Mitigation Options -- Energy Supply

A. Denny Ellerman
Center for Energy and Environmental Policy Research Massachusetts Institute of Technology

It is important to pay attention to mitigation options that concern energy supply. Before proceeding with a brief survey of the alternatives for reducing greenhouse gas emissions on the supply side, I want to distinguish between what might be considered demand side and supply side options.

The Nature of Supply Side Options

Demand side options are based upon the observation that energy is supplied to meet certain basic human needs, such as heat, mobility, or lighting. Demand side actions seek either to change the demand for the basic service or to meet that demand without the use of energy. Such changes of demand are one way to affect energy supply, and thus to mitigate greenhouse gas emissions; but they are not what I mean by a supply side option. Instead let us define a supply side action as one which takes some level of energy supply as given. It may be that the level of supply and demand is too great or too little, but that is another matter. In effect, supply side options may be regarded as those actions which can be taken to mitigate greenhouse gas emissions given some irreducible level of energy supply. Accordingly, supply side options can be defined as methods of obtaining energy without carbon, or with less carbon.

In considering supply side options, a long term perspective must be maintained; in fact, a near term focus will be not only frustrating, but it can be counter-productive in obscuring what can be accomplished over long time horizons. Most of the near term supply actions to mitigate greenhouse gas emissions take on the characteristics of a tax; and we know the reception these proposals receive in the political system. Fortunately, global change is a longer term problem.

A longer term perspective is appropriate, not so much for reasons of political expediency, but because of the nature of the demand for energy and the relation of energy to carbon. The demand for the services provided by energy is very strong, so strong that it can be regarded almost as universal across cultures and time. The demand for these basic services can be influenced, but it is very fundamental and not easily changed. Carbon is not so fundamental; it is only one attribute of the particular forms of energy that we use today. In particular, the greenhouse gas, carbon dioxide, is a residual or by-product of our current forms of energy supply. It is not essential to meeting the demand for those basic human services. Therein, lies the promise of a longer term approach to supply side mitigation and the opportunity for lower carbon trajectories. Thus, when a longer term perspective is adopted, it becomes possible to change carbon trajectories in ways that do not imply a tax or equivalent restriction on the basic needs that create the demand for energy.

Broadly speaking, there are three supply side options: removal and sequestration, altering the conventional energy mix, and new carbon-free technology. Lets look at removal and sequestration first.

Removal and Sequestration

The United States and some other countries have effected significant reductions of other pollutants that are associated with energy supply, such as sulfur dioxide and particulates, by end-of-pipe technology and process changes. Given this successful precedent, it is natural to ask why the same cannot be done with carbon dioxide. Technically, carbon dioxide can be removed from waste gas streams by methods analogous to what is done for sulfur dioxide, particulates and other criteria pollutants. The first problem is cost: because the volume to be removed is so large, the cost of CO2 scrubbing is much greater than for other pollutants. Important as this problem is, the real obstacle is disposal, or the more apt term for carbon dioxide, sequestration. Unlike other pollutants, simply disposing of the captured pollutant in a less offending media is not adequate, it must be isolated or sequestered.

The residue from particulate or sulfur dioxide removal is easily handled and lends itself to a variety of uses. Typically, the residue can be stored in the ground in a manner much less offending than if left in the air; but we have also discovered a variety of ways to recycle these residues in gypsum walls, concrete and roadway fill. The residue from carbon dioxide removal is a gas that if not contained will escape back into the atmosphere. It can be liquefied, but only under pressure and at very low temperatures. There are some uses for CO2, but many (such as dry ice) lead to the gas escaping back into the atmosphere. The gas can be transformed into a hydrate and injected into the deep ocean or reinjected into oil wells or other impervious strata of the earth, but none of these alternatives is very satisfactory or cheap.

Nevertheless, capture and sequestration is a supply side option. Research is being conducted to reduce the cost and to find more practicable means of sequestration. We can always be hopeful, but the reason you do not hear much about this supply side option is because it is not that promising.

Changing the Conventional Energy Mix

The second supply side option is changing the current energy mix. The carbon content of current energy forms is not equal: there are carbon-free conventional energy forms, nuclear and hydro power, and natural gas has notably less carbon content than coal or petroleum products. These conventional forms of energy constitute an important share of energy supply in many countries. In the United States, for instance, nuclear and hydro power meet about 12 percent of total demand, and natural gas accounts for about a quarter of all energy used.

It is hard to imagine that serious action to restrain greenhouse gas emissions would not entail a fundamental reconsideration of nuclear and hydro power. Currently, we may think of further nuclear and hydro development as being undesirable for a number of reasons, but this position is based upon the ready availability of hydrocarbon substitutes. If we decide that carbon is a problem, it is unrealistic to think that the balance now being struck with respect to nuclear and hydro power would not be changed. Not to do so leads to policies that appear to deny the basic needs that energy supply can meet and that are so strong. For instance, opposition to the damming of the Yangtze Gorges in China and to the development of a power sector based on China's abundant coal resources, not to mention opposition to the development of nuclear power in China, comes perilously close to opposing development in any practicable form.

Although not as low in carbon content as nuclear or hydro power, natural gas is one of the alternatives for lowering carbon trajectories by altering the conventional energy mix. This option is also more feasible now that we no longer think of natural gas as a super-scarce, noble fuel whose use must be restricted by legislation. In fact, current trends would suggest that natural gas will gain a larger share of the energy mix quite apart from any concerns about greenhouse gas emissions.

