific value of carbon monoxide with net energy savings.Allows for greater use of scrap, thereby saving energy in ironmaking.Saves electrical energy by removing refining function from EAF.Saves natural gas used for preheating ladles.Increases yield, thereby decreasing overall energy requirements; saves fuel gas in ingot

reheating.Has the potential to reduce energy use and production time.Saves clean fuel gas through increased efficiency.

Saves clean fuel gas through increased efficiency.Saves clean fuel gas through the elimination of slab reheating.Allows fuel switching to electricity, conserves total energy, and increases yield.

Allows fuel switching from more expensive gas or oil. Technology should be available in5 years.

SOURCE: Office of Technology Assessment, 1991.

A number of other opportunities are summarizedin table 2-8. Many of these options require retrofit-ting existing equipment. Some of the energy-savingsopportunities will result in additional benefits such

d i i i l i d

process have achieved 25-percent energy savings inmany plants.

Alternative approaches to conventional distilla-tion include vacuum distillation freeze crystalliza




Table 2-9--Energy-lntensive Processes inChemical Manufacturing

Electrolysis includes all industrial electrolytic processes in whichelectricity is used in direct chemical conversion.

Fuel-heated reaction for processes that require some type ofheat to force a chemical reaction to take place can besubdivided into low- and high-temperature operations. Energysources include steam (except for high-temperature reaction),natural gas, residual oil, distillate oil, and even fluidized-bedcoal combustion. Where precise temperature regulation isrequired, natural gas and distillate fuel oil are used.

Distillation processes include those that require physical separa-tion of end products from both feedstocks and byproducts byevaporation and condensation.

Refrigeration includes processes that compress and expand arefrigerant, such as ammonia or a fluorocarbon, for thepurpose of cooling feedstocks or products below ambienttemperatures.

Evaporation includes those processes that use passive-evaporation cooling. In general, the evaporated water is lost tothe atmosphere, and the heat energy is unrecoverable.

Machine drive is used by many chemical industry processes topump, compress, or move feedstock and end product materi-als. Machine drive arises from electric motors, steam turbines,or gas turbines. A subcategory of machine drive processes-mixing and blending (especially in polymerization proc-esses)--can be very energy intensive due to the high viscosityof the materials.


affinity for one component of a mixture but immisci-ble with the remaining components. One companyreported that this technology saved an estimated40,000 barrels of oil equivalent annually.

Also, the use of membrane separation technologyi h h i l i d i i Th h l

OPPORTUNITIES FOR ENERGYEFFICIENCY IMPROVEMENTS INTHE TRANSPORTATION SECTOR

Since the early 1970s, efficiency improvements inthe transportation sector have been dramatic. Theretirement of older, less efficient vehicles and theintroduction of new, more efficient models havebeen responsible for these improvements.

The fuel efficiency of the new car fleet doubled

between 1974 and 1989. The average fuel efficiencyof the light-duty fleet should continue to rise over thenext decade, but the rate of improvement will beslowed by a leveling off of further efficiencyimprovements in new vehicles. In the current OTA“business as usual” scenario, new car fleet econ-omy for 2001 is 33 mpg. 102

The energy intensity of commercial air travel hasbeen cut by more than one-half since 1970, as aresult of more efficient aircraft and operations.However, efficiency improvements in heavy trucktransport has been less dramatic than those achievedby passenger cars.

In recent years, concerns about urban smog haverenewed interest in alternative fuels. Energy securityconcerns have further stimulated interest in thesefuels. Alternative fuels of primary interest for theU.S. light-duty fleet are methanol, ethanol, com-pressed or liquefied natural gas, hydrogen, andelectricity. The advantages and disadvantages of these fuels are discussed later.

Automobile Efficiency

Chapter 2—Technologies Affecting Demand . 47



shifts in size and performance, using only technolo-gies that are generally expected to be commercial-

ized shortly after the turn of the century. A fleet fueleconomy of 45 mpg is possible. Some of thetechnology changes needed to achieve this fueleconomy level include extensive use of aluminumand fiberglass reinforced plastics, 5-speed automatictransmissions, improved packaging, low-rolling re-sistance tires, and engine improvements, such asweight reduction of reciprocating engine compo-nents, low-friction pistons and rings, five-valve

designs, and intake valve control.By 2010 even higher levels of fuel efficiency are

possible if significant technological advances arecommercially available in the 2000-10 timeframe.For example, a fleet fuel economy of about 55 mpgcan be attained if maximum weight and dragreduction and packaging efficiency benefits are fullyexploited. Also, the direct-injection diesel engineand turbocharging must capture 20 percent of thesmall car market to realize this level of fuelefficiency.

Electric vehicles can make a major contribution toefficiency gains as well as urban air quality, but onlyif storage technology is improved to address con-sumer acceptance and cost considerations. A forth-coming OTA report, Improving Automobile Fuel

Economy: New Standards, New Approaches, dis-

cusses indepth the potential for long-term auto-motive fuel efficiency.

Table 2-10 lists a number of technologies whoseintroduction or wider use offer the potential toimprove fleet fuel efficiency. In addition, there are

b f h l i i f

NO X emissions is not yet available. This problemmay be solved with better control of airflow, and it

appears possible that with further development theengine can meet future NO, standards. 103

Other engine designs said to hold considerablepromise include direct-injection diesels and low-heat rejection engines (also called adiabatic diesels).The direct injection (DI) diesel has seen limitedpassenger car application in Europe. The DI dieselwas rated by Volkswagen and Mercedes Benz asbeing 12 to 15 percent more efficient than theindirect injection (prechamber) diesel. Previousproblems meeting nitrogen oxide and particulateemissions standards have been solved. Audi plans onintroducing a direct injection diesel in the UnitedStates. 104 Stricter emissions requirements couldpose a problem, however.

Adiabatic diesels eliminate the cooling systemrequired by current engines and insulate cylinders

and pistons to retain thermal energy within thecombustion chamber and exhaust system. The abil-ity of this and other diesel engines to meet morestringent emissions standards is in some doubt.

Heavy-Truck Efficiency

Opportunities for heavy-truck fuel efficiencygains include better aerodynamics, reduced rollingresistance, and the development of adiabatic diesels.

In a conventional diesel engine, about 25 percent of the fuel energy is lost as waste heat to the coolingand lubricating of fluids, and another 35 percent islost as waste heat in exhaust gases. The adiabaticengines offer the greatest potential for improvingefficiency of freight transport. It may be capable of




Table 2-10--Reported Efficiency Improvements for Developed or Near-Term Technology

Percent improvements over 1987 basea

EEA Industryestimates estimates

Technology (% F/E benefit) (% F/E benefit) Comment b

Front-wheel drive . . . . . . . . . . . . . . . . . . . . . . . . .Drag reduction . . . . . . . . . . . . . . . . . . . . . . . . . . .4-speed auto transmission . . . . . . . . . . . . . . . . .Torque converter lock-up . . . . . . . . . . . . . . . . . .5-speed auto transmission . . . . . . . . . . . . . . . . .Electronic transmission control . . . . . . . . . . . . .Continuously variable transmission (CVT) only.Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

oil (5W-30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Advanced tires . . . . . . . . . . . . . . . . . . . . . . . . . . .Engine improvement Fuel injection

—Throttle-body fuel injection . . . . . . . . . . . . . —Multipoint fuel injection (over throttle body

injection) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Overhead camshaft . . . . . . . . . . . . . . . . . . . . . .Roller cam followers . . . . . . . . . . . . . . . . . . . . . .Low-friction pistons/rings . . . . . . . . . . . . . . . . . .

4 valves per cylinder engine . . . . . . . . . . . . . . . .4 cylinder replacing 6 d . . . . . . . . . . . . . . . .6 cylinder replacing 8 d . . . . . . . . . . . . . . . .

Intake valve control . . . . . . . . . . . . . . . . . . . . . .

10.02.34.53.02.50.53.5

-0.5

0.50.5

3.03.0

6.02.02.0

5.08.08.06.0

0.5-1.02.03.0

1.5-2.00.1-2.0

0.51.0-2.5

1.0

0.21.0

3.01.0-3.0

1.0-3.53.02.0

1.0-3.5(-2.0)-0.5

1.0-3.51.5-3.0

Over 1970s rear wheel drive vehiclesPer 10 percent coefficient of drag reductionWidely used in 1988Wldely used in 1988Over 4-speed automatic transmissionFor automatic transmission onlyOver 4-speed automatic transmission oars onlyVaries between 0.3 and 0.7 depending on

market classAlready used in some large oars

—

Widely usedWidely used

Over old overhead valve designWidely used in domestic oarsExcept for specific engines already

incorporating technologyAt constant performanceAt constant performanceAt constant performanceSynergistic effects with 5-speed auto/CVT

aThe list of technolo~ benefits cannot be summed to provide an overall benefit.bFord Motor CCL% ex~anat ions fo r the significant differences between EEA and indU.Stry estimates:

Front-wheel driv+Ford’s analyses and data indicate that front-wheel drive provides a smali potential forfuel economy improvement because of a slightreduction in vehicle weight (60 pounds) for mid-size and smaller cars. Ford rear-wheel drive models introduced since the late 1970s are 660 pounds lighterthan their predecessors. There are no technological reasons for a net efficiency gain with front-wheei drive.

4 valve over 2 valve engine—8asad on U.S. Environmental Protection Agency data, Ford indicates that the average fuei economy improvement is3percent for equal performance engines which have incorporated 4-valve designs. The 0:1 compression ratio assumed by EEA ma y not be appropriate forall vehicles.

4 cylinder replacing 6 cylinder; 6 cylinder replacing 8 cylinder-Reducing the number of cylinders will reduce engine friction but increase luggingspeeds. As a result, 4-cylinder engines tend to have higher idling speeds and thus lower fuel economies than 6-cylinder engines; 6-cylinder engines haveslightly higher iugging speeds than 8-cylinder engines. Thus, no substantial fuel economy effect is realized by replacing 8 cylinders with 6.

Intake valve control-Systems that provide 6 percent fuel economy benefits are not suitable for typical engines because they severely compromisewide-open throttle performance.

%ecause newly designed engines all have multiple impmvements, the efficiency benefits representad by individual changes are not easily separated.dl gW Distribution: 20.5percent-V-8; 29.5 percent—V-6; 50 percent-4 cylinder)

KEY: EEA Energy and Environmental Analysis F/E Fuel efficiency




improvements over current high-bypass turbofanengines. However, these advanced engines cost

twice as much as current-generation high-bypassengines. 107

Improvements in engine efficiency are dependenton the development of high-temperature materials,such as metal matrix and ceramic matrix composites.These materials will allow higher turbine inlettemperatures, reduce the need for airfoil cooling,permit higher pressure ratios, and reduce engine

weight. Because these ceramic materials are subjectto brittleness and sensitive to flaws, they are currentlynot being used. To achieve advanced engines’efficiency gains, research will have to focus onhigh-temperature materials.

Aerodynamics and Aircraft Weight

Further reductions in aerodynamic drag andairframe weight are needed to achieve future energy

efficiency improvements. Advances in computerhardware and software programs will enable engi-neers to optimize aircraft design. In addition, con-trolling air flow to minimize turbulence is necessaryto improve efficiency. Some promising conceptsinclude using suction on key wing surfaces tosmooth airflow and changing wing shapes to adaptto changes in speed, altitude, and weight. Perhapsthe most promising concepts involve putting

grooves in the portion of the wing in front of the spar,through which air is vacuumed to reduce turbulence,with ultrasmooth wing surfaces behind to maximizethe area of naturally lamin ar flow. It is expected thatsome of these wing concepts will be introduced inthe early 1990s. Two of Airbus’ new models will

Alternative Fuels 110

Alternative fuels of primary interest for the U.S.light-duty fleet are:

. reformulated gasoline,q alcohol fuels-methanol and ethanol,q compressed or liquefied natural gas (CNG or

LNG),. hydrogen, andq electricity.Interest in these fuels is based on their potential to

address environmental and energy security con-cerns. The use of alternative fuels as a substitute forgasoline is being promoted by EPA, the CaliforniaEnergy Commission, and others as a way to addressthese concerns.

Much is already known about alternative fuels.Not surprisingly, each of these fuels has disadvan-tages as well as advantages. Aside from fuel cost, themajor barrier that most alternative fuels mustovercome is the need to compete with the highlydeveloped technology and massive infrastructurethat exists to support the production, distribution,and use of gasoline as the primary fleet fuel.Concerns about the performance and range of

vehicles that use alternative fuels are also barriers tointroduction and public acceptance. Nevertheless,each of the suggested alternative fuels has one ormore features, e.g., high-octane, low emissionspotential, that imply some important advantage overgasoline in powering vehicles. Table 2-11 presents



Chapter 2-Technologies Affecting Demand . 51



have been rushed into the market in advance of research results, and their formulations may changeas ongoing research begins to identify optimalgasoline formulae.

Methanol

Methanol, which is commonly known as woodalcohol, is a light volatile flammable alcohol usuallymade from natural gas but can be manufactured fromcoal and biomass. It has an energy content of about

half that of gasoline (i.e., the fuel tank has to be twiceas big for the same range), an octane level of 101.5,and a much lower vapor pressure than gasoline.

The advantages of methanol include its potentialto reduce urban ozone, particularly in cities that havesignificant smog, and its high-octane level, whichallows higher (or leaner) engine air-fuel and com-pression ratios. Engines that operate at leanerair-fuel and higher compression ratios are more fuelefficient.

One of its disadvantages is its potentially highprice in relation to current gasoline prices. Theeconomic competitiveness of methanol continues tobe a source of controversy. Estimates of methanolcosts have ranged from competitive with gasoline tomuch higher than gasoline. OTA concludes thatmethanol will most likely be more expensive thangasoline in the early stages of an alternative fuelsprogram. Without government guarantees, metha-nol’s gasoline-equivalent price is likely to be at least$1.50/gallon. During the initial period, governmentguarantees could bring the cost down to as low as/$1.20/gallon if natural gas feedstock costs were very

Methanol is the most “ready” of the alternativefuels. Methanol for chemical use has been producedfor many decades and thus production technology iswell known. Recent attention has focused on thepotential for using methanol as an automotive fuel,either 100 percent methanol or mixed with up to15-percent gasoline. Vehicle technology capable of burning a gasoline/methanol blend has been demon-strated and could be produced in a few years. Workis continuing on improving the efficiency, driveabil-ity, and emissions characteristics of methanol-burning engines.

A number of cities and States have expressedinterest in methanol use. California, for example, hasa program to stimulate the development of a fleet of methanol-capable vehicles. Moreover, Congress haspassed measures to stimulate development and salesof methanol-powered vehicles, and is consideringlegislation to develop alternative-fueled fleets incities suffering from ozone problems.

EthanolEthanol is a grain alcohol that is produced by

fermenting starch and sugar crops. It has an energycontent of about two-thirds that of gasoline and, likemethanol, an octane level of 101.5, and a muchlower vapor pressure than gasoline. Because of itshigh octane level, an ethanol-powered vehicle willoutperform an equivalent gasoline vehicle and

provide some improvement in energy efficiency.Ethanol made from food crops would be the most

expensive of the major alcohol fuels. Even so, it hasmanaged to gain support because of its potentialcontribution to the agricultural economy. Everyyear nearly 1 billion gallons of ethanol are added to




recently formed a cooperative partnership with theNew Energy Co. of South Bend, Indiana, to commer-

cialize the process developed by SERI. SERI hopesto be able to produce ethanol-horn-biomass for nomore than $25/barrel of oil equivalent by the end of the decade. 113

Currently, ethanol production is profitable be-cause the Federal Government and about one-thirdof the States subsidize ethanol use by partly exempt-ing gasohol (a 90-percent gasoline/10-percent etha-nol blend) from gasoline taxes. The current FederalGovernment subsidy amounts to $0.60/gallon.Under certain market conditions, ethanol productionmay reduce Federal crop subsidies and generatesecondary economic benefits to the Nation. How-ever, it also may generate large secondary costs bypromoting crop expansion onto vulnerable, erosivelands.

Natural Gas

Either compressed or liquefied natural gas canserve as an alternative fuel for vehicles. There areabout 700,000 CNG vehicles in use worldwide, withthe largest group in Italy. Generally, natural gas-powered vehicles are gasoline vehicles retrofitted touse either gasoline or natural gas. At current prices,dual-fueled vehicles are not cost competitive withgasoline-powered ones in most uses, and they will

not become so unless oil prices rise sharply whilegas prices stay low or gasoline is heavily taxed.

Most of these dual-fueled vehicles have lesspower and some driveability problems when pow-ered by natural gas. The power loss and drivabilityproblems are due to the design and/or installation of

of similar power, similar or higher efficiency, andsubstantially lower carbon dioxide (CO Z) emissions

but somewhat higher NO Xemissions than an equiva-lent gasoline-powered vehicle. Natural gas-poweredvehicles have the potential to leak methane, which isthe prime constituent of natural gas. Methane is amore powerful greenhouse gas per molecule thanCO Z. In addition, the range of natural gas-fueledvehicles will continue to be unattractive compared togasoline-fueled vehicles.

The Ford Motor Co. has done extensive work withCNG vehicles, including light-duty car and trucks,as well as heavy-duty trucks.

Hydrogen

Hydrogen, which is the lightest gas, has a verylow energy per unit of volume because it is so light,but it has the highest energy content per pound of

any fuel. It can be used in a fuel cell and in internalcombustion engines. Hydrogen is available from anumber of sources. It can be produced from hydro-carbons or from water by several processes: 1) coalgasification; 2) combining natural gas and steam(steam reforming); 3) applying high temperatures,with or without chemicals, to water (thermal andthermochemical decomposition); 4) adding an elec-trolyte and applying a current to water (conventional

electrolysis; potential sources of the electricity arediscussed in chapter 3), or by electrolyzing steamrather than water (high-temperature steam electroly-sis), or by using light with a chlorophyll-type chem-ical to split out the hydrogen (photolysis) fromwater. Currently, steam reforming of natural gas is

Chapter 2—Technologies Affecting Demand .53



The thermal efficiency of a hydrogen-poweredengine should be at least 15 percent higher than anequivalent gasoline engine, and even higher in a fuelcell. As with other fuels, engine efficiency, perform-ance, and emissions are interdependent, and maxi-mizing one may increase or decrease the others. Forexample, operating very lean will increase effi-ciency but decrease power and driveability.

The development of a hydrogen-fueled fleet isstill in the early stages of research. Work needs to bedone on storage and delivery systems, large-scale

production systems, and engines. The productionsystem with the largest resource base--coal gasifi-cation-may be the closest to becoming fullycommercial. (The Lurgi gasifier is fully commercialand some others are arguably commercial.) How-ever, coal gasification will create substantial nega-tive impacts from CO Z emissions. The Cool Waterintegrated coal gasification combined cycle planthas performed extremely well, and the next genera-

tion technology is expected to achieve substantialimprovements in cost and efficiency. The Japaneseand West Germans have strong hydrogen vehicledevelopment programs, but they have produced onlya small number of prototype vehicles. Major uncer-tainties remain about the configuration and perform-ance of a hydrogen engine. Also, a breakthrough instorage technology may be needed, and work needsto be done on pipeline transport because pure

hydrogen will damage certain steels. Inhibitingagents to be added to hydrogen must be found, or aseparate pipeline infrastructure must be built.

Electricity

Disadvantages of electric vehicles (EVS) usingcurrent technology, in particular lead-acid batteries,include limited range, performan ce and capacity.Most EVs built to date have required recharging atabout 100 miles or less. They are also expensive tobuy and may require a special charger. DOEestimates the cost for a home recharging station to be$400 to $600.

Improving the prospects for electric vehicles inthe marketplace will depend on extending theirrange considerably and upgrading perfo rmance in a

variety of traffic situations. This can be accom-plished by improving battery and powertrain tech-nologies. The outlook for significant improvementsin commercial battery technology appears promis-ing, but uncertainties remain about costs and theenvironmental implications of disposing and recy-cling associated with battery production. The ad-vanced batteries necessary for successful EV pene-tration in the urban market are too far away from

mass production to allow reliable cost estimates tobe made. A number of advanced battery types showpromise. These include nickel/iron, nickel/cadmium,zinc/bromide, lithium/iron sulfide, sodium/sulfur,and metal-air.

Some analysts consider the nickel/iron batteryvery promising for the next generation of electricvehicles because it has demonstrated long lifecycleand ruggedness. This battery type, however, pro-duces large quantities of hydrogen during recharge,uses a lot of water, and is relatively inefficient.Leading European battery developers have halteddevelopmental work on nickel/iron batteries. Thehigh-temperature sodium/sulfur battery offers muchhigher energy and power densities than lead/acid



CFC-12-by 20 percent of 1986 levels in the next3 years, and to achieve a 50-percent reduction by1997, and a 100-percent phaseout by the year 2000.

CFCs are used primarily in refrigeration systems,including automobile air conditioners, refrigerators,and centrifugal chillers, and in building insulationfoams. In the United States, refrigeration accountsfor 80,000 tons of CFCs used per year, or about 22percent of the total. A typical refrigerator containsabout 1/2 pound of CFC in its cooling systems and2½ pounds in its foam insulation. 119 CFCs a r e

released during the manufacturing process, servic-ing and disposal of air-conditioners and refrigera-tors. Some CFCs used in insulating foams are alsoreleased during the manufacturing process, but mostremain in the foam and slowly leak out over time.Therefore, a large reservoir of CFCs exist withinbuildings.

Alternatives to CFC insulation and refrigerants

are available, and others are being developed. Thechemicals industry is developing manufacturingprocesses for these products. In addition, alternativebuilding designs and construction techniques canreduce the need for air-conditioning and supplemen-tal insulation. Also, using air-conditioning technolo-gies based on waste heat or solar energy can exploitalternative ways to maintain comfortable tempera-tures in buildings.

In the transportation sector, concern about urbansmog and the greenhouse effect may have an impacton vehicle energy efficiency. The new more strin-gent emission standards, especially for NO X willforce manufacturers to tradeoff cost, fuel efficiency,

d i i Hi t i ll f t h

depending on how the manufacturers choose to tradeoff efficiency and costs.120 Another OTA contractor,Sierra Research, indicates that automakers need notsacrifice efficiency if they are willing to add morecatalysts, at a cost of about $100.

Environmental and, most recently, energy secu-rity concerns have renewed an interest in alternativetransportation fuels as a way of reducing ozonelevels in urban areas and decreasing U.S. reliance onforeign oil supplies. The oil crises of the 1970sspurred a number of Federal initiatives to supple-

ment or replace gasoline with alternative fuelsproduced from domestic coal and oil shale. Theseinitiatives, which were generally not viewed assuccessful, were largely abandoned in the early1980s.

In September 1990, the California Air ResourcesBoard approved a smog control plan that is expectedto reduce hydrocarbon emissions by 28 percent,nitrogen oxide by 18 percent, and carbon monoxideby 8 percent by the year 2000. The plan phases inprogressively cleaner vehicles, which could includecompressed natural gas vehicles and ‘flexible-fuel’cars, and requires the production of electric vehicles.A number of other States are considering similarstandards, which are stricter than the recently passedclean air standards.

Appliance Efficiency Standards

Appliance efficiency standards will also have animpact on energy efficiency. The Federal Govern-ment and several States have enacted minimumefficiency standards for residential appliances. Al-though NAECA does not set standards as high as can




Table 2-12-Cumulative Energy Impacts of the National Appliance Energy Conservation Amendmentsof 1988, 1990 to 2015

Base case Savings SavingsElectricity All fuels Electricity All fuels Electricity all fuels

Department of Energy region (TWh) (quads) (TWh) (quads) (%) (%)

New England . . . . . . . . . . . . . . . . 1,261 18.1 13 0.1 1.0 0.7New York/New Jersey . . . . . . . . . 1,833 28.6 27 0.3 1.5 1.0Mid Atlantic . . . . . . . . . . . . . . . . . . 3,464 30.9 69 0.2 2.0 0.8South Atlantic . . . . . . . . . . . . . . . . 9,112 21.8 320 0.1 3.5 0.4Midwest . . . . . . . . . . . . . . . . . . . . . 5,234 63.1 110 0.5 2.1 0.8Southwest . . . . . . . . . . . . . . . . . . . 4,022 23.1 135 0.2 3.4 0.8Central . . . . . . . . . . . . . . . . . . . . . 1,584 14.3 38 0.1 2.4 0.7North Central . . . . . . . . . . . . . . . . 1,312 13.3 20 0.1 1.5 0.7

West. . . . . . . . . . . . . . . . . . . . . . . 3,423 26.9 61 1.8Northwest . . . . . . . . . . . . . . . . . . . 2,087 5.8 29 0.3/(0.0) 1.4 (0.3)Total . . . . . . . . . . . . . . . . . . . . . 33,332 245.8 822 1.9 2 . 5 0.8

SOURCE: Lawrence Berkeley Laboratory, “The Regional and Economic Impacts of the National Appliance Energy Conservation Act of 1987,’’ Berkeley, CA,June 1988.

efficiency (or maximum consumption) standards formany appliances 121 and will result in the leastefficient appliances being taken off the market. Thestandards, which apply at the point of manufacture,

vary according to product type and size.The initial Federal standards are relatively strin-

gent. For example, of all classes of refrigerators,refrigerator-freezers, and freezers, only 7 models outof 2,114 listed in the Association of Home Appli-ance Manufacturers directory meet the 1993 stand-ards. Most models will have to be improved orredesigned over the next 2 years. Thus, the standards

could have a significant impact on residential energyuse in the future. The American Council for anEnergy Efficient Economy estimated that by 2000,the standards will reduce U.S. residential energy useby about 0.9 quads/year and peak summ er demandby 21,000 MW. 122

Atlantic and Southwest regions. The large savings inthese regions can be attributed to the relativelygreater cooling loads found in these climates andthus the prevalence of air conditioning. 123

Other impacts of the standards include a slightshift away from central air and heat pumps in favorof room air conditioners. LBL notes that theinteraction of a number of factors, including equip-ment costs, climate, and consumer preferences, areresponsible for the shift. In addition, electric waterheaters sales are expected to increase at the expenseof other types of water heating equipment. Theprojected increase in electric water heater salesresults from the higher cost of efficient nonelectricwater heaters, according to LBL. Both shifts aresmall-about 1 to 3 percent. LBL notes that thenational appliance standards will produce a netsavings benefit of $25 billion. 124



Chapter 2—Technologies Affecting Demand .59



the strain of high oil prices on personal disposalincome may actually minimize investment in moreenergy efficiency equipment. For example, residen-tial and commercial oil users may be unable to investin new heating and hot water equipment at a timewhen their heating bills are straining their finances.Or, consumers may defer the purchase of new, moreefficient automobiles.

In any event, the increasing U.S. reliance onforeign oil supplies, particularly the insecure sourcesof supply in the Middle East, and the potential forlarge increases in oil prices should be strongincentives to evaluate the energy efficiency progressthat has been made to date and to continue to look forenergy-saving opportunities. During the Arab oilembargo of 1973-74, crude oil prices quadrupled,and more than doubled again during the Iraniancrisis of 1978-80. These disruptions and the resultantincreases in oil prices changed U.S. thinking aboutthe importance of energy. Historically, the U.S.simply shifted from one supply source to another asdeclining supplies or other concerns shifted con-sumer preferences. Little research attention andpolicy concern were given to energy conservationuntil after the 1973 oil embargo. However, rising oilprices and the specter of insufficient supplies thatfollowed 1973 set in motion a flurry of research,demonstration, and development programs, govern-ment initiatives, and private commitment to payattention to the cost of energy and to lower that costthrough improved efficiency in design and process.Federal spending for conservation R&D, for exam-ple, increased from about $3 million in fiscal year1974 to $406 million in fiscal year 1980 (1982constant dollars), 133 but has since declined. The

lt f ll f th ff t th t th U S

an important way of restoring services formerlysupplied by oil and enhancing the reliability of fuelsupplies. Many energy users in the industrial andutility sectors now have the capability to switchbetween alternative fuel sources quickly-oftenwith only a twist of a knob-to take advantage of relative differences in fuel prices and availability.Today, there are more than 100,000 dual-fuel unitsin the United States. About two-thirds can burn gascontinuously.

