1 October 6, 2005 U.S. Department of Energy Energy Policy Update Dr. Robert C. Marlay Director, Science and Technology Policy Deputy Director, U.S. Climate.

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October 6, 2005

U.S. Department of Energy

Energy Policy Update

Dr. Robert C. MarlayDirector, Science and Technology Policy

Deputy Director, U.S. Climate Change Technology ProgramOffice of Policy and International Affairs

U.S. Department of [email protected]

October 11, 2005Fusion Power Associates Annual Meeting

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October 6, 2005

U.S. Department of Energy

Outline

Recent Events and Near-Term Energy Outlook– Fuels, World Oil, N. Gas, Heating Oil, Power– Gulf Coast Situation

Administration Responses and Near-Term Actions– Ensure Critical Supplies– Restore Energy Infrastructure– Energy Conservation and Efficiency

Longer-Term Energy Outlook Framework for R&D – A Confluence of Forces

– Global Economic Prosperity, Reduction of Poverty & Pollution– Clean Development Supported by Abundant Energy– Concerns About Climate Change and Reducing Emissions

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October 6, 2005

U.S. Department of Energy

Near-Term Energy Outlook

Oil and Related Fuels– Gasoline, Diesel Fuel– World Oil Outlook– Heating Fuels

Gulf Coast Infrastructure – Impacts & Outlook Potential Economic Ramifications Natural Gas

– N. American Outlook– Rising Demand, Including by Power Producers– LNG Outlook

Electricity

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October 6, 2005

U.S. Department of Energy

Administration Actions – Near-Term

Supply– Facilitate Repairs to Infrastructure– Facilitate Suppliers and Market Functioning– Ease Federal Restrictions and EPA Regs, Where Critical– Work With IEA to Release Refined Products to Am. Mkts.– Make Available Oil from the SPR (All That is Needed)

Energy Conservation and Efficiency – Release of “Energy $avers” Guide– Radio Public Service Announcements (4,500 Stations)– Give Added Visibility to “Energy Hog” Program– Energy Teams for 200 Top Energy-Using Factories– Super-FEMP for Gov’t; Pres. Memo to Cabinet Heads

Worries About Impacts of High Energy Prices– Higher Costs for Consumers, Dampening Consumption– Higher Costs for Businesses, Undermining

Competitiveness– Potential to Contribute to Inflation and Interest Rates

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October 6, 2005

U.S. Department of Energy

Administration Actions – Longer-Term

Energy Policy Act of 2005

– Promote Energy Efficiency in Homes, Buildings

– Efficiency of Appliances, Energy Using Products

– Energy Perf. Contracts for Federal Buildings, Agencies

– Gov’t procurement of “Energy Star” Products

– Modernizing the Electric Grid, To Spur Efficiency,

Reduce Barriers

– Diversification of Future Energy Supplies from

Renewable Sources

» Fuels

» Power

– New Generation of Transport Vehicles

– Many Incentives for New Forms of Supply

Implement the 106 Recs. of National Energy Policy

Report

Available at:http://www.whitehouse.gov/energy/

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October 6, 2005

U.S. Department of Energy

Longer-Term Energy Outlook

Oil– World Oil Demand Rising at Unprecedented Rates– Significant New Players in Asia, S. Asia, Americas, Etc.– Long-Term Forecasts of $50/Bbl for a Decade or More

N. Gas– Methane is the Fuel of Choice, Environmentally Driven– N. American Supplies Constrained; LNG Uncertain

High Prices Will Drive Major Investments, But . . . Electricity

– Global Demand Very High – Many-Fold Increases by 2100 Growing Support for Addressing Climate Change

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October 6, 2005

U.S. Department of Energy

Long-Term Framework for R&D

A Confluence of Forces . . .