The most notable feature about natural gas during the past decade has been the much lower than expected price prevailing in North America. Far from being a premium fuel that would sell at an oil equivalent price or better, natural gas prices have settled in a range that is well below oil prices. The same phenomenon is being observed more recently in the United Kingdom based on North Sea supplies. In both instances, it appears that earlier regulation of natural gas production led to a systematic under-estimation of the resource base, or that recent technological developments have made it possible to produce natural gas far more cheaply than before.

In addition, the development of higher efficiency, combined cycle technology has given natural gas a distinct advantage over coal as the choice for new powerplants where natural gas is available and reasonably priced. When coupled with the abundant (although often inconveniently located) natural gas reserves in the rest of the world, the potential for shifting the conventional energy mix to a less carbon intensive form is considerable.

Lower prices, an expanded resource base and new technology will lead to growing use of natural gas, but the rate at which the energy mix changes is going to be restrained by problems of infrastructure in developing countries, where the greatest growth of carbon emissions is anticipated, and by the problems facing new plant construction in already industrialized countries. In developing countries, even assuming the availability of natural gas reserves, the greatest problem is getting the gas to market. Its delivery requires a large initial investment in pipelines or LNG tankers. Not only is scarce capital required, but the infrastructure so created is single purpose. Coal and petroleum products can use existing infrastructure and waterways, and any special infrastructure built to deliver coal or oil lends itself to other uses. In the industrialized countries, where the gas infrastructure has been put in place, the prospects for expanded use of natural gas are brighter, particularly where there is still oil to be backed out of household or industrial use. In the electric utility sector, lower prices and the development of combined cycles have made natural gas the fuel of choice for new plant construction; but there are few new plants. Part of the reason for the relative paucity of new plants is the bias against new plants expressed both in the new source performance standards and the problems of siting any plant whether coal or gas fired.

Despite the problems with nuclear and hydro power or with natural gas, there is promise of a lower carbon trajectory because of changes in the conventional energy mix. Many countries already depend upon carbon-free nuclear and hydro power; and, although further dependence on these carbon-free sources does not seem likely in North America or Europe, Asian countries are continuing to develop these energy sources. Natural gas is no longer the scarce, premium fuel that is too valuable to be burned in a boiler. As its resource availability continues to expand, we can expect its price to become increasingly attractive relative to coal and petroleum and its share to expand.

New Carbon-Free Technology

The third supply side option for mitigating greenhouse gas emissions is new technology. This is always a favorite solution, particularly when the problem is insoluble. The question is whether reliance on new technology is more than just a cop-out. I believe that there is something more to this option, but we must be careful about what we mean.

Consider first that it is very unlikely that the sources of energy that would be used a hundred years from now would be the same as we now have. Technology has never been constant, much less over the long time horizons that are relevant to global change. It would be truly extraordinary if our present carbon intensive means of meeting the underlying human needs for heat, mobility and lighting were to remain frozen throughout the next century. It would not be surprising that the seeds of whatever is the energy technology that will dominate the twenty-first century are lying about now, just as a hundred years ago the precursors of the internal combustion engine and of refining were present. These were the innovations that made horses obsolescent and expanded petroleum applications beyond its initial use for lighting as a replacement for whale oil.

Furthermore, the signal innovations which led to the great expansion in the use of coal, petroleum or natural gas were all developed outside of these industries. The steam engine made coal the energy form of the 19th century, just as the internal combustion engine made petroleum the fuel of the 20th century. Natural gas could not be marketed far from the well-head until welding techniques permitted seamless pipelines. The important technological developments were not in finding or producing the energy source, although these were also important, but in the enabling innovations that expanded the applicability of what were known and existing sources of energy.

As we look for the enabling innovation that will transform energy use in the 21st century, the most likely candidate is the ongoing information revolution. The dramatic reductions in the cost of information, and in the cost of control and coordination, over the past two decades are bound to have significant implications for energy use and perhaps move us on to lower carbon trajectories. Energy conservation, for instance, has already been greatly enhanced by these developments.

As we seek the innovations that would bring on new carbon- free technology, we must be always mindful that the new technology must compete with existing sources at today's price. The notion that it is sufficient simply to demonstrate technical feasibility because depletion of existing energy sources or environmental taxes will eventually make the new technology economic is not only wrong, but also detrimental to the development of competitive alternatives. If history is any guide, resources do not deplete; they are displaced by new technology that typically leaves much of the old resource in the ground.

The problem with developing new carbon-free technology is how to make it happen. It is not clear that government support through funding research and development is the answer. In theory, there is unlikely to be sufficient R&D; absent some government support; but we also have the spectacle of having spent large sums of public monies on energy R&D; over the past twenty years with very little to show for the effort. There are no really new energy technologies, and what have been demonstrated as a part of this effort are almost without exception uneconomic. The one example of seemingly successful government support for a new technology was nuclear power. There has been nothing to succeed nuclear power, and many have come to question the wisdom of developing nuclear power, despite its carbon-free properties.

There is real potential in this third supply side option for lower carbon trajectories. The particular forms of energy we use today are carbon-based; it has not always been thus. For most of man's existence, energy came primarily from other sources. There are other ways to meet man's basic needs for energy; we only need ingenuity to develop another enabling innovation.

In conclusion, I would like to leave you with three thoughts about supply side mitigation options. First, we must recognize that the services and human needs being met by our current forms of energy are very basic and not likely to be significantly changed by demand-side actions. Second, if global warming is the problem, energy is a problem only to the extent that it is coupled with carbon. Third, the supply side task is to decouple carbon from energy, much as we have successfully decoupled energy and economic growth over the past twenty years. I hope that I have been able to give you some perspective on the broad means by which such a decoupling might be accomplished.

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