Typically, utilities switch from oil to gas whengas prices are lower and vice versa. For example, in1979 and 1987, utilities switched to natural gasbecause prices were lower. And, in 1986 the reversewas true.

Additions to fuel switching capability will dependon a number of factors, including seasonal andregional demand, availability of supplies, price

considerations, and technical constraints. Much fuelswitching capability has already been realized. Sincethe mid-1970s, many oil-fired generating plantshave been converted to gas- or coal-fired units.Those that have not been converted generallyinclude units that are too small to justify conversion,or cannot be converted because of environmental orfinancial constraints, or lack coal-burning handlingand storage capability. In addition, inadequate fuel

supplies or storage may preclude switching on animmediate or continuous basis.

Given these considerations, DOE estimates thatnatural gas could at a minimum replace about 85,000barrels of oil per day immediately 134 The DOE



Chapter 3

Technologies forEnergy Supply and Conversion

CONTENTS Page



gU.S. ENERGY SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63TECHNOLOGICAL OPPORTUNITIES FOR IMPROVING FOSSIL

FUEL SUPPLIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Petroleum . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-FOSSIL FUEL ENERGY AND ADVANCED TECHNOLOGIES . . . . . . . . . . . . .The Nuclear Power Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Future Electricity Supply Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Renewable Energy Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .

OTHER FACTORS AFFECTING SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Environmental Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Obstacles to a Nuclear Revival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Electric and Magnetic Fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Electricity Demand Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66 66 71747879848491

103103105107107

Figures Figure Page3-1. Production Platform Technologies for Frontier Areas . . . . . ., * . . * . * . * * . . . . . . . . . .68

3-2. Location of Principal Tight Formation Basins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .733-3. Pressurized Water Reactor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .813-4. Boiling Water Reactor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .823-5. First Generation CAES Plant . . . . . . . ., . . . . . . *, . . . . . . . . . . . . * * * *, * * * * * *...*...,883-6. DOE Energy R&D Budget: 1980-1991 Selected Budget Lines . . . * . *,, **.**.... 91

TablesTable Pa&+

3-1. Major Technologies for Energy Supply and Conversion . . . . . . . . . . . . . . . . . . . . . . . . 643-2. Production of Energy by Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .653-3. Status of Alaska State Coastal Exploration, Development, and

Production Projects . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . * . * * * *, **..*...69

Chapter 3

Technologies for Energy Supply and Conversion



Technologies for Energy Supply and Conversion

Despite stable energy supplies and prices, recentevents in the Middle East and declining domestic oilproduction have triggered concern over the long-term adequacy of U.S. energy supplies. In addition,environmental considerations, e.g., global warmingand high ozone levels in urban areas, will continueto have an impact on energy supply choices.

A variety of technologies (table 3-1) show prom-ise for replacing and/or extending the Nation’s oiland gas resources and providing other options.Included are technologies for improving coal com-bustion, electric power generation, and nuclear andrenewable energy supply options. This chapterbegins with a brief summary of U.S. energy re-sources and ends with a discussion of nontechnicalfactors that could affect U.S. supply options.

U.S. ENERGY SUPPLYFossil fuels continue to dominate the U.S. energy

market. Table 3-2 shows U.S. energy production bysource from 1970 to 1989. Coal accounts for thelargest share of domestic energy production today.The U.S. Energy Information Administration (EIA)indicates that there are enough coal reserves tosustain current levels of production for more than

200 years. Most of the coal (62 percent) is mined eastof the Mississippi River, but Western coal has beenincreasing its share since the mid- 1960s. The growthin Western coal production is partly a result of environmental concerns over Eastern high-sulfurcoal. Also, surface mining, which is more prevalent

The United States has used more than half of itsoil and gas, and estimates of undiscovered recover-able resources are inherently uncertain. Oil produc-tion in the contiguous States has been decliningsince the mid-1970s, and in 1989 Alaskan produc-tion declined for the first time since 1981. The lowprice of oil over the past 4 years has contributed tothis decline.

Exploration was also affected by the low price of crude. According to the EIA, exploration indicatorsshowed a dramatic drop in the number of seismiccrews, operating rigs, and completed wells. 3 Moreoil will be discovered in the United States, but it isvery unlikely that new discoveries will reverse thelong-term decline.

This decline in production translates into a greater

dependence on oil imports. In 1989, petroleum netimports reached 41 percent of total consumption.Saudi Arabia, Canada, Venezuela, and Nigeria areour biggest suppliers. These and other oil producingcountries have used less than 35 percent of theirresources. According to a recent resource assess-ment, the Middle East has the majority of theidentified reserves for the world, enough oil tocontinue production for 124 years. It is likely that the

United States will continue to import Middle Easternoil for many decades. 4

Since the early 1980s, domestic natural gasproduction has been declining. New wells have beenadded, but at a much slower pace than previously.




Table 3-l-Major Technologies for Energy Supply and Conversion

Technology Availability Comments

OilDeepwater/arctic technologies

Enhanced oil recovery techniques —thermal recovery-miscible flooding-chemical flooding

Oil shale and tar sands -Surface retorting —Modified in situ

Natural gas —Hydraulic fracturing

Coal —Atmospheric fluidized-bed combustion (AFBC) —Pressurized fluidized-bed combustion (PFBC) —Integrated gasification combined cycle (IGCC)

—flue-gas desulfurization (FGD)-Sorbent injection

-Staged combustionNuclear

—Advanced light water reactor

—Modular high-temperature gas reactor (MHTGR) —Power Reactor Inherently Safe Module (PRISM)

Electricity —Combined cycle (CC)

—Intercooling Steam Injected Gas Turbine (ISTIG) —Fuel cells

—Magnetohydrodynamics (MHD)

—Advanced batteries

—Compressed air energy storage (CAES)

Biomass —Thermal use-Gasification

C,R

C,R

C,N

c

N,R

N

cC,N

R

c

N,RR

c

NR

R

R

c

cc

Existing technologies that are promising for deepwater areas includeguyed and bouyant towers, tension leg platforms, and subseaproduction units. Advances in material and structural design critical;innovative maintenance and repair technologies important.

Widely adopted over the past two decades.

Uneconomic at present oil prices.

Very complex process; not well understood although successful for some

formations. Key to unlocking unconventional gas reserves.Small-scale units commercial. Utility-scale AFBC in demonstration stage.

PFBC is less well developed; pilot-plant stage.Demonstration stage. Primary advantages are its low emissions and high

fuel efficiency.Mature technology; considerable environmental advantages.Commercially available control technology. Can remove nitrogen oxides

up to 90 percent.Has potential to remove up to 80 percent of nitrogen oxides.

Incorporates safety and reliability features that could solve pastproblems; public acceptance uncertain.

Improvements to familiar technology; incorporates passive safetyfeatures; design of modular reactor completed.Conceptual designs expected to be completed this year.

Conventional CC is a mature technology; advanced CC is indemonstration stage.

Pilot-plant stage.Several types being developed. Fuels cells that use phosphoric acid as

electrolytes are in demonstration stage. Molten carbonate and solidoxide are alternative electrolytes that are less developed. Late 1990savailability, at the earliest.

Difficult technical problems remain, especially for coal-fired MHDsystems.

Research and development needed in utility-scale batteries to improveIifetime cycles, operations maintenance costs. Promising batteries areadvanced lead, zinc-chloride and high-temperature sodium-sulfur..

First U.S. plant (11O-MW) to begin operation in 1991; owned andoperated by Alabama Electric Cooperative, Inc.

Use of biomass by utilities is usually uneconomical and impractical.Anaerobic digestion used commercially when biomass rests are low

enough Methane production from biomass not yet competitive with

Chapter 3-Technologies for Energy Supply and Conversion q 65



Table 3-2--Production of Energy by Source (quadrillion Btu).

Natural NuclearNatural Crude gas plant Hydroelectric electric

Year Coal gas’ oil b liquids power c power d Other Total1970 . . . . . . . . . . . . . . . . . .1971 . . . . . . . . . . . . . . . . . .1972 . . . . . . . . . . . . . . . . . .1973 . . . . . . . . . . . . . . . . . .1974 . . . . . . . . . . . . . . . . . .1975 . . . . . . . . . . . . . . . . . .1976 . . . . . . . . . . . . . . . . . .1977 . . . . . . . . . . . . . . . . . .1978 . . . . . . . . . . . . . . . . . .1979 . . . . . . . . . . . . . . . . . .1980 . . . . . . . . . . . . . . . . . .1981 . . . . . . . . . . . . . . . . . .1982 . . . . . . . . . . . . . . . . . .1983 . . . . . . . . . . . . . . . . . .1984 . . . . . . . . . . . . . . . . . .1985 . . . . . . . . . . . . . . . . . .1986 . . . . . . . . . . . . . . . . . .1987 . . . . . . . . . . . . . . . . . .1988 . . . . . . . . . . . . . . . . . .1989 . . . . . . . . . . . . . . . . . .

14.6113.1914.0913.9914.0714.9915.6515.7614.9117.5418.6018.3818.6417.2519.7219.3319.5120.1420.7421.35

21.6722.2822.2122.1921.2119.6419.4819.5719.4920.0819.9119.7018.2516.5317.9316.9116.4717.0517.4917.78

20.4020.0320.0419.4918.5717.7317.2617.4518.4318.1018.2518.1518.3118.3918.8518.9918.3817.6717.2816.12

2.512.542.602.572.472.372.332.332.252.292.252.312.192.182.272.242.152.222.262.16

2.632.822.862.863.183.152.982.332.942.932.902.763.273.533.352.943.022.592.312.77

0.240.410.580.911.271.902.112.703.022.782.743.013.133.203.554.154.474.915.665.68

0.010.010.030.050.060.070.080.080.070.090.110.130.110.130.170.210.230.240.240.22

62.0761.2962.4262.0660.8459.8659.8960.2261.1063.80

64.7664.4263.9061.2165.8564.7764.2364.8265.9766.07

a Dry natural gas.blncludes lease condensate.c

Electric utility and industrial generation of hydroelectric power.dGenerated by electric utilitieseO t h e r i s e l e c t r i c i t y g e n e r a t e d for distribution from wood, w a s t e , g e o t h e r m a l , w i n d , p h o t o v o l t a i c , a n d s o l a r t h e r m a l e n e rg y.

NOTE: Sumofcomponents maynotequal total duetoindependent rounding.

SOURCE: U.S. Energylnformation Administration, Armua/Energy/?etiew 1989, DOWElA-0364(89), May24, 1990; and Month/yf%ergyReviewApti/ 1991,DOE/EIA-0035(91/04), Apr.26, 1991, p.19.

for almost 7 percent of total gas consumption and areexpected to increase in the near term. Canada is ourmajor supplier with Algeria providing smalleramounts. The United States also exports smallamounts of gas to Japan. 6

Electricity has steadily increased its share of thetotal U.S. energy market from 24.4 percent in 1970to about 36 percent in 1989. In the past 15 years, the

projected rates, and 2) that existing and plannedcapacity is available as projected.

Since the mid- 1970s, coal- and nuclear-powered

generation have displaced substantial quantities of petroleum and natural gas. Growth in oil and gas usebegan to slow in the 1970s, and consumptiondecreased during the first half of the 1980s. In 1989,coal accounted for 56 percent of electric utilityconsumption compared to 9 percent for natural gas




construction, and no additional units are planned. 10

Uncertainty about electricity demand, increases inconstruction costs and rising interest rates, andquestions about nuclear safety and waste disposalhave contributed to the decline of nuclear power asa supply option.

Renewable energy resources account for a smallshare of total energy supplies today. Hydroelectricpower is by far the greatest contributor, accountingfor about 2.7 quads (quadrillion British thermalunits) in 1989. 11 However, concerns about theenvironment and our dependence on imported oilhave renewed interest in alternative sources of energy. The conversion of solar energy to electricity,using either photovoltaics or thermal-electric tech-nologies, offers an exciting but not yet competitiveresource under traditional economic terms. Contin-ued improvements in performance and cost of electric power from wind turbines and geothermaltechnologies are also expected.

TECHNOLOGICALOPPORTUNITIES FOR

IMPROVING FOSSIL FUELSUPPLIES

Oil, natural gas, and coal are the primary energysources in the United States because they areconvenient and economical. They are expected toremain so in the foreseeable future. Technologiesthat can extend the production of oil and gas orreplace them with equivalent fuels from coal are thefocus of this section. In addition, new technologiesfor improving the combustion of coal are examined.

most of the reservoir’s oil remains in place. Tech-niques can be used to augment natural forces. Theseinclude injecting fluids (commonly, natural gas) intoan oil reservoir. This is commonly known assecondary recovery. Conventional primary and sec-ondary recovery technologies can recover aboutone-third of the oil in place.

Drilling techniques also can be used to improverecovery. Geologically targeted infill drilling, forexample, involves drilling reservoirs at closer thannormal intervals. Each reservoir has to be geologi-cally targeted in order for this recovery method to beeconomical. The Oak Ridge National Laboratory(ORNL) estimated that the geologically targetedinfill-drilling technique will recover an additional 8percent of the original oil in place. 12

In addition, the use of horizontal drilling inoffshore production is rapidly expanding. The ad-vantages of using horizontal drilling are improved

recovery, better drainage, and the ability to drill andcomplete several wells from one offshore productionplatform. 13

Deepwater Technologies 14

Most of the undiscovered oil and gas reserves inthe United States are expected to be found offshoreor onshore Alaska. The Alaska Outer ContinentalShelf (OCS) region includes about 1,300 million

acres. The U.S. Department of the Interior has leased8.2 million acres since 1976. 15

The technologies to explore and produce the oiland gas in these remote locations have developed,and will probably continue to develop, in an

Chapter 3--Technologies for Energy Supply and Conversion q 67

h f l ll ff h f ld h b d d h h fl li h f d



Thus far, nearly all offshore fields have beendeveloped using freed-leg production platforms.These platforms can probably be designed for waterdepths of 1,575 feet or more. However, as depthsincrease, structures become larger, more substantial,and thus more expensive. The cost and size of theseplatforms may limit their application to greaterdepths.

Existing technologies that are promising fordeepwater areas include guyed and buoyant towers,tension leg platforms, and subsea production units.(See figure 3-l.) All but the subsea units are flexiblestructures that ‘‘give way” under wind, wave, andcurrent forces. Current technologies can be extendedto depths of about 8,000 feet without the need formajor breakthroughs.

The guyed tower is a tall, slender structure thatrequires less steel than a freed-leg platform. Guylines or anchor lines are used to resist lateral forcesand to hold the structure in a nearly vertical position.

Exxon installed the first guyed tower in the Gulf of Mexico. The buoyant tower is also a tall, slenderstructure. Large buoyancy tanks, rather than guylines, maintain the tower’s vertical position.

A tension leg platform is a floating platform thatis freed by vertical tension legs to foundationtemplates on the ocean floor. Buoyancy is providedby pontoons. Bouyancy in excess of the platformweight maintains tension on the legs. This technol-ogy can be used economically in deep water. Itsprimary disadvantages are the operational complex-ity relative to fixed platforms and its limited deckload capacity. The first tension leg platform wasinstalled in 1984 by Conoco in the North Sea.

produced through a flowline to shore or to a freed orfloating platform. One of the limitations of thissystem is the need to have surface facilities toprocess and transport the oil.

A number of production-related technologies arecrucial to the development of deepwater areas.Advances in materials and structural design andfoundation engineering are critical. Innovative tech-niques for the installation, maintenance, and repairof platforms and pipelines are also important.Deepwater pipeline systems will involve adaptionfrom conventional pipelaying techniques, but newapproaches will have to be developed to overcomeproblems, e.g., buckling by long unsupported spanlengths, higher strain levels, and severe seas. Sup-port operations, e.g., diving and navigation, will beincreasingly important. Because human diving capa-bility is limited, manned vehicles and remote-controlled unmanned vehicles will be increasinglyused for these purposes.

Arctic Production16

Offshore exploration of the Arctic region began inthe mid- 1970s. Since then, the pace of activity andtechnological advances have increased significantly.See table 3-3 for the status of North Slope explora-tion and production projects.

Because of the severe environment, oil and gasdevelopment in the Arctic region is a major techno-

logical challenge. Production systems must with-stand exposure to severe and corrosive conditionsfor the life of the oil fields, which is usually 20 yearsor more. Ice conditions, including duration, thick-ness, and movement, are perhaps the most critical of the environmental considerations




Figure 3-1—Production Platform Technologies for Frontier AreasStatfjord 8 Magnus

Concrete Gravity Base Platform Steel Template- Hutton(Norway) Jacket Platform Tension-Leg Platform Block 2280 Troll

(1982) (U. K.) (U. K.) Guyed Tower (U. S.) Concrete Gravity-Base \ a (1982) (1984) (1984) Platform

To anchor (1 ,350 feet) Sea floor 1,122 feet

SOURCE: U.S. Congress, Office of Technology Assessment, Oil and Gas Technologies for the Arctic an d Deepwater, OTA-O-270 (Washington, DC: U.S.Government Printing Office, May 1985), figure 3-3.

that are likely to be encountered. Increased surveil-lance from satellites and aircraft is needed to providereal-time data. These data are important for struc-tural design purposes, logistics, and tanker transpor-tation design and planning In addition more infor

developed new recording instruments called seis-mometer group recorders.

Another improvement, the borehole gravimeter,can measure rock densities as far as several hundred

Table 3-3-Status of Alaska State Coastal Exploration, Development, and Production Projects

Desig- Explora-Unit/field/ nated Lease Sale Res erv es Reser ves tory Delin- Devel- Primary Secondary Tertiary Status as ofprospect operator sale date in place recoverable drilling eation o pment production production production December 1989



Colville Delta Texaco N/A N/A(Texaco)

Duck Island Unit BP Joint Federal- 09/10/69 1,000 MMBO 0,8 Tcf(Endicott) Exxon State lease 12112179 375 MMBO

SaleGwydyr Bay Unit ARCO State Sale 23 09/10/69 30-60

MMBO

Kaktovik Prospect Chevron Negotiated with 11/83 N/A(KIC well) Arctic Slope

Regional Corp.Kuparuk Unit ARCO State sale 14 07/14/65 4,400 MMBO

N/A

070MMBO

Lisburne Field ARCO State sale 14 01/24/67 3,000 MMBO 165 MMBO

Mine Point Unit Conoco State sale 14 07/14/65

Niakuk Prospect BP State sales 14 07115165 145 MMBOand 18 01/24167 88 Bcf

North Star Amerada N/AHess

Pt. McIntyre ARCO State sale 14 07114165 N/A

Point Thomson Exxon State sale 18 01/24/67Unit

Prudhoe Bay Unit ARCO/BP State sale 13, 12/09/64 23.5 BBOsale 14, sale 18 07/14/65

01/24/67

UGNU Field in ARCO State sale 13, 12/09/64 6-11 BBOKuparuk/ sale 14, sale 18 07/14/65Prudhoe/Mine 01/24/67

West Sak Field ARCO BF(SM) 12/12/79 15-25BBO

60 MMBO

58 MMBO35 Bcf

150 MMBO

300 MMBO

350 MMBO5 Tcf9.4 BBO29 Tcf

o

750 MMBO

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

No activity.

x Maintain production at 100,000 bpd.

Total of 12 wells. Renewed interest inprospect by Vaughn Petroleum (etal.) in 1987. Drilled two wells bothP&A. Reduced reserve estimatesand wait for higher oil price. Conocoresigns as operator.

Tight hole.

x x x Steady production at 260,000 bpd; 39percent oil field depleted.

x x Recoverable reserve estimatesreduced 50 percent.

x Shutdown since January 1987; Conocoreceived drilling permits. Plans tobegin production again.

Army Corps of Engineers rescindedearlier causeway denial. BP mustsubmit additional data on causeway,

Initial stages of development; proposedunit agreement.

Drilled three wells in 1988 and 1989with approved drilling permits forthree more.

Will drill another delineation wellspring1990.

x x x Enhanced recovery techniques andsale good reservoir management willkeep production at 1.5 MMbpdthrough 1969 with slower production

decline now anticipated. Eileen WestEnd Field started producing in June1988. Peak production will be 60,000to 70,000 bpd in 1990 from 76 wells.

Drilled production test well April 1989.Loose sandstone reservoir and lowAmerican Petroleum Institute gravitypresent major technological hurdles.

ARCO filed application with ACOE tobuild gravel pads. Subsequently,delayed citing economic impact.

KEY: ACOE = Army Corps of Engineers; BBO = billion barrels of oil; Bcf = billion cubic feet; bpd = barrels per day; MMBO = million barrels of oil; Tcf - trillion cubic feet.SOURCE: U.S. Department of the Interior, Minerals Management Service Alaska Update, September 1988-January 1990, MMS90-0012,1990, p. 33.


use of enhanced recovery methods is dependent on Chemical Flooding A number of other proc



use of enhanced recovery methods is dependent onthe characteristics and location of the field.

Thermal Recovery Process—The viscosity of crude oil varies considerably. Some crudes flow likeroad tar, others as readily as water. High viscositymakes oil difficult to recover with primary orsecondary production techniques. Viscosity of mostoils decreases as the temperature increases. Thepurpose of thermal oil recovery processes is to heatthe oil to make it flow more easily. The oil can beheated by injecting hot water, steam, or hot gases

into a well.More than 90 percent of thermal recovery projects

in the United States are in California, where heavycrudes are common. According to ORNL, total oilrecovery using primary pumping and thermal recov-ery can exceed 50 percent of the available oil in thefield. The cost of the thermal process can range from$3 to $18 per barrel. 17

Miscible Gas Flooding—Another common ap-proach to enhanced oil recovery is miscible gasflooding. Miscible gas, which is usually either ahydrocarbon mixture (natural gas) or carbon dioxide(CO 2), is injected into a well. Inert gases, such asnitrogen, can also be used for gas flooding. Thegases act as solvents, forming a single oil-like liquidthat can flow through a reservoir to other wells moreeasily than the original crude. Hydrocarbon gas

flooding is economical when there is a large supplyof available natural gas. For example, hydrocarbonflooding accounts for about 10 percent of oilproduction in Alberta, Canada, where there is a largesupply of natural gas associated with the productionof oil Also n sed nat ral gas can be injected back

Chemical Flooding—A number of other proc-esses involve injecting chemicals (e.g., surfactantsand polymers) into the water-flooded field to alterthe properties of the liquids. Polymers are added tothe field to increase the viscosity of water. Surfac-tants are used to alter the surface properties of theoil-water and permit the removal of oil fromcapillary regions of a field. Chemical floodingprocesses are not yet well developed. Moreover, oilyields from these processes are difficult to predict.The cost of polymer flooding can be low but so toocan the yield of additional oil. One estimate of thecost of surfactant flooding is between $15 and $30per barrel. In addition, the degradation of chemicalscan be a problem. 20

Microbial enhanced oil recovery is a variation of chemical flooding. Microorganisms, which are in-troduced into a reservoir, produce detergent-likematerials that would perform much the same func-tion as polymers and surfactants. This technology is

not well developed and a number of uncertaintiesremain. For example, any bacteria developed wouldneed to be monitored for potential environmentalimpacts.

Although enhanced oil recovery is a particularlyattractive technology for extending known oil sup-plies, it is hampered by a number of uncertainties.These include the inability to predict the amount of oil that can be recovered and the difficulty incharacterizing the field. These uncertainties maylimit the use of enhanced recovery techniques tothose projects where improvements in recovered oilare sufficient enough to take the risk. Currentresearch and development (R&D) programs are

Chapter 3-Technologies for Energy Supply and Conversion . 71

known. 21 At present oil prices, recovery of these produce 10,000 barrels of oil per day. In 1988, the



resources is uneconomic.

Oil shale consists of a porous sandstone that isembedded with a heavy hydrocarbon known askerogen. Because the kerogen already containshydrogen, a liquid shale oil can be produced from theoil shale simply by heating the shale to break thekerogen down into smaller molecules. This can beaccomplished by a surface retort process, a modifiedin situ process, or a so-called true in situ process.Liquid shale oil can be upgraded relatively easily tocrude oil.

In the surface retort method, oil shale is mined andplaced in a metal reactor where it is heated toproduce the oil. This method is best suited to thickshale seams near the surface. In the modified in situprocess, an underground cavern is excavated and anexplosive charge detonated to fill the cavern withbroken shale rubble. Part of the shale is ignited toproduce the heat needed to crack the kerogen. Liquid

shale oil flows to the bottom of the cavern and ispumped to the surface. The modified in situ methodis used in thick shale seams deep underground. In thetrue in situ process, holes are bored into the shale andexplosive charges are ignited in a particular se-quence to break up the shale. The rubble is thenignited underground, producing the heat needed toconvert the kerogens to shale oil. The true in situmethod is best suited to thin shale seams near the

surface.The surface retort method requires the mining and

disposal of larger volumes of shale than the modifiedin situ method. The true in situ method requires verylittle mining. However, high oil yields of relatively

p p ycomplex operated for several months at 5,000 to6,000 barrels per day at a cost of $45/barrel. 22

Tar sands resources in North America are esti-mated at315 billion barrels, most located in Canada.Oil from tar sands is being commercially producedat the huge Athabasca deposit in Alberta, Canada. Inthe United States and Canada, much of the resourceis not minable at the surface and will have to beproduced using in situ extraction technologies. R&Defforts have focused on the chemical and physicalproperties of tar sands and the physics of mobilizingand extracting the bitumen constituents. 23

Natural Gas 24

Conventional Gas Production

The way in which gas is produced depends on theproperties of the reservoir rock and whether the gas

occurs by itself or in association with oil. Hydrocar-bons in the reservoir rock migrate to the producingwell because of the pressure differential between thereservoir and the well. How readily this migrationoccurs is a function of the pressure of the reservoirand the permeability of the reservoir rock. When thereservoir rock is of low permeability, the rock maybe artificially fractured to form pathways to thewellbore. This is accomplished either with explo-

sives or by hydraulic means, pumping a pressurizedfluid into the well.

Production can continue as long as there isadequate pressure in the reservoir to propel thehydrocarbons toward the producing well. If gas ish l ll h i d


When gas occurs in association with oil it can be achieved only by increasing permeability by fractur-



When gas occurs in association with oil, it can bereinfected into the reservoir to maintain pressure formaximum oil recovery. Gas is also reinfected whenthere are no pipeline facilities available to transportit to market.

Enhanced Gas Recovery

At some reservoirs, recovery efficiencies aremuch lower than 80 percent. For example, recoveryrates for water-driven reservoirs found along theTexas and Louisiana Gulf Coast are known to be 50percent or less. These poor recovery rates result fromwater encroachment and the subsequent trapping of gas in water-driven reservoirs and from uncertaintiesabout the characteristics of the reservoir. A betterunderstanding of gas field characteristics and im-provements in drilling and production technologieswould increase recovery efficiencies.25

Unconventional Gas Production

Unconventional @s includes tight sands, De-vonian shale, methane from coal, and geopressuredbrine. The Devonian shales and methane from coalare the best understood of the unconventionalresources and appear to have the most near-termpotential for contributing to supply. Estimates of total recoverable unconventional gas resources are600 trillion cubic feet (Tcf) for tight sands, 400 Tcf for Devonian shale, and 400 Tcf for coal seams. 2G If natural gas is to play a significant role in reducingC0 2 emissions, it will be important to find ways of recovering ‘‘unconventional’ gas resources.

