ENERGY SUPPLY ACTIONS
The fuels used to meet U.S. energy needs vary in their greenhouse gas emissions. Among fossil fuels, natural gas emits the least amount of CO2 per unit of energy provided, and renewable energy sources such as solar, wind, geothermal, hydroelectric and biomass energy, release no net CO2. Nuclear power, which currently provides over 20 percent of electricity generated, will continue to play a key role in limiting CO2 emissions from electricity production. Newer technologies can also increase the efficiency of generating and distributing electricity. Increased efficiency lowers the amount of greenhouse gases emitted by reducing the amount of fuel required to generate and deliver electricity to customers.
The energy industry is entering an era of unprecedented change due to market and regulatory shifts. The Energy Policy Act and actions taken by the Federal Energy Regulatory Commission (FERC) have increased competition in a variety of energy markets, increasing the efficiency of energy supply. New requirements under the Clean Air Act have prompted a shift to cleaner fuels. Federal R&D; into new energy technologies, primarily through DOE, continues to help the industry meet environmental and market challenges.
The President's Climate Change Action Plan includes a number of new actions to reduce the amount of CO2 emitted from energy production and use. The Administration will increase the use of natural gas; encourage the commercial application of renewable energy resources; make more efficient use of our existing hydroelectric resources; and reduce the amount of energy lost in electricity transmission.
Natural Gas Strategy
Natural gas, an abundant domestic fuel, emits less CO2 per unit of energy provided than either oil or coal. The Administration recognizes the environmental, economic, and national security benefits of encouraging the use of natural gas.
PRESIDENT CLINTON IS DIRECTING:
- EPA to encourage the use of natural gas as a pollution control strategy under the Clean Air Act. This initiative will lower the cost of combating the severe ozone pollution problem plaguing many of our cities in a way that also reduces greenhouse gas emissions. As part of that effort, EPA recently issued guidelines to urge state and local pollution control agencies to allow the use of natural gas in the summer in existing coal- and oil-fired power plants. EPA will examine additional regulatory options where shifts to cleaner fuels could provide environmental benefits and cost savings.
- DOE to accelerate the commercialization of high-efficiency gas technologies such as fuel cells through joint ventures with utilities, research organizations and technology developers to fund demonstrations and market entry initiatives.
- DOE to work with the Federal Energy Regulatory Agency (FERC) to continue to facilitate the implementation of reforms that will increase the availability and use of natural gas.
Renewable Energy Strategy
Renewable energy sources include solar energy, biomass energy (wood, wood waste, and energy crops), geothermal energy, hydroelectric power, and related energy sources that emit no net greenhouse gases. Through increased funding and utilization of incentives included in the Energy Policy Act of 1992 to promote the use of renewable energy, the Administration is already laying the groundwork for a future that can rely on these resources. The Action Plan features new initiatives to accelerate the widespread commercial deployment of renewable energy sources.
PRESIDENT CLINTON IS DIRECTING:
- DOE to form a renewable technology consortium with utilities that will increase the emphasis on commercialization programs for windpower, photovoltaics, biomass, and geothermal energy, beginning in 1994.
- DOE will facilitate collective purchases of renewable energy technology by States, utilities, and other interested firms. Mass purchase strategies enable equipment manufacturers to increase their production capacity and reduce their unit costs -- which will in turn further broaden the market for the technologies.
- This action will enhance the near-term economic returns from Federal energy R&D; programs.
- The Administration to propose legislation to enable private developers to invest in environmentally sound upgrades at existing Federal hydroelectric projects, and to sell the incremental power at market rates.
- Significant technological potential exists for increasing generation at hydroelectric facilities (without changing stream flows), but institutional barriers have stifled efforts to make these profitable efficiency upgrades.
- Private investments will increase generation from hydroelectric facilities, reducing the need for fossil fuel-fired generation.
- Lease payments will help reduce the Federal deficit.
CALIFORNIA WINDPOWER:
Pollution-free Energy Today
Electric Distribution Efficiency Strategy
In 1991, about 7.4% of U.S. electric generation was lost while being distributed from power plants to end-users. When transmission and distribution losses are reduced, less electricity is generated to meet end-use demands, which reduces CO2 emissions. The Federal Energy Regulatory Commission is currently implementing changes in the Federal Power Act contained in the Energy Policy Act of 1992, which will help promote the efficient use of the transmission system. The Action Plan focuses on increasing the adoption of more efficient transmission and distribution equipment.
PRESIDENT CLINTON IS DIRECTING:
- DOE to promulgate efficiency standards for high-efficiency electricity transformers used to convert high voltage transmission power to lower voltage power for end users. Pending the results of a study which will be completed by March 1994, DOE will implement new cost-effective standards for replacement of utility transformers by 1996.
- EPA to implement an "Energy Star" identification program to encourage the accelerated deployment of the highest efficiency transformers.
Utility Industry Strategy
The energy demand and supply programs outlined above rely on an assumed private sector response to a collection of government initiatives. The analysis of their impact assumes that a favorable climate exists for the penetration of technology and that the programs will be supported by electric utilities. In order to ensure that these programs deliver the estimated impacts, and to enhance the prospects for early emission reductions, DOE has begun to forge commitments with electric utilities to limit greenhouse gas emissions. In addition, DOE and EPA will expand their efforts to encourage supportive state regulatory actions.
PRESIDENT CLINTON IS DIRECTING:
- DOE to enter into Climate Challenges with electric utility companies who voluntarily commit to (1) return greenhouse gas emissions to 1990 levels by the year 2000 or (2) limit emissions under strict performance measures. This partnership links accountability with maximum flexibility to give participating utilities an opportunity to demonstrate cost-effective emission reduction efforts.
- DOE has received letters of intent from seven electric utilities to enter into agreements to return greenhouse gas emissions to 1990 levels or below by 2000. An additional 50 utilities have signed letters of intent to enter into alternative performance agreements to limit greenhouse gas emissions. In total, these utilities represent about 60% of U.S. electricity generation and about 60% of CO2 emissions from this sector, and the Administration expects to attract additional partners, including independent energy producers.
- The Climate Challenge builds upon an innovative government/industry partnership authorized under Section 1605(b) of the Energy Policy Act of 1992, in which participants report historic emissions baselines and submit periodic reports of actions taken to reduce greenhouse gas emissions.
- Participating utilities will have flexibility to implement a portfolio of emissions reduction measures -- including enhancing the efficiency of generation and transmission, switching to lower-carbon fuels, investing in renewable generation, enhancing the performance of existing hydroelectric and nuclear capacity, expanding demand-side management programs, undertaking forestry projects, promoting electrotechnologies, and international projects. To the extent that utilities invest in international projects to help meet their voluntary commitments, they could provide an important source of private sector participation in the U.S. Initiative on Joint Implementation.
- DOE to Expand Utility Integrated Resource Planning (IRP) Assistance to provide a foundation for other Federal and State programs, and to encourage a supportive regulatory environment for utilities entering Climate Challenges. In 1994, DOE will expand the IRP programs authorized in the Energy Policy Act. Key elements of the expanded IRP program include:
- Increasing Federal technical and financial support to State Regulatory Commissions to make utility investments in energy efficiency as profitable as supply side investments and for more effective demand and supply side planning;
- Increasing Federal support for removing regulatory barriers to increased use of renewables and natural gas.