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NEED GRAPHS FROM COLLISION COURSE
California’s energy policies and markets bring natural gas and renewables into direct competition. Importing LNG would bring a flood of new natural gas into the state, and it would limit development of clean energy sources.
Production of electricity stands at the forefront of this dynamic, since half of the natural gas in the state is used for electric generation, making electric generation by far the largest consumer of natural gas fuel. California’s electricity is derived from power plants burning natural gas and coal, large hydroelectric dams, and nuclear power. Renewables – primarily solar, wind, and geothermal energy -- comprise eleven percent of the electric energy pie, as of 2005 (see Graph 1)
Graph 1: California Gross System Power for 2005, in Percentages.[1]
Nuclear Energy in California California derives 13 percent of its electricity from nuclear energy, significantly less than the national average of 19 percent. Due to numerous problems, including high repair bills, earthquake risks, and a near meltdown, five nuclear generating units that formerly produced nearly 1500 megawatts of power in the U.S. have been closed. This leaves two large nuclear power plants in California, and a portion of a large plant in Arizona, that contribute to the state’s electric supply. The two in-state plants are scheduled to remain in operation until 2024, by which time growing demand for electricity will have shrunk the relative role of nuclear power to about 10 percent. California’s two largest utilities are applying for extensions for their nuclear plant licenses until 2040, now pending at the Nuclear Energy Commission. However, there are questions about whether these extensions will be approved, and a state law prohibits construction of new nuclear plants.
Pursuing California’s commitment to clean energy, including the 33 percent share of renewables, the planned billion dollars per year investment in improving efficiency in the electric sector, the California Solar Initiative, as well as expanding cogeneration, will allow for a phase down of nuclear power in the future, while also scaling back the use of fossil fuels.
If We Do the Right Thing: Future California Clean Energy Portfolio
Hydropower in California: The state is committed to electricity derived from large hydropower projects because of the infrastructure investments already made to build the dams decades ago, and because it is a relatively inexpensive source of energy. Other than a few controversial hydro projects such as the Hetch Hetchy dam and those along the Klamath River with low generating capacity, there is no serious movement to decommission the large dams the state is now using for 19 percent of its electricity.
In addition, there is evidence that decommissioning of theses dams will have little effect on total energy supplies. One report showed how 90 percent of electric generation could be maintained from Hetch Hetchy power houses, even if Hetch Hetchy Dam is dismantled. The Klamath decommissioning would result in the loss of 200 megawatts of power, located in Oregon. This compares with over 14,000 megawatts of hydroelectric capacity in California. Nevertheless, growing energy demand and the effect of climate change may reduce the role of conventional hydroelectricity. Our model projects this source of electric power to fall from 19 percent to 15 percent of total supply.
LNG will not Displace Coal in California. Some argue that the state needs LNG in order to phase out reliance on coal. But this argument has several shortcomings. California only gets 16 percent of its electricity from coal, compared to 50 percent for the U.S. as a whole. The electricity the state does derive from out of state coal is often contracted on a long-term basis. According to a new law, new long term coal contracts must supply sources that do not exceed carbon dioxide emissions from natural gas power plants established by the California Energy Commission; the limit is 1100 pounds of carbon dioxide per megawatt-hour generated.[3] There is no existing coal combustion technology that can come close to this standard without sequestering significant amounts of carbon dioxide, and there is much controversy about whether this is even possible.
Furthermore, the new limits on greenhouse gas emissions, combined with growth in total energy consumption, will work to slowly reduce the relative role of coal in California’s energy mix. As demonstrated in the models on pages XX and XX, this can be accomplished while at the same time reducing the use of natural gas.
[AK2]
California’s Clean Energy Promise: Two Scenarios
Graph 3
The table above, the “Program Shortfall Model,” shows all generation needs for California until 2020, including both in-state generation as well as imported electricity. The lowest section shows what is left over for natural gas electric generation after needs are met by energy efficiency, renewables, and other conventional sources. The numbers inside the chart show annual generation from natural gas power plants required to meet remaining needs. Natural gas generation falls from 127,114 gigawatt-hours in 2007 to 117,786 gigawatt-hours in 2020.