Tight gas is natural gas that is found in formationsof sandstone, siltstone, silty shale, and limestone.These formations are characterized by their very low

achieved only by increasing permeability by fracturing the rock surrounding the wellbore. This fractur-ing is most commonly hydraulic, which involvespumping a fluid under high pressure into the welluntil the rock breaks down. Sand or other materialsare added to the fluid to serve as wedges to preventthe fractures from closing.

The fracturing process in tight formations is verycomplex and not well understood. It is difficult totell what a fracture will do or what it has done evenafter the well is producing or proved unproductive.

Despite these uncertainties, fracturing has beensuccessful, at least for the blanket formations.Large-scale fracturing of lenticular formations hasnot been very successful. Lenticular formationdevelopers have tended to use shorter, less expen-sive fracturing treatments, which may imply lowergas recovery.

Devonian shale gas is produced from shalesformed about 350 million years ago--during theDevonian period. Devonian shales occur primarilyin the Appalachian region, Illinois, and Michigan.The shale gas occurs as free gas in the fractures andpores of the shale and also as gas physically boundto the shale (adsorbed gas).

As with tight sands, Devonian shale productiondepends on well stimulation to overcome the natu-rally low permeability of the reservoir and open uppathways for the gas to flow to the wellbore. Unliketight sands, however, successful Devonian gasproduction depends on the well intersecting a naturalfracture network, either directly or through aninduced fracture.



Figure 3-2—Location of Principal Tight Formation Basins

Snake RiverCownyarp

\

Greater GreenRiver Basin Northern

[Big Horn Great Plains

Basin Province

\ ~ . . l \

1 F - - - - # l \ ,

San Juan /DenverBasin Basin “M Cotton BlacK Warrior \

Valley BasinTrend

Ft “Worth


contrast to the wide spacing used in conventional Direct Combustion



contrast to the wide spacing used in conventionalgasfields.

A variety of methods can be used to enable wellsto intersect the naturally vertical fracture network.Horizontal wells may be drilled from within aworking mine or a specially drilled shaft. The lattermethod is expensive. Vertically drilled wells maybeslanted toward the horizontal, so as to run parallel toand within the coal seam. Hydraulic fractures canalso be used to connect the wellbore to the fracturesystem.

Other unconventional gas sources include geo-pressured brines and gas hydrates. Geopressuredbrines are found deep within the Earth under highpressures and temperatures. They are found primar-ily in the Gulf Coast region of the United States. Inorder to produce the gas, the brines are pumped tothe surface, the gas is removed, and the brines aredisposed. Gas hydrates are an icelike mixture of gasand water, called a clathrate, which forms undercertain temperature and pressure conditions oftenfound in water depths greater than 100 feet and underpermafrost. The resource is potentially huge andmay be augmented by free gas trapped under theimpermeable hydrate. It should be noted, however,that gas hydrates are unstable. If they warm just a bit,natural gas is released, contributing to global warm-ing.

Future efforts to recover tight gas, Devonian shalegas and methane from coal will depend on advancesin well stimulation technologies and improvementsin drilling patterns. Also, additional research isrequired to understand gas production mechanisms

f f

Three major factors influence the way coal is

burned: 1) the size of the facility, 2) the environ-mental standards the facility is required to meet, and3) the characteristics of the coal to be burned. Mostcoal is still burned in pulverized coal-fired boilerfurnaces. Raw crushed coal is pulverized and blownwith air into large furnace cavities, where the cloudof coal dust burns much like a fuel gas. The heat istransferred to water, which boils to generate steam.Over the years, improvements in combustion tech-

nology have resulted in larger plants that can operateat higher temperatures and pressures, and thereforehigher efficiency. Further efficiency gains are likelyto be incremental. In recent years, much of theattention has been focused on reducing emissions.

Conventional technology can meet existing emis-sion standards, especially in large facilities. Emerg-ing technologies are likely to be necessary to meet

stricter standards, especially in small- and medium-size facilities. They also may permit substantialgains in efficiency.

Fluidized-bed combustion (FBC) technology 27

offers an emerging alternative. Its basic principleinvolves the feeding of crushed coal for combustioninto a bed of inert ash mixed with limestone ordolomite. The bed is fluidized, or held in suspension,by injecting air through the bottom of the bed at acontrolled rate great enough to cause the bed to beagitated much like a boiling fluid. The coal burnswithin the bed, and the sulfur oxides (SO x) formedduring combustion react with the limestone ordolomite to form a dry calcium sulfate. This

Chapter 3--Technologies for Energy Supply and Conversion . 75

cially around the world for process heat, space heat,i th i d t i l li ti d l t i l

OTA estimated that the capital cost of a large AFBCi bl t ti l l f d l t



various other industrial applications, and electricalgeneration.

The PFBC operates at high pressures and there-fore can be more compact than the AFBC. It can runexhaust heat through the turbines as well as thesteam cycle. The PFBC also may produce moreelectricity for a given amount of fuel. Despite thesepotential advantages, the PFBC has more serioustechnical obstacles to overcome and is less welldeveloped than the AFBC. For example, the corro-sion of gas turbine blades is a primary concern forcombined cycle PFBCs. In addition, fuel and sorbentfeed control may be difficult. The first PFBC/ combined cycle plant began testing in March 1991.The test is expected to last 3 years. The demonstra-tion plant is one of the flagship projects in DOE’sClean Coal Demonstration Program. 29 It is unlikelythat more than a few PFBC commercial units couldbe completed and operating before the end of the

century, although the PFBC’s longer-term potentialis quite promising.

The primary types of AFBCs are bubbling bed andcirculating bed. The bubbling-bed AFBC is charac-terized by low gas velocities through the bed. Theresult is a bed from which only the smaller particlesare entrained with the gas. Conversely, the gas flowvelocities through the circulating bed are rapid.Neither technology has been built to produce elec-tricity on a scale (100 to 200 megawatts (MW)) thatis attractive to utilities. The bubbling-bed technol-ogy is the older of the two and thus greater operatingexperience in the United States. Also, the bubbling-bed combustor can be readily retrofitted to some

is comparable to conventional coal-freed plantsequipped with scrubbers—$ 1,260 to $1,580/

kilowatts of electric power output (kWe).OE has selected two AFBC projects to promote

utility use. One project, a circulating fluidized-bedsystem replaces three small coal-fried boilers with110 MW of capacity. The second project involvesrepowering a 250-MW Southwestern Public ServiceCo. facility. Also, DOE has selected two projects todemonstrate the PFBC technology. The capital costof a 500-MW PFBC is estimated to be about $1,350or $1 ,750/kWe for a 200-MW plant. 31

The integrated gasification combined cycle(IGCC) technology is another alternative to conven-tional coal-fired plants. In the IGCC process, coal ismixed with air and steam at high temperatures,which causes the coal to gasify to a mixture of hydrogen, carbon monoxide, and hydrogen sulfide,called syngas. The ash is separated and disposed of

or used. The sulfur in the coal is converted intohydrogen sulfide, which eventually can be convertedto elemental sulfur or some solid waste material. Thecleaned gas is burned in a combustion turbine. Thehot exhaust gases that exit the combustion turbinegenerate steam, which can then drive a steam turbineto produce electricity. The name “combined cycle”refers to the use of both gas-fueled combustion andsteam turbines in the system.

An IGCC system’s major advantages are its verylow rate of emissions and its fuel efficiency. It alsorequires less water than a conventional coal-firedsteam plant, and because of the modular design,construction time is shorter One of the areas where


One of the biggest IGCC demonstration projectsis the 1OO-MW Cool Water Plant located in Daggett

on the sulfur content of the feed coal. The costs forthe oil agglomeration process ranges from $221 to



is the 1OO-MW Cool Water Plant located in Daggett,California. It has been operating successfully since1984 and has demonstrated the ability to meetstringent California pollution standards using bothlow-sulfur Western coal and high-sulfur Easterncoal.

In the Cool Water process, a coal-water mixture isinjected into a pressurized, oxygen-fed gasifier. Amedium grade fuel is produced. The sulfur in thecoal is converted mostly into hydrogen sulfide, andthe nitrogen oxide is converted into molecular

nitrogen. The hot gases heat the tubes of water,creating steam. The steam is used to drive turbinesto produce electricity. The gas and slag are thenseparated. A sorbent is used to remove 97 to 99percent of the sulfur from the gas produced fromcoal.33 The cleaned gas is burned in a turbine at a lowtemperature, which reduces NO Xproduction.

Capital costs for an IGCC system could rangefrom $1,200 to $2,350/kWe (net). For smaller units(250-MW range), costs are expected to be higher,about $1,600 per kWe. The Electric Power ResearchInstitute (EPRI) estimates a plant cost of $1,630/ kWe for a 500-MW IGCC. The gas production andpurification facilities will account for about 40percent of total costs. Operating and maintenancecosts could range from 6 to 12 mills/kilowatt hour(kWh). 34

Technologies for Controlling Emissions 35

Typically, emissions are reduced by four meth-ods: 1) cleaning coal to reduce sulfur content, 2)switching to low-sulfur coal, 3) using wet flue-gasand 4) sing comb stion controls for NO emissions

the oil agglomeration process ranges from $221 to$472/metric ton removed. These technologies areexpected to be commercial by the mid-1990s, butnone will be adequate to meet New Source Perform-ance Standards by themselves.

The removal of S0 2 from stack gases is termedflue-gas desulfurization (FGD). Devices com-monly referred to as scrubbers are used in thisprocess. The function of the scrubber is to bring theflue gases, which contain SO 2, into contact with achemical absorbent, such as lime, limestone, magne-

sium oxide, etc. FGD technologies are characterizedas wet or dry, depending on the state of the reagentas it leaves the absorber.

There are two FGD processes: nonregenerable(throwaway) or regenerable. In the throwawayprocess, the absorbent and the SO 2 react to form aproduct which is disposed of as sludge or solid. Theregenerative process recovers the absorbent in aseparate unit for reuse in the scrubber and generallyproduces a product with market value, such aselemental sulfur or sulfuric acid. A great majority of the FGD processes employed by the utility industryare wet, nonregenerable systems that use limestoneor lime.

Wet scrubbing for new plants can remove up to 95percent of S0 2. The technology does not removeNOX, but this can be accomplished by incorporating

1ow-NO X burners into the design of a new plant.Capital and operating and maintenance costs of thewet limestone FGD technology are dependent on thetype of coal burned and the amount of sulfurremoved. For example, the capital cost of a 500-MWplant that b rns coal ith a 0 5 percent s lf r


esses should be available in the mid-1990s. Thefurnace sorbent injection process sprays a calcium-

percent. Several commercial projects have demon-strated fuel reburning using natural gas and coal as



furnace sorbent injection process sprays a calcium-based sorbent material, such as limestone or calcium

hydroxide, into the furnace. The heat decomposesthe sorbent into lime which captures the SO 2 andforms calcium sulfate. The calcium sulfate and flyash are separated. The low-temperature, or postcom-bustion, sorbent injection process introduces acalcium-based sorbent into the flue gas, but fartherdownstream from the combustion zone. Postcom-bustion sorbent injection is potentially cheaper thanfurnace sorbent injection and wet flue-gas scrub-

bing. Sorbent injection retrofits are estimated to costfrom $48 to $99/kW, depending on the size and thedifficulty of retrofitting the plant. In the UnitedStates, several commercial-scale utility projects arenow demonstrating furnace sorbent injection.

Currently, NO Xemissions are reduced by modify-ing the design or operating conditions of combustionequipment. Common techniques include loweringexcess combustion air, recirculating the flue gas, andinjecting steam or water into the firebox. Reducingexcess air reduces the quantity of atmosphericnitrogen available for NO X formation. Flue-gasrecirculation and steam or water injection reduceflame temperature, which is an important factor indecreasing NO X production. Some of these tech-niques may reduce energy efficiency because theylower combustion temperatures.

Low NOXburners are standard features on almostall recently built utility boilers. According to theNAPAP report, low NO Xburners can reduce NO Xbyup to 80 percent. The l OW -NO X burner technologyrestricts airflow into the combustion chamber, which

strated fuel reburning using natural gas and coal asthe reburning fuel.

Another advanced technology is selective cata-lytic reduction (SCR). The SCR process is the onlycommercial control technology that can reducenitrogen oxides up to 90 percent. SCR is a flue-gastreatment process that reduces NO = to molecularnitrogen and water by reacting ammonia with NO X

in the presence of a catalyst at temperatures between300 and 400 degrees Celsius. The catalyst is theprimary capital and operating cost component of thistechnology. SCR can be used in a wide variety of applications, including new and retrofit coal-, oil-,and gas-fired facilities.

Japan and Germany have considerable experiencewith SCR. U.S. experience with this technology ismore recent but expanding. SCR has been used onseveral gas-freed combustion turbines in Californiaand New Jersey, but has not been applied commer-

cially on boilers that burn high-sulfur and high-alkaline ash content coals. Many boilers in theUnited States use these types of coal. Before SCR iswidely used in this country, concerns about catalystlife, performance, and costs must be addressed.

Gasification

Gaseous fuels can be synthesized by combiningcoal with varying amounts of hydrogen and oxygen.

Gasification technologies can be used to producesubstitute natural gas (SNG); synthesis gas, whichcan be converted to liquid fuels or used to manufac-ture chemicals; and to generate electricity in gasifi-cation combined cycle systems.


gas from a gasifier with little or no pretreatment.Direct methanation requires no steam. GRI hopes

cially proven. These include the Lurgi, Westing-house, Texaco, and Shell processes. For the lique-



that direct methanation will improve the economicsof converting coal to SNG. 37

Also, advances in acid gas removal could improvethe economics of SNG production from coal. One of the critical elements in producing SNG is theremoval of unwanted gases, such as C02 andhydrogen sulfide, from the product stream. There area number of commercial technologies that removeacid gases. However, only a limited R&D effort isdirected at improving acid gas removal. 38

Following the 1973-74 oil embargo, coal gasifica-tion became a valuable source of synthesis gas,which can be converted to chemicals and feedstocks.The CO2 produced by the gasification process has anumber of applications. For example, CO 2 is used inenhanced oil recovery operations, in the synthesis of urea ( ammonia and fertilizers) and in the carbona-tion of beverages. Several plants use coal gasifica-tion to produce synthesis gas. A plant in Tennesseehas been operating since 1983 and produces aceticanhydride, acetic acid, and methanol. 39

Liquefaction

Liquid fuels can also be synthesized by chemi-cally combining coal with varying amounts of hydrogen and oxygen. Coal liquefaction processesare generally categorized according to whetherliquids are produced from the products of coalgasification (indirect processes) or by reactinghydrogen with solid coal (direct processes).

The first step in the indirect liquefaction processis to produce a synthesis gas consisting of carbonmonoxide and hydrogen and smaller quantities of

faction component of the indirect process, theFischer-Tropsch process has proven effective. Thisprocess has been demonstrated and proven effectivein South Africa for converting synthesis gas to avariety of products, including propanes and butanes,diesel, fuel oil, and methane.

The direct liquefaction process produces aliquid hydrocarbon by reacting hydrogen directlywith coal, rather than from a coal-derived synthesisgas. A variety of direct liquefaction processes have

been developed. These include pyrolysis, solventextraction, and catalytic liquefaction. Much atten-tion has been given to a process that dissolves andhydrogenates the coal at high temperatures (800 to850 degrees Fahrenheit) and pressure (1,500 to3,000 pounds per square inch (psi)), with or withoutcatalysts .40

In the United States, direct liquefaction is themost advanced of all the potential processes forproducing liquid fuels from coal. Between 1972 and1982, four pilot plants demonstrated the feasibilityof direct liquefaction. One of the plants, the Wilson-ville, Alabama Advanced Coal Liquefaction Re-search and Development facility, is still operating.Since 1983, improvements have been made in thequantity and quality of the liquid fuels produced(distillate fuel oil, kerosene, and gasoline). Theincreases in quantity and quality have improved theeconomics of liquefaction. According to ORNL, thecurrent liquefaction process would be cost-effectiveat a crude oil price of $35 per barrel. 41

Further advances are possible. DOE efforts havefocused on improving catalysts that will allow


considered are related to these technologies. Fur-thermore they can contribute significantly to energy

nuclear systems could be imported without greatimpact on the utility its customers or the national



thermore, they can contribute significantly to energysecurity and environmental quality, especially re-

duced CO 2 emissions.

The Nuclear Power Option

Nuclear power has come to an impasse for avariety of reasons. If there is to be a revival, manyimprovements are likely to be required to reactortechnology and its management. In addition, prog-ress on waste disposal must be sufficient to demon-strate convincingly that technology and sites forsafe, permanent disposal will be available. Also,nuclear power is unlikely to be widely acceptable if it contributes, or has a significant potential tocontribute, to the spread of nuclear weapons. De-pending on how well these problems are met,nuclear power will either gradually wither away orresume its growth as a substantial contributor to ourfuture energy needs.

Some observers doubt the viability of nuclearpower. Construction costs are high, and overruns arecommon; catastrophic accidents are possible; andthe problems and costs of waste disposal and plantdecommissioning have not been resolved. In addi-tion, foregoing nuclear power would enhance themoral leverage of nations seeking to stem theproliferation of nuclear weapons. The advantages tophasing out nuclear power, therefore, seem great.

Nevertheless, there are still strong national policyarguments for maintaining the option. An improvednuclear reactor may well be competitive with coaland much cheaper than oil or gas for electricitygeneration Coal prices could also rise sharply with

impact on the utility, its customers, or the nationalbalance of payments. However, the situation is

unlikely to get so extreme over the next few years.The major reactor vendors will probably be able tokeep current, especially if it appears probable that arevival will occur, but many of the companies thatproduce minor but necessary components are drop-ping their certification. This suggests that the longerthe hiatus before the next order, the slower therevival. Not only will design and manufacturingcapabilities have to be rebuilt, but so will nuclear

engineering departments at universities.Nuclear Powerplant Technology 42

The technology has largely, though not com-pletely, matured. If a utility were to order anothernuclear plant now, it could start construction with anessentially complete design, and the final productshould not differ markedly from this design. Inaddition, the advanced designs now being readied by

several of the reactor manufacturers are incorporat-ing safety and reliability features that should go along way to solving many of the past problems.

However, reliability and safety concerns havebeen so pernicious that even the most experiencedutilities would not consider nuclear to be a viableoption at present. The hostility, negative expecta-tions, and encumbrances that were created by all theproblems have left a legacy that will not bedissipated simply by showing that most of theproblems have been alleviated.

If it is deemed desirable to preserve the nuclearoption, there are two basic approaches to overcom-


direction. This approach relies on the expertise thathas been gained with several hundred LWRs in the

The ideal may well be modular units that can belargely factory manufactured and delivered rapidly



has been gained with several hundred LWRs in theworld and the evolving maturity of a familiartechnology.

Alternatively, an entirely different technologycould be tried that should be so demonstrably safethat problems of changing regulation, public accep-tance, and investor uncertainty should not be majorfactors. The high-temperature gas reactor(HTGR) and the liquid metal reactor (LMR) arealternative concepts that can incorporate passivesafety features to the point where it is essentiallyimpossible for an accident to occur that could resultin off-site releases of radioactivity. However, boththese concepts present uncertainties of operabilityand economics because of their unfamiliarity.

Both approaches (improved, familiar technologyand radically different technology) have advantagesand disadvantages. It should also be noted that it isentirely possible that neither will work, i.e., that thelegacy of problems is so great that no reactor willprove acceptable.

No matter which approach is tried, standardiza-tion will be important. No nuclear plant will becheap, and no utility is going to start constructionwithout assurances that the plant will be bothlicensable and well designed to be operable andefficient. No reactor vendor or architect/engineer islikely to go to the trouble and expense of designinga plant and licensing the design unless it canapportion these costs among many sales. Standard-ization is the only way to meet these constraints.

largely factory manufactured and delivered rapidlyas needed. Reactors are unlikely ever to be as simpleto install as combustion turbines, but recent experi-ence suggests (not unambiguously) that large plantsare more subject to delays and cost escalation thansmall plants. Manufacturers are likely to find inno-vative ways to package small reactors that furtherreduce costs. Thus the economies of scale of largeplants are probably not as great as has been thoughtin the industry and may be outweighed by otheradvantages of small units. Small, modular reactorsare particularly appropriate for standardization asthey will be assembled from components that can beserially manufactured. As the number of reactorsordered increases, costs should drop.

Advanced Light Water Reactor—Two differentreactor designs have been developed for the LWR:the pressurized water reactor (PWR) and the boilingwater reactor (BWR) (see figures 3-3 and 3-4). The

PWR maintains its primary coolant under pressureso that it will not boil. The heat from the primarysystem is transferred to a secondary circuit througha steam generator, and the steam produced there isused to drive a turbine. In the United States, abouttwo-thirds of the nuclear reactors are pressurizedwater reactors.

The BWR eliminates the secondary coolant cir-cuit found in a PWR. In the BWR, the heat in the coreboils the coolant directly, and the steam produced inthe core drives the turbine. There is no need for aheat exchanger, such as a steam generator, or for twocoolant loops. In addition, since more energy iscarried in steam than in water, the BWR requires less




Figure 3-3-Pressurized Water Reactor

SOURCE: U.S. Congress, Office of Technology Assessment, NuclearPowerinan Age of Uncertaintv. OTA-E-216 (Washington. DC: U.S. Government PrintingOffice, February 1964), figure 20. -

coolant to remove decay heat in the event the maincirculation system fails. In the new PWR design,coolant piping has been reconfigured and theamount of water in the core has been increased to

.. - . .

vessel. The reactor uses enriched uranium alongwith thorium, which is similar to nonfissionableuranium in that it can be transformed into useful fuelwhen it is irradiated The fuel particles are coated




Figure 3-4-Boiling Water Reactor

Containment vessel

SOURCE: U.S. Congress, Office of Technology Assessment, Nuclear Power inan Age of Uncertainty OTA-E-216 (Washington, DC: U.S. Government PrintingOffice, February 1984), figure 20.

temperature range of the reactor, it causes littledamage to components. Furthermore, it is transpar-ent to neutrons and remains nonradioactive as itcarries heat from the core. Also, the design of thefuel and core structure for the gas-cooled reactor has

sible for a change in direction to smaller, modulargas reactors.

Preliminary conceptual design of a modularreactor has been completed. The simplification of plant design using passive features and factory




Photo credit: Princeton Plasma Physics Laboratory

The Tokamak Fusion Test Reactor at Princeton Plasma Physics Laboratory, where the first ever experiments on deuterium-tritiumplasmas are scheduled to occur in 1993.

remove residual heat passively to the outside. DOEis funding PRISM research and conceptual designs

The reactor fuel rods contain a mixture of plutonium dioxide and depleted uranium dioxide A


Fusion generated by electric currents running within theplasma



Over the past 35 years, there has been great

progress in nuclear fusion research, but there remainmany scientific and technological issues that needresolution before fusion reactors can be designedand built. According to OTA, 30 years of additionalR&D are required before a prototype commercialfusion reactor can be demonstrated. If successfullydeveloped, fusion has the potential to providesociety with an essentially unlimited source of electricity. It may also offer significant environ-

mental and safety advantages over other energytechnologies. Fusion technology is beyond thetimeframe of this report, but it is one of only threelong-term options. R&D must continue on fusion if the United States is to have the technology by themid-21st century.

Nuclear fusion is the process by which the nucleiof two light atoms combine or fuse together. Thetotal mass of the final products is slightly less thanthe total mass of the original nuclei, and thedifference-less than 1 percent of the originalmass-is released as energy.

Hydrogen, which is the lightest atom, is theeasiest to use for fusion. Two of its three isotopes,deuterium and tritium, in combination work best infusion reactions. When deuterium and tritium react,kinetic energy is released. This energy is convertedto heat, which then can be used to make steam todrive turbines.

However, certain conditions must be met beforehydrogen nuclei fuse together. The nuclei must beh d b 100 illi d C l i A

plasma.

Research on alternatives to the tokamak continuesbecause it is not clear that the tokamak will result inthe most attractive or acceptable fusion reactor. Foran indepth discussion of fusion R&D, the reader isreferred to the OTA report Star Power: The U.S. and the International Quest for Fusion Energy.

Future Electricity Supply Options

The U.S. electric power industry experiencedtremendous change during the 1970s and 1980s,leading to considerable uncertainty. Because of thisuncertainty, utilities now consider a broader range of options to accommodate future demand. In additionto its reliance on conventional technologies, utilitiesemploy less capital-intensive and nontraditionaloptions to ensure supply adequacy. These includeload management and conservation programs, life

extension of existing facilities, smaller-scale powerproduction, and increased purchases from otherutilities and nonutility generators. These optionsoffer utilities more flexibility in responding todemand fluctuations.

Utilities are using demand management programsto reduce system peak demand and to defer the needfor future generating capacity additions. Demandmanagement programs include activities undertakenby a utility or customer to influence electricity use.Some utilities are just initiating demand manage-ment programs while others have been heavilyinvolved for years and very dependent on theseprograms to meet system electricity needs Demand


adequacy. The development of sophisticated com-munications equipment and control technologies

d diff i l h f d i i l

tance of combined cycle plants has been improvingthe reliability of the combustion turbines.



and cost differentials have fostered an increasingly

active market in bulk power transactions amongutilities. Bulk power transfers constitute a signifi-cant share of total U.S. electricity sales. Canadianpower imports are also increasing.

This section focuses on a number of new promis-ing technologies for electric power generation.These include the intercooled steam injected gasturbines, combined cycle conversion, and fuel cells.

Advanced Turbines

Turbines fueled by oil or gas have providedelectric power for five decades. They were usedprimarily to meet peak loads because of theirrelatively low efficiency. Recently, they have at-tracted renewed attention because of their lowcapital cost and improved fuel efficiency. Newturbine technologies and advanced materials have

allowed for hotter combustion temperatures. Manyof the advances in design and high-temperaturematerials for turbines result from military R&D forimproved jet engines.

The steam injected gas turbine (STIG) has fargreater power and electrical efficiency than olderdesigns, as discussed in the cogeneration section of chapter 2. The addition of intercooling to the STIG(ISTIG) should further increase power and effi-ciency improving their value for central powerstation applications. Part of the incoming com-pressed air used for combustion is passed throughthe turbine blades for cooling. This permits highercombustion temperatures General Electric is con-

It may also be economically feasible to convert acombined cycle plant to run on gas derived fromcoal, as in an IGCC system. The turbine initially canbe freed by natural gas, delaying construction of thecoal gasifier until fuel prices and other economicconditions warrant. The IGCC is discussed in thecoal section of this chapter.

Fuel Cells

Fuel cells produce electricity by an electrochemi-cal reaction between hydrogen and oxygen, which,at least in theory, can produce electricity much moreefficiently than current technology for burning fuel.The hydrogen can be supplied by a hydrocarbonfuel. A typical fuel-cell powerplant consists of threemajor components: fuel processor, fuel-cell powersection, and power conditioner. The fuel processorextracts hydrogen from the fuel. The hydrogen isthen fed into the fuel-cell power section. The fuelcells are joined in a series of stacks which form thepowerplant. The electrical power that flows from thestacks is direct current (DC). With some voltageregulation, the DC power can be used if the load iscapable of operating with DC. Otherwise a powerconditioner is required to transform the DC intoalternating current (AC). Neither combustion normoving parts is required in the production of power.A single fuel cell produces about 1 volt.

There are several types of fuel cells beingdeveloped. They are categorized according to thetype of electrolyte used in the conversion process.


Fuel cells are expected to produce electricity withmodest environmental impacts relative to those of

Advanced batteries, compressed air energy stor-age (CAES), and pumped hydro are storage technol-



pcombustion technologies. Efficiency is estimated tobe between 36 to 40 percent for smaller units and 40to 44 percent for larger ones, and future technologymay realize efficiency rates well over 50 percent.Another advantage is the short leadtime (2 to 5years) required to build a fuel-cell powerplant.Because fuel cell systems are modular, they can bebuilt at a factory and assembled at the site. Installa-tion can be accomplished in many locations, includ-ing areas where both available space and water arelimited. Other advantages include fuel flexibilityand responsiveness to changes in demand. 47

The installed capital costs of prototype fuel-cellpowerplants are about $3,000/kWe. The fuel cellpower section will account for about 40 percent of the costs. Operating and maintenance costs areestimated to range from 4.3 to 13.9 mills/kWh.Replacing cell stacks will account for the largest

share of operation and maintenance costs. Fuel costsare expected to be about 27 to 33 mills/kWh. 48

Magnetohydrodynamics

In magnetohydrodynamic (MHD) generators, astream of very hot gas from a furnace (about 5,000degrees Fahrenheit) flows through a magnetic fieldat high velocity. Because the gas is an electricalconductor, current is produced through electrodes

mounted on the sides of the gas duct. Used inconjunction with conventional power technology,MHD might raise plant efficiency by 10 percent.However, many difficult technical problems remainunsolved, especially for coal-freed MHD systems.

f

g ( ), p p y gogies that are well developed and could, undercertain circumstances, be used in the 1990s.

Advanced Batteries-Batteries are more efficientand flexible than mechanical energy storage sys-tems. In addition, they are modular and thus requireshort leadtimes to construct. Capacity can be addedas needed and sited near the intended load. Abattery’s ability to react in a matter of seconds makesit valuable for optimizing a utility’s operations.

Three types of utility-scale batteries are promis-ing: advanced lead, zinc-chloride, and sodium sul-fide (NaS) batteries. Lead batteries are widely usedtoday, mostly in cars.

Lead-acid batteries consist of a negative leadelectrode and a positive lead dioxide electrodeimmersed in an electrolyte of sulfuric acid. As thebattery discharges, the electrodes are dissolved by

the acid and replaced by lead sulfate, while theelectrolyte becomes water. When the battery isrecharged, lead is deposited back on the negativeelectrode, lead peroxide is deposited back on thepositive electrode, and the concentration of acid inthe electrolyte increases.

Over the years, research has continually improvedlifetime cycles of the lead-acid battery. It is possible

to buy a load-leveling lead-acid battery with aguaranteed lifetime of 1,500 cycles (about 6 years).Refinements could further improve the lifetime up to3,000 to 4,000 cycles.

One of the disadvantages of lead-acid batteries is


battery stack. Chlorine gas is formed at the positiveelectrode. The gas is pumped into the battery pump,

h it t ith t t 10 d C l i t

1991. Alabama Electric Cooperative, Inc. owns the11O-MW plant. 52



where it reacts with water at 10 degrees Celsius to

form chlorine hydrate, an easily manageable slush.During discharge, the chlorine hydrate is heated toextract the chlorine gas, which is pumped back intothe stack, where it absorbs the zinc and releases thestored electrical energy. The zinc-chloride technol-ogy is complex and is sometimes described as beingmore like a chemical plant than a battery.

Cost estimates for the zinc-chloride battery areabout $500/kWe, less expensive than the lead-acidtype because of the inexpensive materials that gointo its manufacture. The operation and maintenancecosts are uncertain. However, the expected longerlifetimes and less expensive replacement costs forthe stacks and sumps could levelize replacementoperation and maintenance costs in the 3- to 9-mills/ kWh range.

A major safety concern is associated with the

accidental release of chlorine. Because chlorine isstored in a solid form, sumps must be sufficientlyinsulated so that in the event of a refrigerationsystem malfunction the chlorine will stay frozen.

Interest in commercializing the NaS battery isstrong, and funding has reached about $140 millionannually. 50 The NaS battery system requires anoperating temperature of 350 degrees Celsius. Atthis temperature, both the sodium and sulfur areliquid. During discharge, sodium is oxidized at oneelectrode and travels through the electrolyte whereit is reduced at the second electrode to form sodiumpolysulfide. The major advantages of the NaSbattery are its high overall efficiency (88 percent)

In a conventional plant, the turbine must power itsown compressor, which leaves only about one-thirdof the turbine’s power available to produce electric-ity. The compressed air from a CAES is used in aturbine which, freed from its compressor, can drivean electric generator up to three times as large. Thegases discharged from the turbine pass through a‘‘recuperator,’ where they discharge some of theirheat to the incoming air from the cavern, increasingthe overall efficiency of the plant. (See figure 3-5.)

Three types of caverns may be used to store air:salt reservoirs, hard rock reservoirs, or aquifers. Thesalt reservoirs are found in Louisiana and easternTexas. Salt caverns are mined by pumping awater-based solution into the deposit and having itdissolve a cavern. Salt caverns are air tight.

Rock caverns are located throughout the UnitedStates. They are excavated with underground miningequipment. A compensation reservoir on the surfacemaintains a constant pressure in the cavern as thecompressed air is injected and withdrawn. Aquiferreservoirs are naturally occurring geological forma-tions, occurring in much of the Midwest, theFour-Corners region, eastern Pennsylvania, andNew York. They consist of porous, permeable rockwith dome-shaped, nonporous, impermeable caprock overlying them. The force of the surroundingwater confines the compressed air and maintains itat a constant pressure as it is injected and withdrawnfrom the rock.



ing the share to 20 percent might benefit the U.S.power grid. 53

Other storage technologies are flywheels, andsuperconducting magnet energy storage. These tech-

l i lik l b i l b f h

later in this chapter. The technical options discussedhere may help alleviate some of the concerns.

In recent years, long-distance transmission hasincreased significantly. Transmission capacity in


(thyristors) used in this application are expensiveenough that HVDC powerlines are only practical inlong lines interconnections between asynchro

Hydrogen

Many technologies such as nuclear power and



long lines or as interconnections between asynchro-

nous systems. Lower cost and high-capacity semi-conductors will make shorter DC lines economicallypracticable and allow multiterminal HVDC lines,instead of the two terminals now used. Because theconversion voltages at both ends of the line can becontrolled, HVDC transmission allows completecontrol of network flow.

Advances in communication and data processing

should improve reliability and economy. The currenttransmission and distribution system is largelymechanically controlled. The development of moreflexible transmission controls and distribution auto-mation will allow more efficient operation, but at theprice of complexity.

Superconductors will have a number of possibleapplications in the utility industry. These include: 1)

magnetic energy storage, 2) superconducting gener-ators, and 3) transmission lines.

Electricity storage may be the most likely earlyuse of superconductors. The concept is less devel-oped than the storage technologies discussed earlier,but superconducting magnets could be more eco-nomical and easily sited. The difficulties of thisapplication include cost, refrigeration, and theenormous magnetic stress on brittle ceramic super-conductors.

Another possible application is superconductinggenerators. preliminary designs and testing have

Many technologies such as nuclear power and

emerging options such as photovoltaics and wind aremost suitable for the production of electricity.Insofar as the electricity can be loaded onto thepower network and delivered to customers, that isthe most efficient method. However, electricity hassome significant disadvantages as an energy carrier.At present it cannot be stored economically, and it isexpensive to transport long distances although, asdiscussed above, new technologies may change

these conclusions.A potential alternative is to produce hydrogen,

most probably by electrolyzing water, and deliver-ing it via pipelines, much like natural gas. Hydrogenprovides inherent storage, as does natural gas; it isless expensive to ship long distances than electricity;and it can be consumed almost as cleanly—thecombustion product being water vapor (a small

amount of NO Xmay also result).However, hydrogen also involves several disad-

vantages. Costs would be high unless the electricityis extremely inexpensive (in which case the losses of long-distance transmission and storage of electricitywould not be very important). Losses in the electrol-ysis process and in compressing and delivering thehydrogen would be substantial. Pipelines built fornatural gas could be unsuitable because hydrogencan embrittle steel pipes, shortening their lifetimes,and because the energy density is lower than naturalgas, limiting the amount that can be delivered. Thusnew and expensive pipelines could be required.


effort is still needed to bring hydrogen concepts tothe demonstration stage.

Figure 3-6-DOE Energy R&D Budget: 1980-1991Selected Budget Lines



Renewable Energy Technologies

Renewable energy sources can supply space andprocess heat as well as electrical power. Somesources can be converted to feedstocks, for produc-ing chemicals, or to fuel, for transportation. Ingeneral, the resource bases are inexhaustible andwidely but irregularly distributed in both space andtime, making storage very important. And, althoughthe potential of each resource seems enormous, only

a small amount of the resource is economicallyrecoverable at present. As a group, renewable energytechnologies are relatively clean and provide neededprotection against a disruption in oil supplies. Newenergy technologies will enhance U.S. competitive-ness and help reduce the trade deficit.

Continued R&D are needed to improve theefficiencies of promising renewable technologies, toreduce the risk of new technologies, and to helpintegrate renewable into existing energy systems.Yet, Federal funding for renewable R&D hasdeclined over the last decade (see figure 3-6).Several recent studies have suggested that for acomparatively small increase in investment, theFederal Government could significantly hasten thedevelopment and deployment of renewable technol-ogies. The Solar Energy Research Institute (SERI)and ORNL have concluded that the Federal budgetfor renewable R&D was only about half of whatcould be technologically justified. 54

Hydroelectricity

H d l i f ili i h ki i i

Billions of dollars (1982), appropriated

5 1

2

1

0 !

m F u s i o n

m F o s s i l

= N u c l e a r

m Eff i c i ency

= R e n e w a b l e

8 0 8 1 8 2 8 3 8 4 8 5 8 6 8 7 8 8 8 9 9 0 9 1

SOURCE: Congressional Research Serviee, Energy Conservation: T~- dca/Etiiu”encyan dProgram Effectiveness, 1885130,UpdatedApr. 2,1991, table 2.

power represents about 12 percent of installed

electric generating capacity. Although the overallcapacity of hydropower has doubled since 1960, thegrowth rate has slowed. The 88 gigawatts (GW) of present capacity include 64 GW of conventionalhydro, 17 GW of pumped hydro, and 7 GW of small-scale (30 MW or less) hydro. 56

According to SERI, only about half of theNation’s hydropower capability has been devel-oped.57As of January 1, 1988, the United States has76.1 GW of conventional hydropower and 19.1 GWof pumped storage capability still untapped. Of thisamount, DOE estimates that for conventional hydro-power it is economical to develop only 30 percent,

22 GW i t i d l t


plants. Hydropower facilities are characterized bylow annual operating costs, long service lives, andlow emissions of pollutants. Hydropower facilities

steam flow requirement for aquatic life, and 3)quantify the cumulative impacts of multiple-sitedevelopment of a river basin.



can also aid flood control and provide recreation.

On the other hand, hydropower entails high initialcapital costs, potentially serious environmental is-sues (e.g., aquatic life considerations and the loss of farmlands, wetlands, and scenic areas), dam safetyconcerns, and keen competition by other interests foruse of the water base.

Technical Opportunities-Several areas of re-

search promise to improve the economics of hydro-power development and reduce its environmentaldrawbacks. For example, research on hydro-turbines has resulted in technologies that may provequite beneficial to hydropower development. Avariable-speed, constant-frequency generator hasbeen designed to alter the turbine speed in responseto changes in the hydraulic head, allowing theturbine to operate at maximum efficiency.

New ultralow-head turbines, designed for use atsites with elevation differentials of less than 10 feet,could provide nearly 4,000 MW of additionalcapacity .59

Large-scale deployment of free-flow turbines foruse in flowing rivers could help develop an addi-tional 12.5 GW of capacity. 60 Use of such turbineswould entail very little civil work, no impoundment

of water, little disruption of flow, and no costlyupgrade of dam structures.

The development of cross-flow turbines thatoptimize air injection and suction head in the drafttube and the design of replacement turbine runners

Biomass 61

Biomass already is a significant source of renew-able energy. It is the only nonfossil liquid fuel fortransportation applications. The industrial sectoruses 2 quads of energy from biomass, almost all of it in the pulp, paper and lumber industries. Many of these industries use biomass in the cogeneration of heat and electricity. Furniture manufacturers and

food processors are other significant users. Theresidential sector uses nearly 1 quad of firewood,mostly for space heating and cooking. 62

Biomass Resources—The energy potential of biomass is enormous. DOE estimates a total energypotential of at least 55 quads in 2000, under certainconditions. Present capacity, excluding cultivatedenergy crops and wood and grain not used forbiomass, is estimated to be 14 quads. 63

Energy Crops—hardwood trees and herbaceouscrops dedicated as energy resources-are the great-est potential source of biomass. The goal of provid-ing a year-round, abundant supply of biomass isbeing supported by genetic engineering efforts andbreeding research to increase yields and reduce costsof plants such as corn, sorghum, ‘energy’ cane, andshort-rotation hardwoods. DOE reports that during

the next 25 years, average annual crop yields areexpected to be 5 to 11 dry tons per acre. At 9 dry tonsper acre, the use of 192 million acres of potentialcropland could generate a gross biomass energycapacity of 26 quads. It is not known at this time how


Other sources of biomass are described below:q Conventional wood resources, includes wood

not used by the forest products industry in the

tivity and develop new plants. For example, produc-tivity can now be increased 5 to 10 times over thenatural growth rate of trees. 66However, the increase



q

q

q

not used by the forest products industry in thethinning out of commercial forests. SERIestimates that conventional wood resources, if managed properly, could supply 6.5 quads of energy annually. 65

Agricultural and forestry wastes include pri-mary and secondary residues. Primary residuesare the stalks, limbs, bark, and leaves left on theland after harvesting. Expensive to collect, theyare often left to enrich the soil. Secondarywastes emanate from processing (e.g., ricehulls, black liquor from pulping) and can oftenbe used as fuel at little or no cost.

Agricultural oil seed crops that produce veg-etable oil offer an interesting but not yetcommercial source of energy. Soybeans, whichdominate this market, produce oil that is almosttotally usable as fuel, yet soybean products arevalued more highly for other uses. Rapeseed oilis a promising energy source.Certain aquatic energy crops produce oil thatwith upgrading could substitute for jet anddiesel fuel. These plants include microalgaeand macroalgae (e.g., kelp, cattails, waterhyacinths, and spartina).

Biomass offers many environmental benefits.Carbon dioxide produced during combustion isbalanced by reabsorption by the growing plants.Emissions of SO X and other air pollutants arenegligible or at least as easily controlled as thosefrom fossil fuels.

in biotechnology and genetic engineering effortswill have to satisfy concerns of public and environ-mental safety.

Converting Biomass to Energy—Biomass can beused directly as fuel or converted to other forms foruse as fuel or feedstock. Ultimately, biomass will bemore useful if converted to gaseous or liquid fuels,but the conversion process can cost as much as thecollection of biomass and feedstock production.

Thermal Use of Biomass—The principal energyuse of biomass is the production of heat, via directcombustion in air, for use in process heating, spaceheating, and cogeneration systems. About 64 per-cent of this energy is used by the lumber, pulp, andpaper industries. Homeowners and commercial enti-ties use the rest.

Electricity is produced primarily through thedirect combustion of wood, wood wastes, and woodbyproducts. Most users of biomass for powergeneration are nonutility generators (NUGs) thathave ready access to wastes or byproducts at little orno cost. Many utilities, however, purchase powerfrom cogenerators who use biomass as fuel. In 1989,biomass-fueled capacity accounted for about 20percent of total NUG capacity (40,267 MW). Bio-mass capacity included agricultural waste, munici-pal solid waste, and wood. 67 Utilities now operatewood-fired powerplants in California, Maine, Mich-igan, Oregon, Vermont, Washington, and Wiscon-sin. About 5,200 MW of total utility capacity iswood fired 68


Gasification of Biomass-The production of methane (essentially natural gas) from biomass forsupply to a natural gas system is accomplished bybi l gi l bi dig ti A bi dig ti

ethanol processes and indicates that economic com-petitiveness can be reached by the year 2000.

Methanol can also be made from wood and other



biological anaerobic digestion. Anaerobic digestionis particularly well-suited for very wet feedstocksand has been used commercially when biomass costsare low enough. Given a feedstock cost of $2.00/ MBtu, methane can be produced for $4.50/MBtu, acost not yet competitive with conventional naturalgas unless other factors such as disposal costs areconsidered. 70

Methane production from landfills, sewage treat-

ment, and farm wastes will continue to increase butwill be important only for specific locales. Biomasscan also be converted by partial oxidation to syngas,which can be used as a fuel or as a feedstock formethanol production.

Production of Biofuels 71 —A variety of liquidfuels and blending components can be producedfrom biomass for use primarily in transportation.These biofuels include alcohol fuels (ethanol andmethanol), as well as synthetic gasoline, jet, anddiesel fuel.

Each year nearly 1 billion gallons of ethanol areadded to U.S. gasoline stocks to create gasohol, a90-percent gasoline/10-percent ethanol blend. Theuse of ethanol has gained support because of itspotential contribution to the U.S. agricultural econ-omy. The Federal Government and about one-third

of the States subsidize ethanol use by partly exempt-ing gasohol from gasoline taxes. Without thesesubsidies, ethanol would not be competitive withgasoline. OTA estimates that the full cost of producing ethanol ranges from $0.85 to $1.50/

biomass materials, but the costs of production areuncertain. The National Research Council estimatedthat the crude oil equivalent price of methanolproduced from wood, using demonstrated (not yetcommercial) technology, is over $70/barrel. Forbiomass-based methanol to be competitive withcoal-based methanol, improvements are needed inconversion technology and all aspects of growingand harvesting of biomass feedstocks. SERI expects

the wood-to-methanol process to be ready fordemonstration on a commercial scale by 2000 at thecurrent R&D pace.

The production of diesel and jet fuel frommicroalgae is not as promising for the near term.Organisms with high growth rates that produce highoil content must first be developed. In addition,demonstration ponds must be built and operated ona large scale to make this process economical.

Converting biomass to synthetic hydrocarbonfuels through pyrolysis (thermal decomposition inthe absence of air) of the biomass and catalyticupgrading of the biocrude to gasoline has beendemonstrated in pilot plants but not developed forcommercial use. Research results suggest a currentcost estimate of the pyrolysis process to be $1.60/ gallon for gasoline. A target of 85 cents/gallon is

expected by 2005 if improvements are made incatalytic conversion and if feedstock costs are$2.00/MBtu. 72

Commercial production of synthetic gasolinefrom biomass depends on improvements in the


resource is enormous-potentially 10 millionquads 74 in the United States alone-the amount thatcan be recovered economically is small. Neverthe-

Converting Geothermal Energy-Convertinggeothermal resources to energy entails bringing theresource to the Earth’s surface via a production well



can be recovered economically is small. Neverthe

less, using available technology, about 23,000 MWof capacity from geothermal resources could betapped over the next 30 years, according to the U.S.Geological Survey.

75 In 1989, the U.S. geothermalindustry produced 2.8 billion kWh. 76Modest techni-cal advances could dramatically increase the use of this resource.

Geothermal resources take several forms: steam,hot water, volcanic magma, hot dry rock, andgeopressured brines. Except for brines located alongthe Gulf Coast, most of these resources underlie thewestern third of the country.

The Resource Base—The geothermal resourcebase includes usable heat contained within the Earthto a depth of about 3,000 feet. 77Only 3.8 percent of this resource comes from hydrothermal reservoirs,naturally occ urring hot water or steam at tempera-tures of 90 degree C. or more to a depth of 900 feet.

78

Only a small portion of the hydrothermal resourceis composed of the very hot (150 degree Celsius andmore) vapor-dominated reservoirs used to generateelectricity. Two-thirds of identified hydrothermalresources are in the moderate range of 70 to 121degrees Celsius.79These resources and those that areof lower temperature show promise of recovery

using available improved hydrothermal technolo-gies.

The largest part of the geothermal resource baseis found in: 1) magma, accessible regions of moltenrock at temperatures of 850 degrees Celsius and

resource to the Earth s surface via a production well

and then converting geothermal energy to usefulenergy.

The technology for converting hydrothermal re-sources is well established. Dry natural steam can beconverted to electric power by conventional turbinegenerators. Flash and binary cycle conversion tech-nologies must be used to convert other geothermalresources. Flash steam technology is used with

high-temperature liquids (less than 200 degreesCelsius) to produce steam to drive a turbine-generator. Binary cycle systems use the heat of ageothermal liquid to vaporize a second, workingfluid. These systems are used when liquids are nothot enough (below 200 degrees Celsius) for flashsteam approaches.

Although there has been little commercial experi-ence with this technology, the dual-flash system isexpected to be more efficient than the single-flashsystem now in extensive use. Dual-flash units areprojected to be about 40 to 50 MWe in size by1995. 80

The binary cycle system is more complicated andcostly because it uses a secondary working fluid,thus entailing special turbines and heat exchangers.Binary systems have an advantage in that theworking fluid can have thermodynamic characteris-tics superior to steam, resulting in a more efficientcycle. Moreover, binary cycles operate efficiently ata wide range of plant sizes


Hot dry rock technologies offer great promise forcommercially developing the large geothermal re-source potential. The rock is fractured to create

intermediate utility needs. Solar thermal electricplants produce 0.01 quad per year. 86

Much progress has been made in the technology



reservoirs into which water is pumped. Once heated,the water is brought back to the surface, where itsheat can be used directly or converted to electricity.With the needed technology developed, this methodis projected to generate power at 5 cents/kWh. 82

The heat from magma is recovered by pumpingwater into the subsurface to extract heat. Fieldexperiments to confirm drilling techniques, reser-voir dynamics, and other parameters are neededbefore this technology can become commercial.Magma energy costs are estimated to be 4.5 to 8cents/kWh. 83

The costs of identifying and developing geother-mal resources are high. Improved technology forresource exploration and reservoir conflationcould reduce costs as much as 25 to 40 percent foradvanced concepts. 84 Moreover, predictions of res-

ervoir performance must be enhanced.Substantial cost reductions could also be made in

drilling, completing, and operating geothermalwells. Accelerated research is needed on high-temperature equipment and corrosion-resistant ma-terials. Savings of 15 to 20 percent for hydrothermaltechnology and 25 to 40 percent for advancedconcepts could result. However, environmental is-sues, such as wildlife management and scenicconsiderations could restrict the development of some geothermal sites. SERI points out that the‘‘not-in-my-backyard’ syndrome is just as true forgeothermal projects as it is for other energy facili-i 85

Much progress has been made in the technologyin the last decade. Several different solar thermalsystems can produce electricity for about 12 to 15cents/kWh. The DOE program goal is to produceelectricity for 5 cents/kWh. 87

Three technologies could be deployed competi-tively in the next 20 years: central receivers; andtwo distributed, or modular concepts, parabolictroughs and parabolic dishes.

Distributed systems have been more successfulthan central receivers. Since each unit is independ-ent, it is easier to install. Each central receiver,however, must be designed for a specific number of heliostats (the concentrators). Heliostats must beindividually focused on the central receiver andmust follow a unique tracking system. However, itis not yet clear which concept will be superior in thelong term.

Central Receivers—The central receiver is afreed receiver mounted on a tower. At its base a largefield of mirrors, known as heliostats, tracks the sun,reflecting solar energy onto the receiver. The mirrorsmust move both vertically and horizontally on aprecisely determined path. Liquid or air inside thereceiver transports the thermal energy to a steam-driven turbine for generating electricity. In the1970s, several solar thermal electric plants werebuilt, including the 1O-MW Solar One Plant locatedin Dagett, California. The 30-MW Phoebus projectin Jordan is the major central receiver projecttoday 88



mirrors, which reduces the cost of the heliostat aswell as the foundation and control system.

Parabolic Dishes—A parabolic dish is a dish-shaped collector with a receiver mounted at its focal

i t th t E h d l i l d


solar electric technology. 90 The Stirling enginecould be very reliable because of its mechanicalsimplicity, but it will need further development toimprove its efficiency and cost.

though no major breakthroughs are envisioned thatwould lower costs below current projections, thesereductions may be enough to make solar thermal avaluable source of supplemental energy. One market



p y

Power costs from a system of stretched membranedishes and a Stirling engine are projected to be 5cents/kWh when commercially available. 91

Parabolic Solar Troughs-Collectively, para-bolic solar trough systems account for more than 90percent of the world’s solar electric capacity. Aparabolic trough tracks the Sun vertically, which issimpler than the vertical and horizontal trackingrequired from heliostats and parabolic dishes. Thetrough concentrates sunlight onto a tube fried withfluid, usually very hot oil, at its focal line. The fluidcirculates between troughs, finally transferring itsheat through a heat exchanger to water or steamdestined for a turbine generator.

Standing alone, solar troughs are best used forindustrial applications. For electric power genera-

tion, supplemental gas-fired superheaters are used tocreate steam hot enough to drive a turbine.

From 1984 to 1988 several commercial solartrough plants, totaling 275 MWe, were built by theLUZ Corp. in California. LUZ is presently con-structing 80 MWe of capacity, and is planning for300-MWe additional capacity by 1994. These para-bolic trough electric plants operate in the hybridmode, using natural gas. Improvements in engineer-ing, manufacturing, and construction techniqueshave reduced electric costs from 23 cents/kWh inearly plants 92 to 8 cents/kWh in 1990. These areaverage costs, including the contribution of naturalgas which is cheaper than the solar portion 93

pp gyfor which it maybe uniquely qualified is toxic wasteneutralization, where photochemical effects maybemore effective than simple heat.

For the near term, the solar trough/natural gashybrid system appears to be the most marketable.Utility studies suggest that in the long term centralreceiver and parabolic dish technologies offer themost cost-competitive generation if cost-effectivestorage technologies can be developed. The U.S.budget for solar thermal research, however, hassteadily declined in the last 10 years, and the UnitedStates has lost its leadership to European countriesin marketing solar thermal technology to foreignmarkets. Besides its environmental benefits, devel-oping solar thermal energy technologies offers apotential multibillion-dollar domestic and interna-tional industry.

Photovoltaic EnergyPhotovoltaic (PV) cells, which directly convert

sunlight to electric current, have been used for yearsin calculators, watches, and space satellites. Otherniche markets such as remote sites are also develop-ing. These applications have sustained the PVindustry while the technology has developed forusing PV cells economically in the bulk powermarket. Although PV energy is more expensive thanconventional energy for most uses, costs continue todrop. The present cost is now 20 to 30 cents/kWh—about five times the cost of conventional electric-ity. 96 With further advances in microelectronics andsemiconductors photovoltaics can become competi




Photo credit:ARCO Solar, k

Photovoltaic central station,


GaAs are enough to absorb all the solar radiation,whereas a few hundred microns of single crystalsilicon (c-Si) are needed for the same job. However,growing thin films of GaAs in the quantity and

Polycrystalline and Ribbon Silicon-Casting processes yielding large-grained polycrystalline sili-con and techniques for making continuously pulledribbon silicon may yield acceptable efficiencies at



growing thin films of GaAs in the quantity andquality needed is not yet feasible.