These projections are by no means optimistic and make the following assumptions:
• The highest growth rate of energy demand that has been projected by the California Energy Commission;
• A reduction in the availability of hydro power due to reduced snowpack caused by global warming;
• Adoption of the 33 percent renewable portfolio by 2020, but meeting the target is assumed to be delayed by at least 4 years with 28 percent of electricity coming from renewables by 2020;
• Energy efficiency measures that meet one third of new growth past 2008, a significant shortfall from the state target to meet one half of energy growth with efficiency programs after 2008.
Achieving this projection will reduce the amount of electricity produced annually from natural gas by 10,000 gigawatt-hours.
Actually meeting the targets would reduce the need for natural gas much further, by nearly 35,000 gigawatt-hours, as shown in the following “Success Scenario” chart:
Graph 4
Whether the policies are fully successful or not, even a modest effort to meet the targets by utility companies and state regulators will mean a decrease in demand for natural gas as a fuel source in the electric sector. An additional important factor, not illustrated in the charts above, is the reduced need for natural gas to run more efficient natural gas power plants as they are upgraded with state of the art, combined cycle technology.
LNG will increase reliance on fossil fuels and displace clean energy. Compare the scenarios above with one in which new LNG is poured into California. In order to sell LNG, vendors will need long term contracts with buyers. As there is no real growth in demand for natural gas from any sector (see graph below), only electric generation could guarantee a market with full cost recovery over a period of decades from customers whose bills are under the control government agency.
Proponents say that LNG is needed to meet rising energy demand, including the need for more “clean” electricity generation. But if the state is to meet its targets for energy efficiency and renewables, all new sources for electricity production need to be renewable until at least 2020. There is simply no room for any new natural gas, or other non-renewable energy source, in the electricity sector at all. This is borne out by numerous studies.
A study performed for the California Energy Commission by Lawrence Berkeley Laboratory in 2003 examined the effect of a 33 percent renewable standard on the need for natural gas power plants to meet the state’s electricity needs. They concluded that about 8000 megawatts of existing natural gas plants would need to be eliminated.
Source: Lawrence Berkeley Laboratory
The first bar on the left indicates that California’s natural gas electric generation capacity in 2003 was 32.1 gigawatts. As illustrated by the “Higher Renewables” scenario, if a 33 percent renewable standard is adopted by 2030, only 24.3 gigawatts of gas-fired generation power plants would be needed. This reduction in natural gas electric generation capacity would eliminate 20 large power plants. Lawrence Berkeley Laboratory’s report gave the state an additional decade to accomplish the 33 percent green energy target.
A report by the Community Environmental Council concluded that California could dramatically reduce natural gas usage, “just by following plans that the state and the utilities already have in place.” The Council concludes that clean energy efforts in California can produce the energy equivalent of 133 percent to 381 percent of the projected additional gas demand by 2016. The high end of that range is the equivalent of about 2.5 LNG terminals.
In a 2003 report, the California Energy Commission’s staff detailed how natural gas demand growth can be reduced, or even reversed, if achievable electric energy efficiency goals and the 20 percent by 2010 renewable legal requirements are met. These energy efficiency goals, set in 2003, total 7,000 GWh per year of savings from all energy efficiency programs by 2006, 13,000 GWh by 2008, and 30,000 GWh by 2013.
According to an analysis of the Energy Commission’s study by Synapse Energy Economics, achieving the energy efficiency goals recommended by Energy Commission staff and accelerating the RPS to 20 percent by 2010, which is now California law, could reduce electricity usage in California in 2013 by an additional 25,000 GWh. Meeting these requirements would reduce the demand for natural gas for electricity production by about 155 Billion cubic feet per year. This is roughly the production volume of one LNG terminal.
All of these reports envision an energy future with dramatically reduced fossil fuel dependence, while adding no new dependence on nuclear energy. Mitigating climate change requires California to choose between fossil fuels or clean energy. The nature of California’s energy portfolio only allows growth from one source, not both.
(Excerpt from a forthcoming report, "Collision Course: How Imported Liquefied Natural Gas Will Undermine Clean Energy in California") |