Concentrators that keep optical losses small andmaintain focused radiation on cells throughout windstress, thermal cycling, and tracking are the centralfocus of R&D programs. In the near term, 20-percentefficient concentrator modules can be achieved. 97

Flat-Plate Collectors—This type of PV modulesystem exposes a large surface area of intercon-nected arrays of PV cell modules to the Sun. Thissystem uses cells cheaper but less efficient thanthose in the concentrator system. Unlike the concen-trator system, flat-plate collectors can operate indiffuse sunlight, and no cooling system is required.Very little maintenance is required.

Flat-plate systems entail a large number of interconnections between a large number of cells.The integrity of these connections, and their protec-tion against hostile elements in the environment, aremore important than the protection of the cellsthemselves. Making cells as large as possiblereduces the number of interconnections.

Technical Opportunities—Minimizing cell costis critical for flat-plate modules. The complex designand manufacturing process for highly efficient

concentrator cells may always be prohibitivelyexpensive for one-Sun use. Focusing R&D effortson improving automated high-yield processing of one-Sun cells may be more fruitful than changingcell design itself. Improvements in the quality of

ribbon silicon may yield acceptable efficiencies atsignificantly reduced cost.

Thin-film Technology--The cheapest approach toPV energy conversion is the deposition of thinsemiconductor films on low-cost substrates. Thinfilms are amenable to mass production and use onlya small amount of active material. Materials usedinclude copper iridium diselenide, cadmium tellu-ride (with small-area laboratory cell efficiencies of 19 percent), and amorphous silicon. 99 To be effec-tive, deposition techniques must be developed toensure high-quality and defect-he material withinindividual grains. If the thin film is polycrystalline,grain boundary effects must be minimized.

Amorphous silicon (a-Si) is interesting becauseonly a thin film of inexpensive material is needed forhigh absorption and because large-area films of a-Si

and multifunction a-Si cells can be made easily.However, efficiency is low and degrades over time.Research is focusing on improving efficiency bymeasures such as stacking cells (multifunctioncells).

Wind Power

Wind power is the solar energy technology closestto being economically competitive in the bulk powermarket. In 1989, wind powerplants generated over2 billion kWh of electricity, 100 at an average of 8 cents/kWh. At the best sites the cost was only5 cents/kWh 101


Wind is an intermittent resource that varies fromregion to region. Sites with small differences in wind



g gvelocity have great differences in energy output,because power output increases with the cube of thewind speed. Thus, an average wind speed of 19 milesper hour (mph) will produce 212 percent moreavailable energy than will an average speed of 13mph. 102

Technical Opportunities-Although the costs of wind-derived energy have dropped dramatically

since 1981, few of these reductions stemmed fromtechnological improvements. Most of the savingsresulted from standardization of procedures, massproduction techniques, improvements in siting, andthe scheduling of maintenance for periods of lowwind. 103 New turbines are now able to remain inoperation almost 95 percent of the time. 104 I naddition, the lifetime of critical components for windturbines has doubled in the last 10 years. 105

DOE and industry analysts agree that within thenext 20 years expected improvements in wind powersystem design will yield electric power at 3.5cents/kWh for sites with only moderate wind re-sources. 106 Some Midwestern States, with averagewind speeds of 14 to 16 mph, would be likelybeneficiaries of such technology.

Additional improvements will derive from more

sophisticated turbines that can adapt to the changingspeed and direction of the wind, thereby helpingprovide more constant frequency power to a utility.Pacific Gas and Electric and EPRI are engaged in a5-year project to develop build and test prototypes

Photo credit: U.S. Wn@ower, Ed Linton, photographer

Small wind turbines.

ronmental, regulatory, and public perception per-spectives. Characterizing a site has proven costlyand time-consumin g, because techniques for extrap-olating data from one site to another are not yetrefined. Extensive, customized wind measurements


resources, cost, and performance. Many industryobservers recommend establishing minimum per-formance standard levels for turbine certification.

providing desalinated water. Effluents from eitheropen- or closed-cycle systems can be converted tofreshwater through a second stage evaporator/ condenser system.



In general, improvements in wind energy areexpected to continue, and the cost of electric powerfrom wind turbines in high-wind regions maybecome considerably lower than power from othersources. The rate of improvement will be heavilyinfluenced by future trends in the avoided costs or“buy-back rates” offered by utilities to nonutilityenergy producers. If these costs are low or uncertain,technological development and application will be

slowed. Conversely, high avoided costs, stimulatedperhaps by rising oil and gas prices or shrinkingreserve margins of generating capacity, might con-siderably accelerate the contribution of wind power.

Ocean Energy Systems

The ocean—with its waves, tides, temperaturegradations, marine biomass, and other dynamiccharacteristics-contains an enormous amount of energy. Exploiting this resource has proved difficult.

ocean thermal energy conversion (OTEC) ex-ploits the difference between temperatures of sur-face water and water as deep as 1,000 m 108 togenerate electricity. Differences as small as 20degree Celsius can produce usable energy. Tappingthis vast resource, particularly in tropical oceans,would produce an estimated 10 million megawatts

of baseload power, according to SERI.109

Research has focused mainly on the closed-cycleand open-cycle OTEC systems for generating elec-tricity. The closed-cycle system recirculates a work-ing fluid like ammonia to power a vapor turbine for

y

No commercial OTEC plants have been tested,but under some conditions, OTEC-derived electric-ity may be competitive in the next 5 to 10 years forsmall islands where power from diesel generators isvery expensive. Use of OTEC domestically forelectric power is unlikely except for coastal areasaround the Gulf of Mexico and Hawaii.

It should also be noted that the basic OTECtechnology-the conversion of large quantities of heat at low temperature differences to electricpower--can also be used to exploit waste heat atindustrial and commercial facilities. Many refiner-ies, steel plants, chemical processing plants, etc.dump heat at much higher temperatures than areavailable in the ocean. Exploiting this energy wouldbe much easier than building and operating an

OTEC and would supply power right at a load centerinstead of out in the ocean. Similarly, thermalpowerplants exhaust a huge amount of energy (60 to70 percent of all energy input to the plant), thoughat lower temperature differences. A bottoming cycleusing OTEC-type cycles could make an asset out of an environmental problem, and feed the powerdirectly into the grid. Both these applications arelikely to be economical long before OTEC.

Other ocean energy technologies that convertwave energy and tidal power receive much lessattention than OTEC. The U.S. Government does nomajor wave R&D, but Norway, Britain, and Japan


The total U.S. tide potential has been estimated at18,300 GW. 111 Only three coastal areas, however,are promising: one in Maine and two in Alaska. aminimum tidal range of 5 m is needed for tidal power

lected from landfills and flared, because the volumeis too low to be economical.

Several problems exist with present MSW ap-proaches. MSW plants have higher capital and



to be considered practical. Research in microhydrotechnology may make tidal systems feasible at lessertidal levels.

Municipal Solid Wastes (MSW)

About two-thirds of the solid waste generated byhouseholds and by commercial, industrial, andinstitutional operations is burnable and can beconverted to energy.

Conversion Technologies—MSW can be con-verted to electricity and process heat by either masscombustion or refuse-derived fuel combustion. Inmass combustion, MSW is burned with or withoutpretreatment or sorting of the inherent waste prod-ucts. In refuse-derived fuel combustion, recyclablematerials and noncombustible materials are frostremoved from the MSW. The rem aining material ismade into pellets.

Waste-to-energy facilities function much like afossil fuel steamplant. The fuel is burned to heatwater, and the steam drives a turbine to generateelectricity. The steam can also be used in districtheating/cooling systems. SERI estimates that cur-rent use of MSW for electricity totals 0.11 quads.Under current programs, that amount is expected torise to 0.45 quads by 2010 and 0.57 quads if R&D isincreased.

112

Most waste-fired capacity is owned bynonutility generators.

Another energy product, methane, can be recov-ered from MSW for use in natural gas systems via

p p g poperating expenses than those of wood- or fossil-fired plants, mainly due to feedstock processingcosts and to later emissions and solid waste disposal.

Some of these costs are balanced by credits foravoiding MSW disposal. Thus, overall costs of power generation average 7 cents/kWh but couldalter depending on the economics of particularlocales.115

A variety of technology improvements are beingsought for reducing the costs of electric powergeneration and emission control, increasing theattractiveness of MSW as a fuel for electric power-plants. New ways are needed to dispose of dioxins,nitrogen oxides, chlorinated gases, solid residues,and ash. Automatic trash sorting to remove glass,plastics, and other recyclable would improve com-

bustion and reduce disposal problems.For methane production by anaerobic digestion of

MSW, improvements are needed in solids loadingrates and digestion efficiency. Also needed areimprovements in the stability and control of digesteroperation. An accelerated program with industryinvolvement and cost-sharing could reach perform-ance goals if tipping fees for MSW exceed the $25to $50/ton range. 116

Extensive commercial use of gasification of MSW may be economical already in areas wheredisposal costs are high (where tipping fees are above$100/ton at lanfills).


space. Global temperatures could increase by 2 to 9degrees Fahrenheit over the next century if currentemission trends continue. The anticipated rise intemperature could lead to devastating changes in

tages may be marginal. For an indepth analysis of technical and policy opportunities for reducinggreenhouse gas emissions over the next 25 years, thereader is referred to the recent OTA report Changing



climate, agriculture and forestry, and populationshifts.

The United States is a major contributor togreenhouse gas emissions. U.S. carbon emissionsfrom energy use account for 25 percent of the worldtotal. Coal accounts for 35 percent of U.S. carbonemissions; petroleum, about 45 percent; and naturalgas, about 18 percent.

A recent OTA report, Changing by Degrees: StepsTo Reduce Greenhouse Gases, concluded that theUnited States can reduce CO 2 emissions by 20 to 35percent from 1987 levels over the next 25 years butonly with great difficulty. There are significantopportunities for reducing CO 2emissions in allsectors. To achieve this reduction, a serious commit-ment and the implementation of a variety of techni-

cal options and policy measures will be required.Emissions reductions may be costly, but no majortechnological breakthroughs are needed.

The implementation of C0 2 reduction measureswill have far-reaching effects on the U.S. economyand energy supply picture. The switch to low ornoncarbon fuels may revitalize the nuclear option,increase demand for natural gas, accelerate thegrowth of renewable, and limit production andconsumption of coal. Attempts to limit coal use willresult in significant social and economic impacts. Atthe very least, marginal, inefficient mines andcoal-fired powerplants will probably close. Unem-

By Degrees: Steps To Reduce Greenhouse Gases.

Another environmental concern is acid rain. Thecombustion of fossil fuels also produces sulfurdioxide and nitrogen oxide. As these pollutants arecarried away from their sources, they can betransformed through complex chemical processesinto secondary pollutants: sulfates and nitrates.These pollutants combine with water to form acidand fall as rain or other precipitation. Numerouschemical reactions-not all of which are completelyunderstood-and prevailing weather patterns affectthe overall distribution of acid deposition.

The best documented and understood effects of acid deposition are to aquatic ecosystems. Thesensitivity of a lake or stream to acid depositiondepends largely on the ability of the soil and bedrockin the surrounding watershed to neutralize acid.When the waters of a lake or stream become moreacidic than about pH 5, many species of fish die andthe ecosystem changes dramatically. In addition tothe acidification of aquatic ecosystems, transportedair pollutants have been linked to harmful effects toterrestrial ecosystems. Broad forested areas sub-

jected to elevated levels of acid deposition, ozone,

or both have been marked by declining productivityand dying trees, although it is uncertain how muchof this is due to airborne pollutants. For an indepthdiscussion of acid rain, the reader is referred to theOTA report Acid Rain and Transported Air Pollut-


also given to “clean” utilities to grow beyond thecap.

The mandated emissions reductions will likely

confident that there would be no reversal duringconstruction and the operating lifetime of the plant.

There are many ways in which the public can



result in increased electricity costs to consumers,particularly in the Midwest, and may financiallystrain certain vulnerable utilities. Markets may bedisrupted by an increase in the demand for low-sulfur coal at the expense of high-sulfur coals. Thischange in demand will result in increased unemploy-ment in regions where high-sulfur coal is mined. Theextent to which utility and industrial users wouldshift to low-sulfur coal depends on the relative cost

advantage of fuel switching as opposed to removingsulfur dioxide by technological means (scrubbers).It is hoped that by providing financial incentives(pollution credits) to defray the costs of pollutioncontrol equipment, utilities will not switch tolow-sulfur coal and thus save some high-sulfurcoal-mining jobs.

Obstacles to a Nuclear Revival

Public Acceptance of Nuclear Power

Over the years, public concerns about reactorsafety, costs, and waste disposal have had an impacton nuclear power will affect energy supply optionsin the future. The accidents at Three Mile Island andChernobyl dramatized the hazards of nuclear power.Poor operations at some plants, especially whenmishaps or small radioactive releases occur, serve as

reminders. Nuclear reactors present risks to thepublic that are statistically much lower than othercommonly accepted facilities such as dams, but thepublic will not find that credible until safety is nolonger a controversial issue Critics are unlikely to

make its opposition felt. Most directly, referendahave been held to shut down nuclear plants. One haspassed on the Rancho Seco Plant in California,though that seems to have been more related to theeconomics of a poorly operated plant than toconcerns over safety. Indirectly, the public alsoexerts pressure in courts, on local governments thatmust issue permits, and on state governments whichmust regulate rates of return on the investment and

approve emergency evacuation plans.At this point it is simply not possible to say with

any assurance whether there will be a nuclear revivalor what it would take to initiate one. If there is one,it will occur primarily because new plants are saferand cheaper than has been the recent norm andbecause alternatives are proving inadequate. How-ever, neither safety nor cost will be easy to establish.

If costs and safety of nuclear power can beconvincingly made favorable relative to otherchoices, a revival is quite possible, though by nomeans assured. This will not happen within the nextfew years, but by the mid-1990s demand growth islikely to mandate considerable new construction,and the industry will have had time to replace thememories of the present failures with a period of reliable operation and declining costs. Under suchconditions, having the option of an economicalreactor that has been thoroughly reviewed to mini-mize the risk of cost escalation or operating prob-lems could prove attractive.


a nuclear plant, while others demand a large riskpremium.

Very few people involved in operating nuclear

l b li h l l

decay within 200 years. After 1,000 years, virtuallyno radioactive material is left but plutonium andtraces of a few other long-lived components. Thewaste can be stored in geological formations thath b bl f illi f d



powerplants believe that nuclear plants represent asignificant hazard to the public, but failed construc-tion projects and plants damaged by moderatelyserious accidents, e.g., Three Mile Island, poseimportant financial risks for the utility.

Capital Costs—A recent industry study predictedthat a new nuclear plant would cost $1,400/kWecompared to $1,220 for a coal plant and $520 for agas combined cycle plant. The levelized costs for thepower would be 4.3 cents/kWh for nuclear, 4.8 forcoal, and 6.1 for gas.

117 These figures are notverifiable because no plant has been started recentlyor under the conditions assumed in the analysis. Inaddition, industry has been generally optimistic oncost estimation, sometimes spectacularly so. Never-theless, it suggests that nuclear power can still becompetitive if the problems of the past can beavoided.

Nuclear Waste Disposal

Concerns about nuclear waste disposal also willhave an effect on energy supply adequacy. The lackof proven technology and a known site for safelysequestering nuclear wastes has been one of themajor factors behind opposition to nuclear power.To many people, it seems irresponsible to buildreactors before we could be sure that waste productswould never be a threat. The period required beforethe radioactivity of spent fuel decays to completelyinnocuous levels 118 is many times longer than

d d hi d i i ll h

have been stable for many millions of years, andeven if conditions change, any leakage will be veryslow (the long-lived wastes are largely insoluble inwater and too heavy to be easily windblown). Suchleakage should pose essentially no threat to peopleor the environment, especially in comparison tochemical wastes and other risks. In any case, theproblem must be solved whether we build morereactors or not, because of all the waste that has beenproduced already in the commercial and weaponsprograms.

Yucca Mountain, part of the Nevada Test Site fornuclear weapons, has been selected as the site for thefirst Federal high-level waste repository. The cli-mate is extremely dry, and the water table is about1,000 feet below the proposed waste storage level,limiting the likelihood of leaching. The area is verythinly unpopulated, minimizing the number of people who could be at risk. Extensive testing anddetailed analyses necessary to validate this selectionare underway.

In addition to the natural protection of deep burialin a stable formation with little groundwater seepingdown through the site, various manmade barrierswill be applied to ensure protection, especiallyduring the earlier, rapid decay rate stages. Waste canbe blended into material, e.g., borosilicate glass,which hardens into a very stable mass. Vitrifiedwastes (or spent fuel) can also be encased in casksmade of materials impervious to any plausible




disagreements are rooted in uncertainty over futuregrowth in demand and the cost and performance of existing and planned capacity. In the face of the

considerable uncertainties conflicting views abouthi h i k k d h b h i k

Edison Electric Institute, electricity sales to utilitiesfrom nonutility sources increased sixfold from 1979to 1986 and 33 percent in 1988 and 1989. 120 Almost

all of the sales have been to the investor ownedf h i d



considerable uncertainties, conflicting views aboutwhich risks to take and who must bear those risks areinevitable. In recent years, few utilities have beenwilling to commit to construction of new baseloadcapacity, in spite of the continued aging of theexisting generating plant stock and predictions fromsome industry and government planners that thecountry faces possible shortages in the early tomid- 1990s. Meanwhile, the flow of new plantadditions by utilities entering service as a result of orders placed in the 1970s is slowing to a trickle,although capacity additions by nonutility generatorsare increasing.

Nonutility Generation

Increases in nonutility generating capacity havebeen significant in recent years. The growth incogeneration and small power production facilitieshas, to some extent, offset the slowing of utilityconstruction of new capacity. According to the

all of the sales have been to the investor-ownedsegment of the industry.

Also, nonutility generation is an important sourceof electricity in some States (California, Louisiana,Texas, Maine, Alaska, Hawaii) and is starting tobecome a national factor. Moreover, several regions,including New England and the Mid-Atlantic, willincreasingly depend on nonutility generation addi-tions to ensure supply adequacy or offset capacity

shortfalls over the next 10 years.A wide range of technologies can be used to

cogenerate electric and thermal energy, e.g., steamturbines, open-cycle combustion turbines, combinedcycle systems, and diesels. Much of the investmentin new generating technologies, particularly cogen-eration, has come from nonutility generators. Formore information about cogeneration technologies,the reader is referred to the OTA report Industrialand Commercial Cogeneration.



Chapter 4

Potential Scenarios for FutureEnergy Trends

. .“

CONTENTS Page

P R O J E C T I O N S F O R T H E . . . . . . . . . . . . . . . . . . . . 112

Scenario 1: Baseline . . . . . . . 112

Scenario 2: High Growth . . . . . . . . . . . . . . . 114

Scenario 3: Moderate Emphasis on Efficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118

Scenario 4: High Emphasis on Efficiency 121



Scenario 3: Moderate Emphasis on EfficiencyScenario 4: High Emphasis on Efficiency . . . . . . . . . . . . . . . . . . . . . 121Scenario 5: High Emphasis on Renewable Energy q . 124

Scenario 6: High Emphasis on Nuclear Power . . . . . . . . . . . . . . . 127

Comparative Impact of Scenarios. . . . . . . . . . . 129

TablesTable Page 4-1. Baseline Energy Use and Supply . . . . . . . . . . . . . . . . . . . . 113

4-2. High Growth Energy Use and Supply . . . . . . . . . . . 1154-3. Moderate Efficiency Scenario Energy Use and Supply . . . 119

4-4. Potential for Energy Demand Reduction From Base Case by 2015 . 119

4-5. High Efficiency Scenario Energy Use and Supply . . . . . . . . . . . . . . . 122

4-6. High Renewable Scenario Energy Use and Supply . . . . . . . . . * . . . . 125

4-7. High Nuclear Scenario Energy Use and Supply . . . 127

4-8. New Nuclear Plant Construction Schedule in High Nuclear Scenario . . . . . . . . . . 1284-9 Summary of Scenarios . . . . . . . . . . . . . . . . . . . . . . 130

4-10. Comparative Impact of Scenarios . . . . . . . . . . . . . . . . . . . . . . . 131

Chapter 4

Potential Scenarios for Future Energy Trends

Previous chapters have described historical en-d d id ifi d h j f 1988 Low oil prices and strong economic growth( h l l l f h f ) i l l



Previous chapters have described historical energy trends and identified the major components of our energy future. The relative emphasis on thesevarious components will guide our energy futurealong one path or another. There is considerablevariation among the potential paths. In general, theNation can remain on a course that emphasizesconventional fossil supply patterns. Alternatively,an emphasis on high efficiency can reduce projec-

tions of energy demand. Such a shift would entailradical changes in energy supply planning and use,and in their economic and environmental impacts. If concern over global climate change increases, thenincreased emphasis on energy sources that do notproduce carbon dioxide (C0 2)--nuclear power andrenewable energy--could be necessary. These dif-ferent paths entail many choices, such as whichtechnologies to emphasize, and the technologies

have large differences in their impact.Of all the factors influencing energy trends, three

of the most important are the growth rate of theeconomy (commonly measured by the gross domes-tic product (GDP)), the price of oil, and the status of technology. The GDP is a measure of the demand forthe goods and services that require energy. Prior tothe energy crisis of 1973-74, there was a generalassumption that energy growth was intimatelylinked to GDP. That assumption has been disprovedby the flat energy demand from 1972 to 1985 whilethe GDP grew by 39 percent in real terms. 1 Hadhistorical trends held, U.S. energy use would have

1988. Low oil prices and strong economic growth(the latter partly a result of the former), particularlyin energy-intensive industries including steel andaluminum, appear to be responsible for this shift.

Neither economic growth nor the resultant effecton energy demand can be predicted confidently. TheU.S. Department of Labor’s moderate economicgrowth scenario for 1988 to 2000 assumes a2.3-percent rate, lower than the 2.9-percent rate of the previous 12 years. This is consistent with otherprojections, but growth could be substantially higheror lower. In any case, it can be assumed that as longas economic growth is a national goal, demand forthe services that energy provides will increasesubstantially.

..<

The amount of energy that will be required toperform these services is a function of the efficiencywith which it is used. As discussed in chapter 2, aparticular service (e.g., transportation in a car,heating a house, making steel) can be performed ina variety of ways, some of which use far more energythan others. If the cost of energy rises (or if otherincentives are applied), energy users will considerimproving existing processes (e.g., insulating theirhouse), buying more efficient equipment (e.g.,higher mileage automobiles), or altering their behav-ior. However, rising energy costs also reduce con-sumers’ ability to afford these investments.

Different forms of energy have different costs, butthe most variable is petroleum The price of petro


may be important for nuclear power. As discussed inchapter 2, a variety of technologies are availablenow in all sectors to raise efficiency, and many morecould be developed and implemented.

economic growth and lower energy prices areconsidered in scenario 2 to explore a future wherevery optimistic projections are realized. This sce-nario differs from the others in that a higher level of goods and services requiring energy are assumed.



PROJECTIONS FOR THE FUTUREAs discussed above, the qualitative aspects of the

energy situation are not by themselves very useful inprojecting future energy trends. Nor do they allowany quantification of the potential impacts of futurepolicy options. For such purposes, scenarios have

been derived from the analyses developed for theOTA report on climate change. 2A simple account-ing model modified the results of the energy/ economic model of the Gas Research Institute,which in turn was based in part on the DataResources, Inc. energy model, to estimate theeffectiveness of various technical options for lower-ing C02 emissions. The reader is referred to the OTAreport on climate change for a detailed explanation

of the models used and the specific assumptionsinvolved. Two scenarios are modifications of one of these cases in order to explore a higher emphasis onsolar and nuclear energy. One additional scenario(number 2) involving higher demand was createdand analyzed for this study.

These scenarios reflect the major issues discussedin chapter 1 that energy decisionmakers are likely toconfront in the coming years: how to reduce C0 2

emissions to slow global climate change, should thatprove necessary, and minimize other environmentaland health impacts of energy use; how to reducedependence on imported oil; how to assure that a

goods and services requiring energy are assumed.Scenario 3 is based on the moderate scenario in theOTA climate change report and emphasizes effi-ciency of energy use in order to reduce demand.Scenario 4 is based on the tough scenario andrepresents an intensification of the measures inscenario 3 to reduce energy demand. Scenarios 5 and6 are modified versions of scenario 3 that exploitalternative energy sources (renewable and nuclear)to reduce emissions of C02, in contrast to the majoremphasis on efficiency in scenario 4.

Collectively, these scenarios are representative of the main energy choices facing the country eventhough four of them were created to test C0 2

reduction decisions. Steps to reduce Co 2 emissionsare largely congruent with steps to address the otherenergy issues. One notable exception is the develop-

ment of synthetic fuels to reduce dependence onimported fuels, a topic discussed in scenario 2.

These scenarios should be viewed as guidelinesonly, not predictions. If one proves accurate, thatwill be largely accidental. Energy events of the lasttwo decades have been too capricious and turbulentto allow much confidence that all problems inmaking energy projections have been anticipated.Unexpected disruptions will almost certainly occur,and so may some pleasant surprises, e.g., technolog-ical developments that permit the economic extrac-tion of our vast domestic reserves of unconventionalnatural gas. The scenarios are sketches of plausible

Chapter 4--Potential Scenarios for Future Energy Trends . 113

slowly from 83.9 quads in 1989 to 112.4 in 2015,about 1 percent per year. Demand for electric powerincreases at 2.3 percent per year, equaling economicgrowth, as has been the case in recent years. Thebreakdown by fuel and end-use sector is shown in

Table 4-l—Baseline Energy Use and Supply(quadrillion Btu)

1989 2015Demand

ResidentialN t l 5 0 4 2



ytable 4-1. Electricity is listed separately because it isan intermediate carrier, neither supply nor demand,and accounts for the largest single use of primaryenergy.

The baseline growth rate is slower than that of thepast few years but faster than the prior 15 years. It isconsistent with slowly rising energy prices and aneconomy that largely maintains its current mix of activities. Some improvements in efficiency areimplemented so that energy intensity (energy perdollar of GDP) continues to decline. Of particularinterest are the following:

The highest energy growth is in the commercialsector. Industrial sector energy growth is thelargest in absolute terms, but it remains modest

for this sector, primarily due to reduced manu-facturing growth. Transportation increases at aslightly slower rate than industry. The residen-tial sector is essentially flat, largely becausepopulation growth is low.U.S. oil production is expected to decline from9.73 million barrels per day (MMB/D) in 1990to 8.61 in 2000 and 6.94 in 2015.3 Even keepingto this schedule will require the discovery andexploitation of new fields, which are mostlikely to be offshore or in Alaska.Future domestic production of conventionalnatural gas resources will be supplemented by

Natural gas . . . . . . . . . .Electricity a . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .Renewable . . . . . . . . .Total . . . . . . . . . . . . . . .

CommercialNatural gas . . . . . . . . . .Electricity a . . . . . . . . . . .oil . . . .’.. . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .TransportationOil . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . .Electricity . . . . . . . . . . .Total . . . . . . . . . . . . . . .

IndustrialNatural gas . . . . . . . . . .Oil (fuel) . . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . .Electricity . . . . . . . . . . .Renewable . . . . . . . . .Coal . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

Total demand a . . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . .Renewable . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . .

Supply Oil. . . . . . . . . . . . . . . . . . .

5.03.11.80.10.9

10.9

2.72.70.7ne

6.1

21.60.6ne

22.2

8.33.84.43.21.92.9

24.5

63.6

16.05.72.9

1.7/3.0

29.2

34.0Domestic . . . . . . . . . . . . (18.3)Imported . . . . . . . . . . . . (17.0)Exported . . . . . . . . . . . . ( 1.8)Synthetic . . . . . . . . . . . . (ne)

Gas . . . . . . . . . . . . . . . . . . 19.5Domestic . . . . . . . . . . . . (17.5)

4.24.01.10.11.5

10.9

3.45.20.90.1

9.627.5

0.7ne

28.2

7.7/5.05.75.33.54.6

31.8

80.5

29.13.86.3

1.6/5/7

46.4

41.8(12.0)(27.8)( 0.0)( 20) 22.3

(16.5) .


q Security concerns increase with oil imports, butimport growth rates are not so high thatadditions to the Strategic Petroleum Reserve(SPR) cannot keep up. By 2015, however, theMiddle East supplies a very large and risingf i f U S i D di h

sumptions made for this scenario are sufficientlyoptimistic that higher growth is unlikely. Economicgrowth is assumed to be in the high range of projections, perhaps 3 percent, resulting in higherdemand for energy services. Energy costs have tot l d it hi h d d ith b f



q

q

pp y g gfraction of U.S. imports. Depending on thegeopolitical environment at that time, the SPRmight have to expand to several times itscurrent size. The anticipated price of oil issubstantially higher, which seriously aggra-vates the balance of trade.CO2 emissions would rise almost 40 percent by2015. While no environmental constraints areenvisioned for the duration of this scenario,such a large additional contribution from theUnited States would pose a substantial risk of accelerating global climate change.The near doubling of coal consumption willaggravate problems in meeting local and na-tional air quality standards unless better tech-nology such as integrated gasifier, combined-cycle combustion becomes available.

Conclusions-This traditional approach is feasi-ble if several conditions are met: 1) domestic oil andgas reserves prove adequate to support the projectedproduction at reasonable prices; 2) chronic shortagesof imported oil do not develop; 3) the costs of renew-able energy become more competitive; 4) CO 2andother pollution problems are not so serious as torestrict the coal option; and 5) economic growthdoes not greatly exceed the assumed level. If theseconditions are not met, energy prices will rise withtighter supply, and demand will shrink to fit (as italways does in principle), but not without likelyeconomic penalties, e.g., increased inflation.

gy gystay low despite higher demand, either because of technological breakthroughs or unexpected resourcediscoveries. No major new environmental regula-tions are expected in this scenario.

A guiding principle behind this scenario is that theUnited States maintains an orientation toward en-ergy production rather than energy conservation.The result will be higher demand for energyservices, tempered by the faster replacement of older, less efficient facilities and equipment. Totalenergy demand grows 1.7 percent annually, reaching127 quads in 2015. Energy use in all sectorsincreases faster than in scenario 1. The industrialsector experiences 2-percent growth, consistent witha resurgence in manufacturing. The commercialsector rises faster at 2.7 percent, which is slightlyabove the rate assumed in scenario 1. Transportationenergy demand increases 1.2 percent annually overthe study period. Lower fuel prices provide lessincentive to purchase efficient automobiles, andcommercial traffic will be higher than in scenario 1.Residential sector energy demand grows at 1 percentwith demand for new and larger houses; no suchgrowth occurs in the base scenario. Table 4-2summarizes the details.

Electricity demand increases 3 percent annuallyin this scenario. However, it is important to note thatthe additional power, relative to scenario 1, isproduced with little additional fuel consumed.U d th diti f thi i hi h

Chapter 4--Potential Scenarios for Future Energy Trends q 115

Table 4-2-High Growth Energy Use and Supply(quadrillion Btu)

1989 2015Demand

ResidentialNatural gas 5 0 5 5

Twenty years ago, these energy growth rateswould have been considered unrealistically modest.Now they appear high, largely because we havelearned that it is easier to control energy growth than

to meet high demand growth. In addition, economicgrowth forecasts are lower and projected energy



Natural gas. . . . . . . . . .Electricity a . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . .Renewables . . . . . . . . .Total . . . . . . . . . . . . . . .

CommercialNatural gas. . . . . . . . . .Electricity a . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .Transportation

Oil including synfuel...Alcohol (biomass) . . . .Natural gas. . . . . . . . . .Electricity a . . . . . . . . . .Total . . . . . . . . . . . . . . .

industrialNatural gas . . . . . . . . . .Oil (fuel) . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . .Electricity a . . . . . . . . . .

Renewables . . . . . . . . .Coal . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

Total demand a . . . . . . . .Electricity b

Coal. . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Renewables . . . . . . . . .Total . . . . . . . . . . . . . . .

Supply OilD o m e s t i c .imported. . . . . . . . . . . .Exported . . . . . . . . . . . .Synthetic . . . . . . . . . . . .

5.03.11.80.10.9

5.54.81.30.11.5

10.9

2.72.70.70.0

6 . 1

21.6

0.6ne

22.2

8.33.84.43.2

1.92.924.5

63.6

16.05.72.91.73.0

29.2

34.0(183)(17.0)(1.8)/ne

13.2

3.65.50.90.1

10.1

32.60.51.50.7

35.3

10.95.66.56.4

3.85.338.5

97.1

27.48.27.0

1.6/5.5

49.7

48.5(140)(26.5)( 0 0 )(8.0)/28.5

growth forecasts are lower and projected energyprices are higher. However, if energy prices remainat current levels (about $20 per barrel for petroleumand equivalent for other fuels), the higher growth of the late 1980s could continue. Energy prices signifi-cantly higher than those in scenario 1 would not beconsistent with high demand growth (except forimprobably high economic growth rates), becausethey would trigger efforts to increase efficiency of use.

Therefore, significant advances in energy produc-tion technology must be assumed for this scenario inorder to control costs. Moreover, the modest energyprice increases assumed here would be insufficientimpetus to spur these advances. As a result, Federaland private sector efforts--especially for research,development, and demonstration (RD&D)--wouldbe critical to achieving the supply outcomes. It mustalso be assumed for this scenario that CO 2 emissionsare determined by policymakers to be a minorproblem.

A substantial number of electric vehicles (EVs)are postulated for this scenario, largely because of local air pollution problems. About 2.4 quads of fuelwould be required to produce and store the 0.7 quadsof electricity that EVs would consume. This electric-ity would replace about 3.5 quads of oil, becauseEVs are more efficient than gasoline-powered auto-

116 q Energy Technology Chokes: Shaping Our Future

be built without government incentives. However,security concerns over high petroleum imports mayprovide compelling policy reasons to ensure at least

d l l f h d i Thi i



Photo credit: Electrk Vehicles SA

Prototype electric minibus.

is likely, and technological breakthroughs are possi-ble.

Coal will be used both directly (primarily forelectric generation as it is now) and for syntheticfuels. The additional 300 gigawatts of electric poweroutput (GWe) of coal-fired generating capacityshould present no insurmountable technical orresource difficulties, even though most plants willuse relatively new technology (most probably inte-grated gasification combined cycle (IGCC)) to meetair pollution emission regulations. The efficiency of

new plants should average about 40 percent, butsystem efficiency will be lower because of olderplants on line and increased use of storage to meetpeak loads.

a modest level of such production. This scenarioprovides for liquid fuel production of 4 MMB/D by2015. As discussed in chapter 3, several liquid fueltechnologies could be used. At present, all of thesetechnologies raise significant concerns over envi-ronmental impacts as well as costs, so majordevelopment and demonstration programs will benecessary in addition to promotional programs.

The national security rationale is less pertinent tosynthetic pipeline gas, because foreign gas sourcesare more stable (Canada is the main supplier) and,unlike petroleum, the production of domestic naturalgas can be increased appreciably. In fact, thisscenario is largely contingent on an increasingsupply of relatively inexpensive gas. Natural gasproduction, however, is unlikely to be rising by2015, and may well be falling significantly. There-fore, the need for replacement sources may besubstantial. In addition, an industry that producessynthetic oil would find it simple to producesynthetic gas, so the costs may be reasonable.Therefore, this scenario assumes that about 4 trillioncubic feet (Tcf) of synthetic gas will be producedannually.

Nuclear energy could be important in this sce-nario if the problems that have immobilized it areovercome. In particular:

Costs must be predictable stable and competi-


Assuming a construction schedule of 5 years, 5 onlythose reactors ordered by 2010 would be ready forelectricity generation by 2015. Since much of theindustry would have to be revamped, only a fewthousand megawatts of electric power output (MWe)per year could be supplied at first Less familiar

these and other supply areas help keep these fuelscompetitive. In addition, features of the scenarioprobably would require policy measures to encour-age production (e.g., synthetic fuel initiatives tolimit imports and expanded offshore oil explorationand development) Finally as noted above it is



per year could be supplied at first. Less familiartechnology, e.g., high temperature gas reactors, willrequire longer to develop.

This scenario optimistically projects the construc-tion of approximately 70,000 MWe to supplementexisting nuclear capacity (about 100,000 MWe) by2015. Accounting for existing plant retirements,

total nuclear capacity of about 140,000 MWe wouldbe online by 2015. Only a major national commit-ment to nuclear energy could result in faster growth,but that would be a high risk strategy considering thehistory of nuclear power in this country. Such astrategy is discussed under scenario 6. If no nuclearplants are ordered, an equivalent amount of coal- andgas-fired capacity would have to be added to meetthe supply projections of this scenario.

Renewable supplies are only slightly higher thanin scenario 1. The lack of urgency to replace fossilfuels assumed here leads to slow development of renewable, and the low costs of fossil fuels limitcompetitiveness. Much of the renewable energydepicted in table 4-2 is hydroelectric power, butcontributions from wind, solar thermal, and pho-tovoltaics could become significant over this period.

The transportation sector is assumed to consumeabout half a quad of alcohol from biomass. Alcoholfuel could become quite important in urban areas forenvironmental reasons, but it is not clear how muchwill be made from biomass instead of coal or natural

and development). Finally, as noted above, it isassumed that no new major environmental con-straints emerge.

If these assumptions prove out, the nation’smid-term energy future will present few problems.Some of the assumptions are likely to proveaccurate, but depending on the entire package wouldbe extremely risky, and would do little to prepare thecountry for longer-term problems such as climatechange and the depletion of the lowest-cost fossilfuel reserves. Petroleum prices are almost certain tobe much higher by the mid-21st century when U.S.production will be considerably lower than now.Whether or not serious global climate changes areimminent, they are likely eventually, probably by2050. Rapid exploitation of fossil fuels wouldincrease that risk and make the transition to alterna-tive fuels more difficult and costly.

The energy system under this scenario is vulnera-ble to disruptions-petroleum import interruptions,environmental constraints, and increasing publicopposition to energy facilities. Hence, policy meas-ures encouraging production are likely to be requiredto ensure the supplies assumed in this scenario.Synthetic fuel to moderate reliance on importedpetroleum has already been mentioned. To compen-sate for the higher rate of imports, the SPR wouldhave to be enlarged. Nuclear power will require


more energy must be produced, but higher economicgrowth supports the new construction.

Overall, this scenario is notable for its failure to

take advantage of efficiency opportunities that makeeconomic sense even at fuel prices lower than

become important. Higher efficiency will bethe most effective strategy to reduce carbonemissions over the next several decades. Evenwithout clear indications of significant warm-ing trends now, many analysts have argued thatefforts to offset carbon emissions would be



passumed here. In keeping with long-term past trends,efficiency improves, but only slowly because energycosts are a small portion of overall costs, andbecause relatively little attention is focused onefficiency. The one exception is the electric utilityindustry, where new generating technology isemerging with significantly higher efficiency.

Scenario 3: Moderate Emphasis on Efficiency

As has been noted several times in this report,many opportunities exist for reducing energy con-sumption in all sectors of the economy. Most of these opportunities require some investment. Someoffer compelling economic benefits, while others aretoo expensive to warrant consideration unless en-ergy costs rise considerably above expected levels.

This scenario explores the results if the policiesdiscussed in the next chapter are implemented toencourage investments that would yield net eco-nomic benefits when amortized over the expectedlifetime of the equipment, in the context of the fuelprice increases noted at the start of this chapter. Fewenergy users make their decisions on this basis. Mostconsumers, insofar as they consider energy costs at

all, look for a payback of no more than a few yearson additional investment to reduce energy consump-tion, a rate of return greatly exceeding prevailinginterest rates. Industrial users are the most cost-

i b t ll f t i

q

q

q

q

efforts to offset carbon emissions would beprudent now. In addition, lower demand forenergy would reduce other environmental in-sults stemming from the production and use of fossil fuels.The economy would benefit, especially in thelong-run, because energy inputs would be usedat a more nearly optimal level. Thus, U.S.products would generally become more com-petitive in world markets.Resources of low-cost premium fuels wouldlast longer because of the reduced demand forpetroleum and natural gas. The forced transi-tion to less convenient fuels could be delayedby a decade or more.Vulnerability to petroleum import disruptionswould be lessened, and the SPR could be keptsmaller.There would be less intrusion from energyfacilities on society, which often resists suchconstruction and operation.

The major drawback to this strategy is that theGovernment would have to induce people to dothings that apparently most have no particularinterest in doing. Tax credits, information programs,

and other initiatives have had some impact, but thebiggest single motivation for efficiency improve-ments appears to have been higher prices. 6

The major effect of implementing this scenario is

Chapter 4--Potential Scenarios for Future Energy Trends 119

Table 4-3-Moderate Efficiency Scenario Energy Useand Supply (quadrillion Btu)

Table 4-4-Potential for Energy Demand ReductionFrom Base Case by 2015 (quad/year) a

1989 2015Demand

ResidentialNatural gas . . . . . . . . . .

a5.0 3.6

Moderate Highefficiency efficiency

Residential buildingsEnvelopes . . . . . . . . . . . . . . . . . . . . 0.96 1.48



Electricity a. . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .Renewable . . . . . . . . .Total . . . . . . . . . . . . . . .

CommercialNatural gas . . . . . . . . . .Electricity. . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

TransportationOil . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . .Electricity a. . . . . . . . . . .Total . . . . . . . . . . . . . . .

IndustrialNatural gas . . . . . . . . . .Oil (fuel) . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . .Electricity a. . . . . . . . . . .

Renewables . . . . . . . . .Coal . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

Total demand a . . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Renewable . . . . . . . . .Total . . . . . . . . . . . . . . .

Supply Oil. . . . . . . . . . . . . . . . . . .

3.11.80.10.9

10.9

2.72.70.7ne6.1

21.60.6ne

22.2

8.33.84.43.2

1.92.924.563.6

16.05.72.91.73.0

29.2

34.0Domestic . . . . . . . . . . . . (183)imported . . . . . . . . . . . . (17.0)Exported . . . . . . . . . . . . ( 1.8)Synthetic . . . . . . . . . . . . (ne)

G 19 5

3.30.90.11.29.1

3.03.40.70.1

7.2

24.80.7ne

25.5

7.54.45.74.4

3.23.328.570.3

17.86.6 4.11.5

4.5 34.4

37.9(120)(249)( 00)( 1 . 0 ) 1 8 8

Heating and cooling . . . . . . . . . . . .Hot water, appliances . . . . . . . . . .Retrofits

Envelopes . . . . . . . . . . . . . . . . . .Lighting . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .Commercial sector

Envelopes . . . . . . . . . . . . . . . . . . . .Heating and cooling. . . . . . . . . . . .

Water heating . . . . . . . . . . . . . . . .Lighting . . . . . . . . . . . . . . . . . . . . . .Office equipment . . . . . . . . . . . . . .Cogeneration . . . . . . . . . . . . . . . . .Retrofits

Envelope . . . . . . . . . . . . . . . . . . .Lighting . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .Transportation

New auto efficiency . . . . . . . . . . . .New light trucks. . . . . . . . . . . . . . .

New heavy trucks . . . . . . . . . . . . . .Non-highway vehicles . . . . . . . . . .Public transit. . . . . . . . . . . . . . . . . .improved maintenance . . . . . . . . .Improved traffic flow. . . . . . . . . . . .Ride sharing, etc. . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . .

IndustryCogeneration . . . . . . . . . . . . . . . . .Lighting . . . . . . . . . . . . . . . . . . . . . .Electric motors . . . . . . . . . . . . . . . .New processes . . . . . . . . . . . . . . .Process retrofits. . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . .

0.070.89

0.590.44

0.371.41

0.670.59

2.89

1.700.74

1.551.180.070.15

0.590.37

4.51

2.961.15

2.221.550.071.41

0.590.37

6.29

0.590.37

0.300.370.150.220.890.303.11

0.590.440.892.221.415.62

10.36

2.701.92

1.770.892.590.301.040.74

10.73

4.070.712.856.071.48

17.06aBe~useoftheform ofthedata andtheconversion method, alivahsareapproximate andshould beusedforgeneralguidance only.Totalsarenotalways equal tothesum ofthe parts because maximum values maybe


Residential/Commercial Sector

In the residential/commercial sector, new build-ings require only 50 percent of the energy used incurrent new buildings for heating because of betterconstruction techniques insulation and windows

Transportation Sector

Energy use in the transportation sector is muchless likely to drop than in the residential/commercialsector, but the growth rate can be slowed. Cost-effective improvements in the mileage of new cars,t k d i l ill d d d ig ifi



construction techniques, insulation, and windows.Improved lighting and equipment provide additionalsavings. For the most part, the technology for theseimprovements is familiar. Some of the gains dependon the commercialization of new technology, e.g.,heat pump water heaters, but none of the requiredadvances is particularly dramatic or risky. Nor are

consumers required to accept many technologiesthat would be significantly more difficult to managethan existing equivalents.

The uncertainties are primarily with the decision-making to implement the improvements, particu-larly what it will take to induce consumers to investin more expensive houses and appliances in order tosave on operating costs. In no case would theadditional investment be extremely high (e.g., anewhouse might cost a few thousand dollars morebecause of improved insulation and appliances).However, the decisionmaking in this sector has beenless predictable than in the others. Overall, energyuse in the residential/commercial sector could actu-ally decline by 2015 with these changes despite asubstantial increase in per capita wealth.

Electricity use increases in both the residentialand the commercial sectors. Natural gas declines inhomes because the average thermal efficiency of houses increases Natural gas and electricity will

trucks, and airplanes will reduce demand signifi-cantly, but the increase in miles traveled willoutweigh them. In the long term, improved mileagewill make a dramatic difference. With improve-ments to already existing technology, the fueleconomy of new automobiles in this scenarioincreases to 39 miles per gallon (mpg) by 2010, ascompared to 36.5 mpg in the base case and 27 mpgnow, using only evolutionary improvements toexisting technology, as discussed in chapter 2.However, over the next 20 years, nontechnicalmeasures, e.g., increased van pooling, improvedvehicle maintenance, and reinstatement of the 55mile per hour (mph) speed limit, will have moreimpact.

Achieving major fuel economy gains in thetransportation sector may be hindered by conflictingdemands. For example, reducing vehicular emis-sions often results in some compromise to fuelefficiency and vice versa. The expected growth of alternative fuels resulting from the 1990 amend-ments to the Clean Air Act may reduce oil importsbut does not promise greater efficiency. Indeed, therecent revisions to the Clean Air Act mandateseveral changes that will affect how the transporta-tion sector uses fuel. Gasoline will still be thedominant fuel by 2015, but the large, powerful carsthat many consumers prefer now will be squeezedbetween demands for cleaner emissions and higher

Chapter 4-Potential Scenarios for Future Energy Trends q 121

(4 quads) of the energy required in the base case issaved by these measures by 2015, but a net increaseof 4 quads over 1987 is still required.

Fuel shifting within the industrial sector is rela-tively easy for applications such as process heat andi ( b 60 f ll d i

competitiveness. The other reason is environmental:reducing energy use generally, though not always,reduces emissions of pollutants from both the useand supply of energy. This scenario would providemany environmental benefits without drastic curtail-ments. It represents a moderate response to concerns



cogeneration (about 60 percent of all energy used inmanufacturing), but quite difficult or impossible forother categories. Many boilers and heaters incorpo-rate dual-firing capability to switch between oil andnatural gas as economics and emission regulationsdictate. Coal can also be a major energy source,actually surpassing oil by 2015 in this scenario.

Policy incentives or disincentives focused on naturalgas and coal are likely to have more effect than thoseaimed at efficiency.

Electric Power Sector

The electric power sector consumes more primaryenergy than any of the three sectors discussed above.One of the main issues related to electric powerinvolves nonfossil energy sources, which are dis-cussed in scenarios 5 and 6. There are also someimportant options to raise the efficiency of the sectorthrough improved generation and transmission, butfew are implemented, because so little new generat-ing capacity is required. In this scenario, demand forelectricity is lower than in the base case because theefficiency of use increases. Demand rises from 2.7trillion kWh (kilowatt-hours) in 1987 to 3.4 trillionkWh in 2015, compared to 4.6 trillion kWh in 2015in the base case.

In the long term, new plants can be significantlymore efficient than existing ones. The efficiency of

t h l i f l ll d i t l d

e ts. t ep ese ts a ode ate espo se to co ce sover global climate change and reducing CO 2

emissions, consistent with the conclusion that theproblem has not been verified at present but maybeserious in the coming decades.

As noted above, however, this scenario will notoccur by itself. There are too many constraints and

market imperfections for people to make all thenecessary decisions that would be required toimplement this level of efficiency. Policy initiativesthat would help overcome these constraints arediscussed in the following chapter.

Scenario 4: High Emphasis on Efficiency

Extreme measures to improve efficiency could be justified under some circumstances. Perhaps globalwarming will be confirmed as an imminent problemwith potentially devastating consequences, or inter-national political instability will severely threatenthe supply of petroleum. Even in highly efficientcountries, almost any activity consuming energycould be accomplished with much less. If energywere to become very expensive or limited inavailability, the number of viable, alternative ap-proaches to reduce energy use would increase. Thisscenario incorporates measures that are equivalent tothe most efficient that have been demonstrated todate and assumes that these are widely applied.Table 4-5 shows the energy use that results. Table


Table 4-5-High Efficiency Scenario Energy Use andSupply (quadrillion Btu)

1989 2015

DemandResidentialNatural gas . . . . . . . . . . 5.0 2.9

residential heating. Exceeding 75 percent will re-quire meticulous attention to design, construction,and materials, and possibly, compromises on ap-pearance and lifestyle as well. For example, housesand their windows may have to be oriented towardthe sun (rather than toward the street), or the number



atu a gas . . . . . . . . . .Electricity a . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .Renewables . . . . . . . . .Total . . . . . . . . . . . . . . .

CommercialNatural gas . . . . . . . . . .Electricity a . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

TransportationOil . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . .Electricity a . . . . . . . . . . .Total . . . . . . . . . . . . . . .

industrialNatural gas . . . . . . . . . .Oil(fuel) . . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . .Electricity a . . . . . . . . . . .Renewables . . . . . . . . .Coal . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . .

Total demand a. . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . .Renewables . . . . . . . . .Total . . . . . . . . . . . . . . .

Supply Oil. . . . . . . . . . . . . . . . . . .

Domestic . . . . . . . . . . . .i d

5.03.11.80.10.9- —

10.9

2.72.70.7ne6.1

21.60.6ne

22.2

8.33.84.43.21.92.9

2.92.60.8

ne/o.6

6.9

3.81.70.30.15.9

17.70.70.1

18.5

7.73.35.73.22.21.5

24.5 23.6

63.6

16.05.72.91.7

3.029.2

34.0(183)(17 0)

54.8

5.36.85.30.2

5.222.8

27.8(120)(15 8)

the sun (rather than toward the street), or the numberof windows could be reduced.

Very tight houses require ventilation systems tokeep indoor air pollution at tolerable levels. As airexchange is reduced by tightening shells, problemsarising from indoor air cent aminants (radon, NO X

from natural gas cooking, vapors from building

materials) and irritants (particulate, aerosols) willworsen unless countervailing measures are taken.Fireplaces and woodstoves would be incompatiblewith supertight houses, because they require contin-ual ventilation while in operation. Even with heatrecuperators, significant heat losses from ventilationsystems will interfere with the 85-percent heatreduction goal. As a result, multiunit buildings mayhave to be encouraged as an important alternative to

single family homes in order to achieve the energyprojections for this sector.

Existing building shells are aggressively retrofit-ted in this scenario. Energy savings of 20 to 30percent are anticipated. This goal is less controver-sial than that for new houses.

In addition, appliances will have to be as efficientas currently feasible. Electric or gas-fired heat

pumps or pulse furnaces would replace conventionalfurnaces in new construction. Electric heat pumpswould be at least 50-percent more efficient thanthose in use now. Water would also be heated with


Commercial Sector

Energy consumption in the commercial sectordrops 30 percent relative to the moderate projection

scenario. Buildings require 25 percent of the currentaverage for heating, and appliances are as efficientas the best a ailable no The most notable shift is

many of them. Process changes provide the greatestenergy savings, followed by improved maintenance,more efficient electric motors, and cogenerationgrowth. Some of the new processes will requireresearch and development (R&D) and probablyGovernment support for demonstrations. Industry is



as the best available now. The most notable shift isthe replacement of purchased electricity with naturalgas, some of which is used in cogeneration.


The transportation sector produces large savingsrelative to the last scenario, mostly because mileage

standards on new automobiles are raised sharply.The previous scenario raised the 2010 average fromthe 36.6 mpg of the base case to 39.0 mpg, whichwould have little effect on consumer choice or cost.The increase to 55.0 mpg here would require anaggressive emphasis on new technology, such asadiabatic diesel engines, lighter materials, andcontinuously variable transmissions. Some shifttoward smaller cars in the fleet mix would be

required to meet this standard if the technologicalimprovements prove inadequate. Only one or twomodels on the market now are rated at 55 mpg, andthese are very small. In addition, there will have tobe a strong emphasis on car pooling, public transpor-tation, and advanced traffic control. The 55-mph-speed limit is reinstated under this scenario as well.

Although they are not emphasized here, alterna-tive fuels and electric vehicles could play a large roleunder the conditions of this scenario. If the concernis over CO 2 emissions, then the replacement of gasoline by methanol from biomass would havesubstantial benefits Methanol from natural gas

pp ywilling to accommodate changes to improve energyefficiency, but only if the changes are demonstrablycost-effective and of acceptable risk, suggesting thatan increase in the price of energy would be the mosteffective motivation. The major difference betweenthis scenario and the previous one is that the universeof acceptable technological options to save energyexpands, and increased use is made of technologiesimplemented in scenario 3. Some of the mostimportant changes are in industry-specific proc-esses, e.g., direct steelmaking and biopulping forpapermaking.

Widespread implementation of many of theseoptions would require major alterations to oldfacilities or the construction of entirely new ones.

These major changes would not be done purely forenergy reasons, though the energy savings wouldrepresent a significant part of the economic benefits.Therefore, this scenario is most likely to be initiatedas part of an overall upgrading of much of theindustrial infrastructure in this country. Such anoverhaul is beyond the scope of this report, but itshould be noted that considerable promise exists formajor industrial gains in both energy efficiency and

economic competitiveness.Electric Power Sector

Efficiency gains in the electric power sector are


sions--generating stations produce over one-thirdof all the CO 2 emitted in the United States-thenreplacements may be warranted. However, theenvironmental benefits of replacing an old coal plantwith anew one are much smaller than the benefits of replacing it with a nonfossil plant. This approach is

this level of action is a judgment that cannot bedetermined analytically at this point.

Scenario 5: High Emphasis on

Renewable EnergyRenewable energy sources (solar and geothermal)



considered in the next two scenarios.

Therefore the major assumption of the highefficiency scenario is that most existing coal plantsare retired by 2015. Coal consumption in the sectordrops by almost two-thirds. As noted below, thiswould have extremely serious economic conse-

quences in some coal-producing areas. Most newconstruction is highly efficient combined-cycle,gas-fired technology. Some nuclear (5 GWe) andrenewable (15 GWe, mostly hydroelectric) energy isalso included. In addition, the improved operation of existing plants raises their efficiency by about 5percent, as in the previous scenario.

Conclusions-This scenario is notably moresuccessful in reducing energy demand than theprevious one, but it relies on measures that would beeven more difficult to implement. Housing andautomobiles would be significantly more expensiveto purchase, though cheaper to operate. Much newtechnology, particularly in the transportation andindustrial sectors, is assumed to be available andreliable. Industry may find more compensatingadvantages than consumers, but companies wouldstill find their planning processes heavily influencedby this major effort to reduce national energy use.

Therefore, this scenario is very unlikely to beimplemented unless driven by major national

Renewable energy sources (solar and geothermal)have considerable appeal from an environmentalperspective. In most cases, the energy already existsnaturally, and there are few harmful emissions fromits use. However, with some exceptions, renewablecurrently are not economically competitive withfossil fuels or nuclear energy. As discussed in

chapter 3, some renewable technologies show con-siderable promise for near-term competitiveness ona wide scale. Policy intervention could assure amuch more rapid penetration than assumed in theprevious scenarios. The impetus could be concernover global warmin g, other environmental issuessuch as air quality, or energy security.

However, it does not appear that any of theseoptions will ever seem inexpensive by currentstandards. Hence, a high dependence on renewableenergy should start with an economy that has builtin as much efficiency as practical. This scenariobuilds on the energy distribution in scenario 3(moderate efficiency) but shifts some of the supplyfrom fossil to renewable sources. Table 4-6 outlinesthe supply and demand. As each sector will adoptrenewable for unique functions, they are discussedseparately.

Residential/Commercial Sector

The major direct use of renewable in the residen-tial/commercial sector would be passive and active


be increased by 0.5 quad. The total additionalrenewable contribution to the two sectors is 2 quads.

Commercial buildings may be less appropriatethan residences for solar heating, because most aretoo large for on-site collectors. Furthermore they useheat for unique functions and often extended periods

Table 4-6-High Renewable Scenario Energy Use andSupply (quadrillion Btu)

1989 2015Demand

ResidentialNatural gas . . . . . . . . . . . . . .Electricity a

5.03 1

3.32 8



q p(hospitals, restaurants). However, commercialbuilding owners can also arrange for service compa-nies to supply heat or cooling from off-site solarstations.

The size of the solar collector industry hasdecreased greatly since the 1970s from the loss of tax

credits and the drop in fossil fuel prices. Rapidgrowth would risk repeating the experience of the1970s, when inadequate designs and unskilled ordishonest installers plagued the industry. The tech-nology is much better now, but controls to ensurethat the solar contribution is achieved efficientlywould be prudent.

Other applications for renewable energy includeelectricity generation and the replacement of naturalgas with hydrogen, which could be produced byphotovoltaics. Alternatively, synthetic gas could beproduced from biomass. These options also apply tothe sectors discussed below.


The transportation sector would use fuels derivedfrom biomass. If advances in plants, cultivation, and

processing are successful, methanol from wood orherbaceous crops is the most likely fuel though someof the ethanol technologies are promising. By 2015,as much as 1.2 quads could be supplied, displacing0 6 MMB/D Moving toward methanol would re

Electricity . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .Commercial

Natural gas . . . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Renewable . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

TransportationOil . . . . . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . . . . . .Renewable . . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

IndustrialNatural gas . . . . . . . . . . . . . .Oil (fuel) . . . . . . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

Total demand a . . . . . . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . .

Supply

3.11.80.10.9

2.80.7ne2.3

10.9

2.72.7

ne/0.7ne

9.1

2.73.00.9

0.50.16.1

21.60.6nene

22.2

8.33.84.43.21.92.9

7.2

23.60.71.2ne

25.5

6.73.75.74.44.83.2

24.5 28.5

63.6

16.05.7

2.91.73.0

29.2

70.3

12.14.3

2.71.211.331.6


gasoline, and then as a pure fuel for urban fleets,before individuals are expected to purchase cars thatburn only methanol.

An alternative is cars powered by solar-generated



An alternative is cars powered by solar-generatedelectricity. Electric cars have even more environ-mental advantages than methanol cars, emittingalmost no pollution when the electricity is producedcleanly. However, significant storage improvementswould be necessary before electric cars couldexpand beyond small niche markets. In this scenario,

the penetration of electric vehicles is assumed to besmall relative to methanol. (The following scenarioreverses this assumption.) Solar electricity is dis-cussed below. If the technology can be developed,powering cars with hydrogen produced from solarelectric plants might be superior to using theelectricity directly. The infrastructure required forhydrogen would be quite different, but the overallenvironmental, economic, and social impact proba-

bly would be about the same.

Industrial Sector

The industrial sector already uses substantialamounts of biomass, primarily through combustionof wood wastes by the forest products industry.Biomass use could be expanded about 1.5 quads by2015.

Industry uses primary energy mainly as processheat. Most process heat requires temperatures fargreater than that produced by flat solar panels, but

h high h t i il bt i bl b th t f

Photo credit:Aian T Crane

Parabolic dishes focused on a Stirling engine to produceelectricity. This assembly was designed and built in the

United States and exported to France.

Electric Power Sector

If solar energy is to supply a large fraction of U.S.energy requirements, it will be achieved only withconversion to electricity (with storage) or perhapshydrogen. Direct applications of solar energy aremodest, and most solar technologies lend them-

selves to electricity generation. Hydroelectric poweris the largest renewable energy source and willremain so for many years. Photovoltaics and windproduce electricity directly. Solar thermal and geo-h l f l d h h d h h


quads and wind 2.2 quads. Geothermal increases 0.5quads. Solar electricity could displace some directfossil fuel use, but that is not assumed in thisscenario. In fact, electricity generation drops 2.9quads from displacement by the direct use of renewable energy.

Table 4-7—High Nuclear Scenario Energy Use andSupply (quadrillion Btu)

1989 2015Demand

ResidentialNatural gas . . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .

5.03.1

3.43.4



Conclusions-The largest uncertainty for thehigh renewable scenario is whether the technologycan be improved sufficiently to provide a reliable,affordable energy source. Only a few renewabletechnologies are now competitive and most of theseonly in special situations. Furthermore, as these

intermittent sources begin accounting for largerfractions of electricity generation, improved storagewill become essential. Cost projections suggest thatat least several technologies will be competitive, butthat is not yet certain. If the projections provecorrect, renewable could grow very rapidly. Someadaptation by individuals and companies might berequired to make the most effective use of renewableenergy (e.g., revising energy demand profiles to

track more closely solar energy availability, andincreased installation of backup power equipment).In addition, wide-scale exploitation of renewableenergy is likely to cause some conflicts withenvironmental goals (e.g., f arming practices forbiomass, aesthetics of solar collectors). Overall,however, if the economics are solved, renewablewill follow with considerably less difficulty.

Scenario 6: High Emphasis on Nuclear PowerTwenty-five years ago, the total capacity of all

nuclear powerplants in the United States was less

Electricity . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Renewable . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

CommercialNatural gas . . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

TransportationOil . . . . . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

Industrial

Natural gas . . . . . . . . . . . . . .Oil (fuel) . . . . . . . . . . . . . . . . .Oil (nonfuel) . . . . . . . . . . . . .Electricity a. . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . .

Total demand a . . . . . . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . . . . . . . .Oil . . . . . . . . . . . . . . . . . . . . . . .Renewables . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . .

Supply

3.11.80.10.9

3.40.8

ne/1.5

10.9

2.72.7

ne/0.7ne

9.1

2.83.50.30.50.1

6.1

21.60.6nene

22.2

8.33.84.43.21.92.9

24.5

7.2

23.40.70.70.7

25.5

7.24.25.74.63.63.2

28.5

63.6

16.05.72.91.73.0

70.3

12.112.05.01.37.6

29.2 38.0


would involve a consortium of utilities, manufactur-ers, and architect-engineers implementing a preli-censed design. Under circumstances leading to highnational priority, at least two separate consortia

would be likely, each building a reactor of about 600MWe. These initial reactors would require about 7years to attain commercial operation which would

Table 4-8-New Nuclear Plant Construction Schedulein High Nuclear Scenario

Plantsstarted Total new Operating

Year in year starts capacity ( MWe)2000 . . . . . . . . . 2 4 02001 . . . . . . . . . 4 8 1,200



years to attain commercial operation, which wouldbe in 2001.

If progress during construction of these test casesis reasonably smooth, subsequent orders might beplaced in 2000. Some risk would be involved inordering before completion of the construction,regulatory, and operational demonstrations, but thesituation is not analogous to the premature orders inthe sixties and seventies. Now the technology ismuch more familiar and stabilized. However, utili-ties are likely to be cautious, so only two more plants(1200 MWe total) are ordered in 2000, and four in2001. These and following reactors are built on a5-year construction program.

Alternative technology, in particular the high-temperature gas reactor (HTGR), would be availableslightly later, but the net effect on this scenariowould be small. Ironically, one of the major advan-tages suggested of advanced reactors, improvedpublic acceptance, would not apply in this scenario,because public acceptance of conventional reactorsis already assumed. However, alternative reactorsshould still have safety advantages. The type of accident that occurred at Three Mile Island, whichentailed serious financial and public relations dam-age, though releasing only trace amounts of radioac-tivity, becomes a significant risk if hundreds of LWRs operate for decades. Since this type of

2002 . . . . . . . . . 8 16 1,2002003 . . . . . . . . . 12 28 1,2002004 . . . . . . . . . 16 44 1,2002005 . . . . . . . . . 20 64 2,4002006 . . . . . . . . . 22 86 4,8002007 . . . . . . . . . 24 110 9,6002008 . . . . . . . . . 26 136 16,8002009 . . . . . . . . . 28 164 26,4002010 . . . . . . . . . 30 194 38,4002011 . . . . . . . . . 32 226 51,6002012 . . . . . . . . . 34 260 66,0002013 . . . . . . . . . 36 296 81,6002014 . . . . . . . . . 38 334 98,4002015 . . . . . . . . . 40 374 116,400SOURCE: Office of Technology Assessment, 1991.

construction process becomes large. By 2015, theadditional operating capacity is 116,000 MWe and

growing rapidly. The existing 103,000 MWe can beexpected to decline by about 19,000,for a grand totalby 2015 of 200,000 MWe, producing 12 quads. Evenfaster growth could be envisioned; in 1975, projec-tions called for 1,000,000 GWe in 2000, 10 timeswhat we shall have. However, the rapid growth rateat that time was the source of many of the industry’sproblems. This more controlled rate should giveindustry time to acquire qualified workers and build

an adequate infrastructure. By 2015, however, thecapacity reaches the levels ordered in the earlyseventies, so the industry may again becomestrained. In addition to the reactors, several enrich-


Relying on nuclear power will change the natureof the energy system, but not as greatly by 2015 asafter. This scenario uses nuclear energy more as ameans to reduce coal combustion than as an effort to

increase electricity production. The use of nuclearreactors to produce industrial process heat has beenproposed, particularly using HTGRs, but that is not

This scenario is impossible unless the industrycan demonstrate mastery of the technology withexisting as well as new plants. Furthermore, afunctioning waste repository must be a near-term

probability before many new plants are ordered, andproliferation risks must be strictly minimized. Inaddition, at least initially, nuclear power must be



proposed, particularly using HTGRs, but that is notassumed in this scenario.

The transportation sector will be especially diffi-cult to convert to electricity, because batteries areunlikely to improve sufficiently by 2015 for EVperformance to match that of present vehicles. EVswill become widespread after 2000 in this scenario,but the motivation assumed here centers on localenvironmental benefits rather national efforts toreduce fossil fuel use. Electricity and biomass eachsupply 0.7 quads in the transportation sector (table4-7). The biomass component would be moreassimilable, but the electricity will power about fourtimes as many vehicles. Alcohol or other biomassfuels must be burned and converted to work atrelatively low efficiencies (generally much lowerefficiencies than at large, stationary powerplants),whereas the electricity is used directly.

Industry would be unlikely to shift its bulk process heat to electricity because of the cost, unlessindustrial heat pumps prove effective. Industry willenjoy the greatest benefits from electrification if process redesign exploits electricity’s controllabilityand cleanliness.

Conclusions-Nuclear power will not solve ei-ther the C0 2 problem or energy security concerns by2015, but it can make a major contribution thatwould grow rapidly thereafter Before this scenario

addition, at least initially, nuclear power must besignificantly less expensive than renewable optionsor fossil-fired plants for utilities to consider choos-ing nuclear.

All of these conditions are possible to meet, butthe likelihood of meeting all of them is uncertain.The nuclear industry retains a strong commitment toa revival, but strong policy leadership will berequired to convince the rest of the country, at leastat frost.

Comparative Impact of Scenarios

The six scenarios discussed above are summa-rized in table 4-9. They represent different assump-tions about the problems and opportunities facingthe Nation. It would be quite difficult to specifyexactly what impact would result from the imple-mentation of any of them, because that woulddepend on additional assumptions, e.g., regulationof emissions and interest rates. Furthermore, thevalue of scenarios 4, “5, and 6 depends to a largeextent on how crucial it becomes to reduce C0 2

emissions, which cannot be determined at this time.However, major types of impacts can be identified.

The three major parameters for the design of thescenarios were: 1) how to minimize environmentalimpacts, especially global warming; 2) how to


Table 4-9-Summary of Scenarios

2015 2015 2015 2015 20152015 High Moderate High High High

1989 Baseline Growth Efficiency Efficiency Renewable Nuclear

DemandResidential

Natural gas. . . . . . . . . . . . . . . . . . . .Electricity a . . . . . . . . . . . . . . . . . . . .

5.03.1

4.24.0

5.54.8

3.63.3

2.92.6

3.32.8

3.43.4



yOil. . . . . . . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . . . . . . . .Renewable. . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . .

CommercialNatural gas,... . . . . . . . . . . . . . . . .Electricity a . . . . . . . . . . . . . . . . . . . .Renewable. . . . . . . . . . . . . . . . . . .oil . . . . . . . . . . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . .

Transportationoil . . . . . . . . . . . . . . . . . . . . . . . . . . .Natural gas . . . . . . . . . . . . . . . . . . . .Renewable. . . . . . . . . . . . . . . . . . .Electricity. . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . .

IndustrialNatural gas..... . . . . . . . . . . . . . . .Oil-fuel . . . . . . . . . . . . . . . . . . . . . .Oil--non-fuel . . . . . . . . . . . . . . . . . .Electricity . . . . . . . . . . . . . . . . . . . .Renewable. . . . . . . . . . . . . . . . . . .Coal . . . . . . . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . .

Total demand a . . . . . . . . . . . . . . . . . . .Electricity b

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nuclear . . . . . . . . . . . . . . . . . . . . . . . . .Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . .oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Renewable. . . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

supplyl

1.80.10.9

1.10.11.5

1.30.11.5

0.90.11.2

0.8

ne/2.3

0.7

ne/1.5

0.8

ne/1.5

10.9

2.72.7

ne/0.7ne

10.9

3.45.2

ne/0.90.1

6.1

21.60.6nene

9.6

27.50.7nene

22.2

8.33.84.43.21.92.9

24.5

63.7

16.05.72.91.73.0

29.2

28.2

7.75.05.75.33.54.6

31.8

80.5

29.13.86.31.65.7

46.4

13.2

3.65.5

ne/0.90.1

10.1

32.61.50.50.7

35.3

10.95.66.56.43.85.3

38.5

97.1

27.48.27.01.65.5

49.7

9.1

3.03.4

ne/0.70.1

7 . 2

24.80.7nene

25.5

7.54.45.74.43.23.3

28.5

6.9

3.81.7

ne/0.30.1

5 . 9

17.70.7

ne/0.1

18.5

7.73.35.73.22.21.5

23.6

9.1

2.73.00.90.50.1

7 . 2

23.60.71.2ne

25.5

6.73.75.74.44.83.2

28.5

9.1

2.83.50.30.50.1

7 . 2

23.40.70.70.7

25.5

7.24.25.74.63.63.2

28.5

70.3

17.86.64.11.54.5

34.5

37 9

54.9

5.36.85.30.25.2

22.8

70.3

12.14.32.71.2

11.331.6

35 3

70.3

12.112.05.01.37.6

38.0

35 9


Table 4-10-Comparative Impact of Scenarios

High HighImpact Base Growth Efficiency Efficiency Renewable Nuclear

Environmental . . . . . . . . . . . . . 0 – – + ++ ++ +

Security . . . . . . . . . . . . . . . . . . 0—

+ ++ ++ ++Economic . . . . . . . . . . . . . . . . . 0 0 ++ o — oResilience . . . . . . . . . . . . . . . . 0 —— + ++ + 0Implementability



ImplementabilityInfrastructure. . . . . . . . . . . . 0 ++ — —— — +Public acceptance . . . . . . . 0 0 + — +

Sustainability. . . . . . . . . . . . . . 0 --

—

+ ++ ++ +KEY: O = about the same as the base case;+ . somewhat better or easier; ++ - much better; – = somewhat worse

or harder; – – = much worse.SOURCE: Office of Technology Assessment, 1991.

uncertainties includes both the probability of suc-cess and the consequences of failure and depends inpart on the technologies involved. The high growthscenario has particularly uncertain assumptions. Thehigh efficiency scenario is most immune againstnegative surprises and vulnerable principally toimprobably low energy prices.

The ability to implement any of the scenariosdepends on several factors. Public acceptance is oneconsideration. Some technologies (e.g., solar) arequite popular with the public (in the abstract), andpromotional policies are likely to be widely sup-ported. Conversely, the level of public involvementrequired to implement these technologies may behigh, which increases the difficulty of implementa-tion. Demand-side measures in particular requirepeople to focus on energy decisions (purchasing andoperating equipment) more than has been experi-enced to date. Some solar options also involve usersmore intensively than does the purchase of conven-tional energy. Industrial readiness to implement thescenarios also varies The fossil and nuclear indus

notable shifts would be the decrease in coal fieldemployment under scenarios 4, 5, and 6. Compen-sating increases could be found elsewhere, but theyare unlikely to help the coal miners or their regions.Nor are changes in energy demand and supply dueto global warming (other than those changes deliber-ately implemented out of concern over climatechange) considered here, even though such warmingcould be detectable (though probably not large) by

2015 under scenarios 1 and 2.Table 4-9 evaluates these factors qualitatively

relative to the base scenario. The scores cannot beaveraged to determine totals because the six factorslisted do not represent all important considerations,nor would they be equally weighted. However, itdoes appear that scenario 3, moderate conservation,has most of the advantages and few of the disadvan-tages of the others.

overall, it is clear that no one subset of energytechnologies is going to solve all the problems theNation will have to confront eventually. Each


modest under some conditions, but such a goal could This argues strongly for assuring that a wide rangeonly be achieved by strenuously combining scenar- of technologies is available in the future, and that noios 4, 5, and 6. option be discarded prematurely.



CONTENTS Page

INTRODUCTION .......... + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135BASELINE SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .137HIGH GROWTH SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137MODERATE EFFICIENCY SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139HIGH EFFICIENCY SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143HIGH RENEWABLES SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .144HIGH NUCLEAR SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146COMPARING SCENARIOS . . . . . . 146



COMPARING SCENARIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146

Figure Figure Page5-1. DOE Conservation R&D Budgets, Budget Requests, and Appropriations . . . . . . . . 137

TableTable Page

5-1. Summary of Policy Options . . . . . . . . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

Chapter 5

Policy Issues

INTRODUCTIONThe previous chapter describes six alternative

views of the Nation’s energy future presented as

manufacture or construction of the least efficientequipment or stock in the marketplace.

Although not typically conceived as such, pollu-



views of the Nation s energy future presented asdivergent scenarios of U.S. energy supply anddemand by 2015. This chapter explores policy issuesconcerning each of these energy futures. The optionsare considered as they relate to the three major goalsbehind energy policy discussed in chapter l—economic competitiveness, environmental health,and energy security. These three goals are alsorecognized as preeminent in the Presidents NationalEnergy Strategy (NES). l

As mentioned earlier, the scenarios in this reportare not predictions. Their purpose is to conveyoutcomes for six alternative energy futures based onvarying assumptions about the implementation of differing technologies that could affect energysupply and demand by 2015. This chapter is notmeant as a general description of energy policy noras a quantitative assessment of policy options. Withfew exceptions, the scenarios are developed withouta priori assumptions about the exact nature andextent of policies used to attain the technologicalimplementation assumed in each. Those decisionsare left to policymakers and are not directly relevantto conveying the technological promise theoreticallypossible under each scenario.

Only the first case, the base scenario, could beimplemented without altering existing Federal statu-

g yp y , ption limits have the potential to save energy as well.If properly designed, pollution standards canencourage manufacturers, utilities, and consumers toincrease their level of goods or services per unit of energy consumed, or per unit of emissions gener-ated. For example, pollution standards that encour-age the use of industrial wastes as feedstock or theimplementation of cogeneration systems would leadto direct gains in energy efficiency.

Along with efficiency and pollution standards, athird type of requirement can induce energy-savingsthrough behavior modification. For example, amandated national speed limit of 55 miles per hour(mph) would slow average highway speeds and savea considerable amount of energy in transport.

2

Financial mechanisms can increase the competi-tiveness of energy efficient measures, technologies,or fuels not otherwise economical or preferred byconsumers. Financial mechanisms include incen-tives such as tax credits, low-cost loans, or directpayments by Government or, in the last two in-stances, by utilities. Financial mechanisms can

establish a level field for competing goods orservices by eliminating indirect subsidies that dis-courage energy conservation or by creating subsi-dies that encourage energy conservation. For exam-


for polluting industries to reduce emissions beyondmandated standards, which by themselves offer nobenefit or incentive for polluters to surpass once theyare in compliance.

With the tradable permit system created under theCAA, utilities have been given a strong incentive toincrease their energy production per unit of S0 2

to some degree by reduced economic activity, atleast in the short term, which would lower Federaltax revenues from other sources.

Information management—in the form of pub-lic or professional education, training, workshops,information dissemination, or program evaluation—educates consumers and professionals about options



increase their energy production per unit of S0 2

emissions as a means of generating additional profit.Technologies now or nearly available, e.g., inte-grated gasification combined cycle (IGCC) andsteam-injected gas turbines (STIG), offer both lowemissions and high efficiency, and they may becomemore widespread as the new provisions of the CAAare implemented.

Thus, appropriately designed incentives couldguarantee that energy efficiency becomes an integralrather than confounding feature in efforts to reduceemissions. Marketable emissions permits for carbondioxide (C0 2) in the industrial and utility sectorswould be even more useful than those for sulfur inpromoting energy savings.

Energy taxes have the potential, if set highenough, to reduce energy consumption and petro-leum imports, while encouraging investments inenergy efficient equipment and technologies. En-ergy taxes may apply directly to energy purchases,e.g., gasoline taxes, or they may apply to the initialpurchase of energy-using equipment, e.g., gas guz-zler taxes for the least efficient vehicles in the new

light-duty fleet market. A currently discussed alter-native, a tax based on carbon emissions, would alsoimprove the competitiveness of renewable andnuclear technologies, while reducing C0 2 emis-

educates consumers and professionals about optionsto improve energy efficiency and conservationpractices.

Research, development, and demonstration(RD&D) programs develop new options or advance

current options toward commercial availability. Thelast element, demonstration, can be vital, becauseresearch and development (R&D) programs oftenfail to demonstrate the practical applications of newor improved technologies or fail to improve theprospects of their commercial availability.

Promising energy technology R&D projects areshown in tables 2-1 and 3-1. Budget increases will

be needed for many of these technologies to achievewidespread commercial availability. Reversing thedrastic cuts in U.S. Department of Energy (DOE)R&D conservation budgets that began in 1982would be an important step to improving thecommercial prospects of these technologies (figure5-l).

Federal programs can increase energy conserva-tion and efficiency in the Government and othersectors or increase energy supplies. A recent OTAreport describes in detail the progress and prospectsof improving Federal Government energy effi-i 3 I ddi i l i F d l d S

Chapter 5--Policy Issues q 137

Figure 5-l—DOE Conservation R&D Budgets, BudgetRequests, and Appropriations

Millions of 1982 dollars

4 0 03 5 0 + I

11.?300 , ‘ “,.

national energy policy in the near term. For thepurposes of this scenario, however, we assume nochanges that would significantly alter the frameworkunder which energy decisionmaking takes place

today.Even without major policy changes, some energy

efficiency improvements are expected. Under the



11<

250 “I,2ooj \ I

150- +,

100-“. ,‘. / ‘. / . ‘. / \ ~ - . . . . . . . . . . -

50- . / . ,‘,/ .,0 I I 1 1 1 1 I 1 1 1

80 81 82 83 84 85 86 87 38 89 90 91Fiscal year

+ Cong. appropriations ----- Admin. budget requests

SOURCE: U.S. General Aeeounting Office, Ene@y F/&D-ConservationPlanning and Management Should Be Strengthened, GAOIRCED-90-195, July 1990.

should be open to development. Federal programsalso include the Strategic Petroleum Reserve (SPR).

At varying levels of implementation, these policyoptions are discussed below for the six scenariosgiven in this report. Each scenario covers the period1989-2015.

BASELINE SCENARIOThe first scenario assumes that no major new

energy-related policy initiatives are undertaken. Inthis scenario, fossil fuels remain the cheapestavailable energy source and they continue to drive

conditions described in chapter 4, this scenariopredicts modest efficiency improvements by 2015through normal upgrading and equipment turnover.Use of available shell improvements will allow the35 million new homes and apartments projected tobe built between 1995 and 2015 to require 15-percent less heat and 8-percent less air conditioningthan current new homes. Without changing currentFederal fuel economy standards, new cars areprojected to average 36.5 miles per gallon (mpg) by2010. The appliance efficiency standards under theNational Appliance Energy Conservation Amend-ments of 1988 (NAECA), Public Law 100-12, areassumed to remain in effect as well.

Under this scenario, U.S. oil import dependencewould reach unprecedented levels, about two-thirdsof consumption by 2015.4 The prospects of climatechange would worsen as well, and urban air qualitywould remain poor from continued transportationenergy growth.

HIGH GROWTH SCENARIOGovernment policies in this scenario focus on

expanding supply rather than on diminishing de-mand to fuel a period of high economic growth. Thehigh growth scenario envisions total U S energy


be necessary to keep domestic production fromdropping too sharply by 2015. Policies would haveto encourage increased domestic production of thesesources, while protecting against supply disruptionsto prevent shortages and drastic energy price rises.

The options to expand supply in this scenario echothe proposed NES. For example, the development

d f d d il h l

monoxide and ozone nonatt ainment areas). s Inresponse, this scenario assumes that the use of electric vehicles (EVs) becomes more widespread,which would require Government incentives toinduce manufacturers to produce such vehicles on alarger scale. This option is an element of the NES,and some areas (e.g., California) are already begin-ning to incorporate EVs in their environmental and



and use of advanced oil recovery technology toextract currently unrecoverable domestic reserves inthe range of 300 billion barrels would be important.Also, increasing exploration in offshore and otherunexplored areas, such as the Alaska NationalWildlife Refuge, would help meet the supplyprojections in this scenario. To expand domesticsupply exploration and development, a variety of environmental concerns would have to be addressed,but they could not raise the cost of the final productsby much or they would not be competitive under thislow-price scenario.

If coal is to be used in the quantities assumed here,stricter SO 2 and nitrogen oxide (NO X) emissions

controls may be necessary to avoid violating airquality standards. Though coal remains abundantand cheap under this scenario, tighter emissionsstandards could not raise the price of energysignificantly, or the low-price, high-growth condi-tions of this scenario would be compromised, andprices would rise and demand would shrink accord-ingly. Thus, expanding Government support forRD&D to improve combustion (e.g., fluidized bed

or gasification in combined cycle plants) would helpenhance generating efficiency while offsetting theemissions increases that are a major feature of thisscenario. In addition, a tradable emissions permit

g ptransportation planning. However, EVs are expen-sive and suffer from poor performance. GovernmentRD&D and incentives are likely to be required if they are to be important contributors to urban airimprovement in the short to medium term. 6

To maintain low electricity prices, increasingcompetition could be vital. Changes to the PublicUtility Holding Company Act of 1935 (PUHCA)could ease the financial and other constraints onutilities that service customers in more than oneState. Though amending PUHCA could have agenerally positive effect on competition, the fulleffects of any PUHCA changes need to be under-stood before major amendments are made to preventeither small or large generators from enjoying unduecompetitive advantages or disadvantages.

The large diversion of coal (one-third of produc-tion) to synthetic fuel production under the modestprice rises assumed for oil and natural gas in thisscenario is not probable absent price incentives andexpanded RD&D, both of which the Governmentwould have to provide. Concerns about rising levels

of petroleum imports, which are assumed in thisscenario and likely in any event, would be the likelyimpetus for synthetic fuel production of this magni-tude.


to be waning by 2015, because the price assumptionsused in this scenario would be insufficient to spurnatural gas exploration at the levels projected here.As proposed, the NES supports R&D to improvenatural gas production, as well as regulatory reformto prevent delays in building new pipeline capacity.Both of these steps would be important in thisscenario.

availability of cost-effective efficiency improve-ments remains great. Suggestions in the proposedNational Energy Strategy to improve the acceptanceand use of nuclear power fail to indicate how toaddress potential public concern about nucleargrowth at a time when many options to implementcost-effective demand control are available.

The nuclear R&D program has been declining



Additional RD&D for enhanced oil recovery inexisting fields may be required, as well as improvedexploration and drilling techniques, especially off-shore. Increasing both imports and domestic produc-tion also suggests that improved safeguards against

oil spills would be necessary. To reduce the potentialfor oil supply and price disruptions under the highgrowth scenario, exploiting protected areas inAlaska and off-shore would help prevent domesticoil production from diminishing too quickly. Evenwith expanded exploration of this kind, however,domestic oil production is expected to continuedeclining. For further protection against supply orprice disruptions, the SPR would have to be en-

larged.To expand nuclear power, attention to RD&D,

regulatory treatment, waste disposal, and decommis-sioning would be necessary, as well as a visibleeffort by the Government to restore public confi-dence in the industry. Standardizing designs andsimplifying licensing are crucial ingredients for arevival. Proapproval of designs, and perhaps sites,might be possible. However, it could be verydamaging to public acceptance if a streamlinedlicensing process is viewed as steamrolling opposi-tion. Along with an improved regulatory environ-

t th l i d t it lf ld i

The nuclear R&D program has been decliningsince the cancellation of the Clinch River BreederReactor in 1983. Increased RD&D for alternativereactor designs and processes could lead to technol-ogy that could more easily recapture public trust.

MODERATE EFFICIENCYSCENARIO

Improved efficiency has been the major energysuccess story since the first oil crisis in 1973. Hadthe pre-1973 trends in the growth of U.S. energyconsumption continued unabated, total energy usehere would have been 32 quads higher in 1986 thanthe actual 72 quads consumed that year. For the

period 1973-86, this resulted in a cumulative savingstotaling 171 quads, valued at over $950 billion (1986dollars). 7 Despite these large gains, there are vastopportunities for further improvements.

In contrast to the previous scenario, therefore, thefocus of the moderate efficiency scenario switchesfrom increasing energy supply to reducing energydemand. As noted in chapter 4, this scenarioassumes that available cost-effective, energy-savings opportunities are fully exploited due todirect policy intervention. 8 While this optimal levelof cost-effective investment would theoreticallyb fit d th N ti h l it


cates strongly only the last three options, whilepostponing or dismissing consideration of revisingstandards or broadening energy taxes. Nonetheless,a significant, broad-based energy tax is perhaps the

single most effective means of improving efficiencyin this or other scenarios. A gasoline tax in the rangeof $0.50 per gallon, with equivalent increases forother energy sources would have a major impact on

ronmental, and energy security goals outlined inchapter 1.

Of course, there are social costs to raising energy

taxes significantly. In particular, energy taxes wouldbe regressive; lower income individuals and familieswould experience a greater marginal burden if suchtaxes were imposed, because energy costs consist-



other energy sources, would have a major impact onhow consumers make energy-related decisions. Forexample, a recent OTA report suggested that asustained increase in gasoline prices of 50 percentcould lessen gasoline demand 8 percent (between 5and 20 percent), 9 but the gasoline price elasticity

assumed in this estimate is an extrapolation of empirical data. In other words, estimating gasolineprice elasticity at such high prices is uncertain,because the United States has not experiencedsustained gasoline price rises (in real terms) of thismagnitude.

Across the board energy taxes would increase thelevel of energy efficient construction and manufac-

turing for residential and commercial stock, vehi-cles, appliances, and other equipment. In the indus-trial sector, energy taxes could motivate the wideradoption of adjustable-speed drive (ASD) and othermotor efficiency improvements to save 10 percent of the energy projected for use by motors in the basescenario in 2015. Of course, taxes would have to behigh enough to motivate improvements but lowenough to allow consumers sufficient investment

capital to afford such equipment and conservationmeasures.

Energy taxes could also be applied to the initial

p gyently account for a higher fraction of income inlow-income households. 10 This report does notanalyze social equity issues such as this. It merelynotes that one of the most efficient ways to induceeffective energy-saving decisions is to raise the cost

of energy.Barriers to maximizing cost-effective, energy-

saving investments are not merely price-oriented.Reliable information on energy-saving opportuni-ties needs to increase in all sectors. Most people, forinstance, are aware that measures such as insulatingresidences or driving high mileage cars will saveenergy, but few are aware of the full range of investments that can profitably save money bysaving energy. Information programs such as appli-ance labeling can be useful, but only if consumersare aware of them and understand them. The scopeand clarity of Federal energy information programscould increase to assure consistent and meaningfulinformation for appliances, building energy ratingsystems, and other energy-using equipment or stock.

Passive programs that simply supply some infor-mation, or supply information only when asked, willnot reach a high proportion of consumers. Otheractors that can aid or influence consumer decisionsabout energy use builders lenders landlords

Chapter 5-Policy Issues . 141

efficient design are made by builders and landlords,rather than subsequent buyers or renters. Unlikeappliances and vehicles, the decision about whetherto invest in energy efficient building design is made

for the consumer in advance. Standards would helpcorrect this basic problem.

In the moderate efficiency scenario, standardscould be raised significantly in all sectors and still

efficiency performance. However, estimating theeffects between taxes and standards in the buildingssector is complicated by the diversity and uses of building types. Comparing the effects of taxes and

standards for vehicles, on the other hand, is lesscomplicated. Meeting the fuel economy targetsgiven in this scenario might be achieved mostefficiently through energy taxes, but experience in



could be raised significantly in all sectors and stillmeet the criterion of life-cycle paybacks used in thisscenario. The NAECA standards, for example, couldbe strengthened; at present, the method for revisingthese standards may effectively encourage the wide-spread use of three-year payback periods, 11 but theopportunity for efficiency gains typically increasewhen longer paybacks are used in setting standards.To be sure, there is no current requirement underNAECA to set standards at levels that would ensurepaybacks strictly determined on a life-cycle basis.

Mandatory Federal building standards are cur-rently restricted to Federal buildings, and they arenot enforced strictly. Under this scenario, thesestandards could be strengthened to require high, butstill cost-effective, efficiency levels, expanded toinclude residential and commercial structures, andenforced. State energy grants disbursed through theFederal State Energy Conservation Program (SECP)and other DOE and U.S. Department of Housing andUrban Development (HUD) programs could berestricted to States that have adopted the nationalBuilding Energy Performance Standards (BEPS) orother building codes, such as the Council of Ameri-can Building Officials “Model Energy Code”(CABO “MEC”). One way to bolster enforcementprograms is to attach major fries for noncompliance

other industrialized nations suggests that such a taxwould have to be high, as much as two to three timesthe current U.S. price.

Strengthening fuel economy standards directly isan alternative approach to taxes that appears to havebeen effective in the United States with lower cost toconsumers. However, raising prices through energytax increases would affect all vehicles, not just newones. Raising energy prices and strengthening fueleconomy standards together would encourage thescrappage of older, less efficient vehicles at a timewhen new vehicle fuel economy was rising. Theeffect would be to raise the efficiency of the entirefleet much more quickly than we have experiencedin the United States with just new vehicle standardsworking by themselves.

In fact, fuel economy standards in this scenariowould not need to increase much over levelsexpected in the base scenario to achieve significantenergy savings. Year 2015 new auto fuel efficiencyof 39 mpg and new light truck efficiency of 35.5 mpgcould be achieved if regulations raised the fueleconomy of these vehicles only about 10 percentabove that already predicted by the base scenariowhere no regulatory changes occur. Along withreinstating the 55-mph speed limit, improving trafficf


prevents firms or individuals from acquiring them.Financial mechanisms could soften or eliminate thefirst cost barrier. Tax credits applied, for example, toefficiency investments, conservation measures, orboth could be set at minimal losses to the FederalTreasury while helping to reduce the flow of oil



Treasury while helping to reduce the flow of oilimports. Moreover, revenues lost from Federal taxand other incentive programs could be offset byincreasing energy taxes to achieve no net effect onGovernment revenues.

Tax credits could also be applied to equipmentusing renewable energy sources (solar, wind, geo-thermal). The Federal Government has experiencewith both types of credits in the residential, commer-cial, and industrial sectors, particularly under theEnergy Tax Act of 1978 (ETA), Public Law 95-618,and the Windfall Profits Tax Act of 1980 (V/PTA),Public Law 96-223. Tax credits would lower FederalTreasury revenues directly, but they would indi-

rectly raise some of these revenues by stimulatingeconomic activity that might not otherwise haveoccurred but for the incentives.

The marginal benefits that tax credits actuallyprovided the industrial sector under the WPTA wasuncertain, because many firms may have made theirefficiency investments regardless. Other mecha-nisms, e.g., low-cost loans and direct payments,might be targeted and administered more effectivelyby States and utilities, as they can often evaluatebetter fuel use, load, and cost changes in balancewith projected demand and supply growth, but theF d l G t ld g f t th t h

Photo credit: Southern California Edison Co.

A 500-kW wind turbine mounted on a vertical axis inCalifornia.

spread application As these problems are solved


of renewable sources of energy, which are assumedto cover 40 percent of new electricity demand by2010. In addition, these tools could achieve theextensive use (70 percent) of cogeneration in newand replacement industrial steam boilers by 2015.

Federal energy use could be improved throughmandatory building, equipment, and fleet efficiencystandards; retrofitting existing shells and lighting

scenario, therefore, is more difficult to justify thanthe moderate efficiency scenario under currenteconomic, security, and environmental conditions.For this scenario to become a national goal, extremethreats to energy security or the global environmentwould probably be necessary.

Serious climate change would probably serve asthe strongest rationale. This scenario represents a



; g g g gsystems; and participating in local utility demand-side management efforts. Furthermore, committedFederal efforts to invest in cost-effective energyefficiency technology through serious procurementefforts would be essential to bolster Federal credibil-

ity if major national programs are created to reduceU.S. energy use. Federal legislation or executiveorders may be well-intentioned but have experi-enced poor results historically. To ensure that suchefforts attain their desired results, financial support,enforceable provisions, appropriations contingen-cies, or some combination of these could be used toachieve Government efficiency and conservationimprovements that m aximize cost-effective options.

Revisions to Federal procurement and leasing guide-lines and requirements could also promote newdemand- and supply-side technologies.

There are three general reasons for pursuingenergy savings through some or all of these policies.First, maximizing cost-effective energy savingsreduces the cost to produce U.S. goods and servicesin the domestic and international markets, therebymaking those goods and services more competitive.Second, energy savings under this scenario woulddampen U.S. reliance on imported petroleum.

Finally, energy savings of the kind noted here

the strongest rationale. This scenario represents amajor effort and investment to back out coal use. Nonew coal-fired generating capacity would be in-stalled; new supply requirements would be coveredby a combination of renewable, nuclear, and naturalgas technologies. Some coal-freed plants are closedand carbon emissions at others are lowered bynatural gas co-firing. Existing fossil fuel plantswould have to be retired entirely after 40 years(rather than the typical 60). While the natural gas,renewable, and nuclear industries would growslightly, the coal industry-and coal states inparticular-would suffer abrupt economic declinesunless adequate State and National contingencyplanning were conducted successfully in the shortterm.

Tax incentives (e.g., a 2- to 5-cent per kilowatthour (kWh) credit for renewable electricity genera-tion), accelerated plant depreciation schedules, andinformation programs could encourage the use of low- or no-carbon fuels, cogeneration, or help speedthe retirement of coal-fired generating plants. How-ever, in an aggressive demand-side effort such as

this scenario implies, information programs andconsumer-oriented financial mechanisms are lessuseful policy tools: more coercion than convincingor consumer financial assistance would be required.


of the same policies suggested in the moderateefficiency scenario. Accordingly, this scenario andthe policies that would be needed to implement itare, for the most part, a major departure from the

NES.In combination with other policies, higher taxes

would be essential, probably at least double the costof energy which would still leave U S energy prices

package could be nearly as high as 1.8 percent of gross national product (GNP), or could result in a netsavings of a few tenths of a percent of GNP. Thiscompares with total current U.S. environmental

GNP costs of 1.5 percent and the total current GNPcosts of direct fossil fuel and electricity consumptionof roughly 9 percent. 14

A key part of a high-efficiency scenario is Federal



of energy, which would still leave U.S. energy priceslower than in some other countries. A carbon tax inthe range of $75 to $150 per ton would encouragefuel switching and conservation. A tax of thismagnitude would make natural gas more competi-tive than coal at many electricity generating facili-ties. 13 To offset the potential economic effects of increasing prices through energy taxes, the FederalGovernment could lower other taxes on individualsand firms.

High-efficiency standards would be a major partof this policy package. Buildings and applianceswould be required to meet the highest efficiency nowachievable. As a result of such standards, new

residential units by 2015 could require 85-percentless heating and 45-percent less air conditioningthan the average home today, and retrofits could beaggressively applied to all buildings such that theirenergy needs drop 30 percent. In the transportationsector, as part of an intensification of the otherdemand-curbing measures given in the moderateefficiency scenario, fuel economy standards for newautos would rise to 55 mpg (holding the current fleetsize mix and performance characteristics constant).With a shift to smaller vehicles, which is likely withhigh fuel costs, the average fuel economy of the newcar fleet could rise to 58 mpg by 2010 With

A key part of a high-efficiency scenario is FederalGovernment energy use. In several ways, Govern-ment efficiency lags behind other sectors, which isnot only expensive but diminishes credibility .15 Useof standards, changes in procurement guidelines,and realistic energy performance goals are some of the major ways the Federal Government can reduceits energy use if policymakers determine that thisshould be a priority. Although specific changes inGovernment energy use are not a defined element inthis scenario, such improvements would be neces-sary to achieve the goals outlined here.

In addition, the Government would need toincrease expenditures for improving transportation

and industrial infrastructure. Increased mass transitfinding is assumed in this scenario to improvehigh-speed intercity rail systems enough to curbinterurban car travel by 5 percent and air travel by 10percent.

HIGH RENEWABLES SCENARIOThe high renewable scenario represents a major

but less aggressive effort than the high efficiencyscenario to back out coal use to reduce quicklyCO 2 emissions. Implementing policies for ahigh level of renewable could be easier than


Federal Government RD&D support sharplydropped beg inning in 1982. 16

As a result, the Government might consider taxcredits, low-cost loans, or direct payments to subsi-dize the growth of solar, wind, and geothermalelectricity generation, as well as the increasedproduction of biomass fuels (such as ethanol fortransportation) Accelerated capital depreciation

generators that actually operated solely on renew-able sources, but the contribution of such generatorswould probably be small (absent price or otherregulatory incentives) in the timeframe of this

scenario. Under our current regulatory system,merely increasing the PURPA size qualifications forQF status will have the effect of encouraging moregas-fired (rather than renewable source) electricity

ti b i th h ti A it



transportation). Accelerated capital depreciationschedules coupled with investment credits thatfavored renewable could also speed the wide-scaleadoption of renewable supply technologies by en-couraging their acquisition more quickly and easilythan the market generally would by itself.

Financial incentives would clearly help correctthe current inability of renewable energy sources tocompete with fossil fuels, the sources that arecurrently cheaper (and that are likely to remain so ina price system that consistently fails to captureenvironmental externalities). To pay for such incen-tives, and to help create a level field between moreexpensive renewable and less expensive nonrenewa-

ble energy forms, some energy taxes could beestablished (e.g., carbon emissions) while otherscould be increased (e.g., gasoline). The combinedeffect of incentives and taxes has the potential topush the expansion of the renewable energy supplybase further than either option would alone.

The most expeditious way of promoting large-scale, renewable energy use would be assured by

direct regulatory intervention. If the use of renew-able technologies to generate electricity, for in-stance, was favored as a first option by regulation,the need for additional incentives or energy taxes

generation, because gas is the cheaper option. As itis currently written, PURPA grants QF status tomany small, fossil-fried generators, which are com-monly more efficient but not necessarily driven byrenewable sources.

As suggested in the NES, efforts to expandhydropower would be eased if regulations governingsiting, permitting, and environmental review werestreamlined, but such regulatory changes could notsimply cloak efforts to reduce or effectively elimi-nate adequate public review of the licensing process.The enhancement of existing hydropower capacityalso is an important option.

To expand the market for alternative transporta-tion fuels (whether produced from biomass, coal, ornatural gas), their use as gasoline additives could bemade required practice, but the environmental trade-offs would have to be evaluated. Similarly, therequired use of alternative transportation fuels inU.S. fleets would increase their production anddistribution but at an undetermined cost. At aminimum, their adoption in Federal fleets for allnonmilitary and select military use would be appro-priate if the Government decided to promote orrequire their increased use.


together. Efficiency measures meeting the originalcondition of achieving life-cycle paybacks will helpmoderate the need for what are currently the moreexpensive energy sources (renewable).

HIGH NUCLEAR SCENARIOThe high nuclear scenario assumes that a major

As discussed under scenario 2 (high growth), alarge part of the problem is waste disposal. Since thisscenario envisions even faster growth, faster prog-ress is necessary. Waste siting is difficult but must

be done with sensitivity to local needs, addressingthe technical difficulties is also urgent.

As noted in the high growth scenario, standardiza-tion of designs and stable licensing are crucial for a



g jcommitment to nuclear power is deemed essential,most probably because of global climate change. Asa result, this scenario exploits nuclear power asmuch to reduce coal combustion as to increaseelectricity production. Most coal plants would beretired to reduce U.S. CO 2 emissions, one-third of which currently derive from electricity generatingplants. Unlike renewable sources, the amount of nuclear power capacity that is built in the comingdecades depends more on political decisions and lesson resource constraints or industrial capability.

Like the high renewable scenario, the highnuclear scenario assumes that expensive efforts to

expand the supply base will be matched by the samelevel of demand-side controls called for in themoderate efficiency case. Thus, these three scenar-ios assume the same level of end-use energy demandby 2015, and the demand control options discussedin the moderate scenario would all apply here.

Reviving nuclear energy as a viable option wouldrequire a major change in public acceptance, whichcould be induced by serious global climate changesor intense Government efforts to improve the safetyand public acceptance of this power source, such asimposing stricter standards on plant design and

t o o des g s a d stab e ce s g a e c uc a o arevival. Proapproval of designs, and perhaps sites,might be possible. However, it could be verydamaging to public acceptance if a streamlinedlicensing process is viewed as steamrolling opposi-tion.

In the short term, a revival of nuclear power doesnot depend on new reactor technology RD&D.Instead, good design, public acceptance, and imple-mentation of existing technology are more importantto achieve the sharp growth in nuclear generatingcapacity for this study period. RD&D will be moreimportant over time. As noted in chapter 4, currentlight water reactor technology may not be adequate

if hundreds of reactors are installed. Even if it is, theeconomic advantages in diversifying design ap-proaches would probably outweigh the costs of developing new reactors, e.g., the high-temperaturegas reactor. In this regard, a decision is to be madein 1991 on which technology will be used for thetritium production reactor for the weapons program.This report has not examined the question of whichtechnology is best for production, nor does it

recommend which technology should be used in thatmilitary application. However, it is clear that thedecision over which technology is used for militarytritium production could have implications for

Chapter 5-Policy Issues q 147

narios vary greatly, the best policy packages forachieving them vary as well. As a result, comparingthe major features of the scenarios will convey theirrelative merits and suggest which policies could bethe most appropriate or valuable in the future. Thepolicy issues most relevant to all scenarios (exceptthe baseline) are summarized in table 5-1.

Scenarios 4 5 and 6 are extreme outcomes based

Scenario 2 is even more optimistic. That scenarioassumes that continued fossil fuel use will not becurbed by domestic or international concerns aboutglobal climate, that fossil fuel reserves will actuallyexpand, and an uninterrupted level of economicgrowth not seen in two decades will be fueled byabundant and relatively inexpensive energy.

Scenario 3 is a moderate effort to curb U.S. energy



Scenarios 4,5, and 6 are extreme outcomes basedon the growing chance of an extreme problem:global climate change. These scenarios rapidlyreduce the use of coal in electricity generation,despite our large resource base, in order to reduceC0

2emissions. A somewhat different package of

such extreme policy measures could be warranted if severe threats to energy security develop. The costof implementing any of these three scenarios couldbe high, but the cost of not implementing them if global climate change proves as disrupting as someanalysts predict would be higher .17

Scenarios 4, 5, and 6 assume that major policydecisions and Federal budget commitments aremade long before the problem that would precipitatethese changes—serious climate change--is likely tooccur. This fact, however, does not diminish thevalue of considering these scenarios, their policyrequirements, and their effects to counter globalclimate change (or severe threats to energy security);it merely postpones their provable urgency. Ourcurrent understanding of the lagtime in atmosphericresponses to changes in trace gas concentrations,e.g., C0 2, suggests that the urgency of makingpolicy decisions similar or identical to the last threescenarios could be appropriate now.

demand, but it would require an unprecedented useof cost-effective investments and success in energyefficiency and conservation. Though it requires lessextreme measures than the high-efficiency measuresin scenario 4, it would still require a prodigious

effort by Government and citizens to be realized.Scenario 4 adopts the same approach as scenario

3 (demand control), but its measures and outcomeare more extreme. This is the only scenario thatactually results in lower total energy demand at theend of the study period. Such an outcome wouldrequire many investments in energy efficiency thatwould exceed life-cycle paybacks suggesting thatextreme threats to the global environment or energysecurity would be necessary to impose policymeasures this economically severe.

Scenarios 5 and 6 entail aggressive supply-oriented measures, but they exploit the same level of demand-side measures as scenario 3 and thusprovide an illustrative lesson about mixing supplyand demand-side measures in an energy policy.

Any of these scenarios could be the right choicedepending on the resolution of several critical butpresently unknowable factors. In particular, thespecter of climate change could invalidate the frost

b

Table 5-l-Summary of Policy Options

Scenario Financial mechanisms Taxes Info management RD&D Standards Federal programsHigh growth Credits, loans and pay-

ments for synfuels;tradable permits for coalemissions; incentives forelectric vehicles.

Moderate Tax credits and acceleratedefficiency depreciation for quicker

equipment turnover;tradable permits for

No change from baselinescenario.

Energy taxes; gasoline taxin the range of 50 cents;other energy taxesraised accordingly; car-

No change from baseline Clean coal technologies; ad-sce na ri o. Imp ro ve va nce d oil an d ga s r e-public acceptance of covery; synfuels; fluidizednuclear power. bed and IGCC; electric ve-

hicles.

Increase Government Vigorous for all sectors.and utility efforts to im-part life-cycle opportu-nities (retrofits & new

No changes needed in en-ergy performance stand-ards; emissions reduc-tions in utility and trans-portation sectors proba-bly necessary.

Raise building and equip-ment performancestandards (NAECA,BEPS); CAFE to 39 mpg;

PURPA/PUHCA revisions toexpand resource base, in-crease competition; easedplant siting to keep costsdown; OCS/ANWRopened; SPR increased;improved nuclear licensingand waste disposal facility.

Aggressive FEMP; increasedfunding for urbanhterdtyrail; Federal procurementand technology transfer



emissions reductions,(industry and utilities),coupled with tougheremissions standards.

Tough efficiency Similar to moderate effi-ciency scenario, but at a

higher level.

High renewable Renewable investment taxcredits for electricity gen-eration & biomass fuelsproduction; low-costloans; accelerated capi-tal depredation for exist-ing fossil-powered sys-tems; same demandcontrols as moderate ef-ficiency scenario.

High nuclear Accelerated depreciationschedules for utilitiescommitted to investing innuclear plants; invest-ment tax credits for newnuclear construction;same demand controlsas moderate efficiencyscenario.

bon tax of at least $75 to$150/ton; added taxeson inefficient equipment.

Energy taxes and espe-cially carbon taxes of at

least $150/ton; purchasetaxes that Ievelize pricesof equipment with vary-ing efficiencies.

Energy taxes on fossil fueluse only; carbon taxesas an alternative; sameas moderate efficiencyscenario.

Large carbon tax on utilitiesto encourage nucleargrowth.

equipment).

Same as moderate effi- Extremely aggressive; tech-ciency scenario. nologies available by 1999

implemented by 2015.

Same as moderate effi- Especially for storage tech-ciency scenario. nologies.

Same as moderate effi- RD&D needed for advancedciency scenario. lm- reactor designs; modularprove public accep- components; waste dis-tance of nuclear posal technologies.power.

tradable permits; 55-mph speed limit; HOVsand carpooling pro-grams; and utility de-mand-side managementprograms.

CAFE 55 mpg; most energyefficient design for build-

ings and equipment;stronger utility emissionsreductions; ban newcoal-fired generatingplants.

Same as moderate effi-ciency plus standards forgenerating plants thatfavor renewable.

Same as moderate effi-ciency; also higherstandards for non-nuclear plants.

are key.

Aggressive retirement of coalplants; natural gas cofiring;

stronger DSM programs;aggressive FEMP; highnational priority tied to in-frastructure funding.

Favorable regulatory treat-ment encouraging renewa-bles; fleet use of alterna-tive fuels; extended andimproved hydro (existingcapacity).

Streamlined licensing; wastedisposal facility.

ABBREVIATIONS: BEPS . Building Energy Performance Standards; CAFE = Corporate Average Fuel Economy Standards; DSM = Demand-Side Management; FEMP - Federal EnergyManagement Program; HOVS = High Occupancy Vehicle lanes; IGCC = Integrated Gasification Combined Cycle; NAECA = Nationai Appliance Energy Conservation Act;OCS/ANWR = Outer Continental Shelf/Arctic National Wildlife Refuge; PURPA/PUHCA = Public Utility Regulatory Policies ActiPublic Utility Holding Company Act; RD&D =Research, Development, and Demonstration; SPR = Strategic Petroleum Reserve