– Global Economic Prosperity, Reduction of Poverty & Pollution

– Clean Development Supported by Abundant, Affordable, Reliable Energy Supply

– Concerns About Climate Change and Reducing Green House Gas Emissions

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October 6, 2005

U.S. Department of Energy

The U.S. is Committed, With Climate Change Policy and Programs

Presidential Leadership Cabinet-Level Engagement Near-Term Actions Financial Incentives for Investments $4 Billion / Year In Federal S&T

– Science to Inform Policy

– Technology to Facilitate Action International Cooperation Deliberate Approach to Long-Term

Goal, Consistent with UNFCCC Climate Friendly Technologies A Collaborative Path Forward SCIENCE, 30 July 2004,

Volume 305, Number 5684

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October 6, 2005

U.S. Department of Energy

Technology -- Seeking Better and More Cost-Effective Solutions – to Facilitate Action

U.S. Climate Change Technology Program

– An Ambitious Program of RDD&D

– $3 Billion / Year Climate Technology Goals:

1. Reduce Emissions From Energy End Use & Infrastructure

2. Reduce Emissions From Energy Supply

3. Advance CO2 Capture & Sequestration

4. Reduce Emissions From Non-CO2 Gases

5. Enhancing Measurement & Monitoring

6. Fortifying Foundations Public Review Draft Available – Comments Due Nov 2

www.climatetechnology.gov

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October 6, 2005

U.S. Department of Energy

Examples of Multi-Lateral Cooperation . . . International

Partnerships Carbon Sequestration Leadership Forum: 19 Members;

Focused on CO2 Capture & Storage Technologies.

International Partnership for the Hydrogen Economy: 17

Members; Organizes, Coordinates, and Leverages Hydrogen

RD&D Programs.

Generation IV International Forum: 11 Members; Devoted to

R&D of Next Generation of Nuclear Systems.

ITER: 6 Members; Project to Develop Fusion as a Commercial

Energy Source.

Methane to Markets: 16 Members; Recovery and use of Methane

from Landfills, Mines, and Oil & Gas Systems.

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October 6, 2005

U.S. Department of Energy11

Source: Placet M; Humphreys, KK; Mahasenan, NM. Climate Change Technology Scenarios: Energy, Emissions and Economic Implications. Pacific Northwest Nation Laboratory, PNL-14800, August 2004. Available at: http://www.pnl.gov/energy/climatetechnology.stm

Century-Long Planning Horizon, Supported by Analyses

Beyond the Standard Suite for High Emissions Constraint

World Primary Energy Demand, 1990-2095

-

200

400

600

800

1,000

1,200

1,400

1990 2005 2020 2035 2050 2065 2080 2095

Year

EJ

/yr

Fossil w/o Capture & Storage Fossil w/ Capture & StorageNuclear RenewablesBiomass ExoticsEnergy Use Reduction

Projected and Mitigated World Carbon Emissions, 1990-2095

0

5

10

15

20

25

1990 2005 2020 2035 2050 2065 2080 2095

Year

GtC

/yr

Vented Emissions Fossil w/ Capture & StorageTerrestrial Sequestration Biomass

Exotics Fuel MixEnergy Use Reduction

Mitigated World Carbon Emissions Beyond the Reference Case

Cumulative Gigatonnes (GtC) 2000-2100

0

50

100

150

200

250

En

erg

y U

se

Re

du

cti

on

Re

ne

wa

ble

s

Nu

cle

ar

Bio

ma

ss

Fu

el

Mix

Fo

ss

il w

/

Ca

ptu

re &

Sto

rag

e

Te

rre

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ial

Se

qu

es

tra

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n

Ex

oti

cs

GtC

World Primary Energy DemandCumulative Exajoules (EJ) 2000-2100

Fossil w/o Capture & Storage

53%

Renewables10%

Nuclear5%

Fossil w/ Capture &

Storage2%

Biomass10%

Exotics6%

Energy Use Reduction

14%

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October 6, 2005

U.S. Department of Energy

Near-Term Mid-Term Long-TermCCTP Goals

Goal #1

Energy End-Use

& Infrastructure

Goal #2

Energy Supply

Goal #3

Capture, Storage

& Sequestration

Goal 4

Other Gases

Hybrid & Clean Diesel Vehicles High-Efficiency Appliances High-Performance Buildings High-Efficiency Industrial

Processes & Boilers Modernized Grids

Wind, Hydro, Solar & Geothermal Biomass, Biodiesel, Clean Fuels Distributed Electric Generation IGCC Coal Plants Stationary H2 Fuel Cells Enhanced Nuclear Power

CSLF & Regional Partnerships Oxy-Fuel Combustion Enhanced Oil Recovery Reforestation Soils Conservation

Methane to Markets Alternatives to High GWP Gases Bioreactor Landfill Technology

H2 Fuel Cell Vehicles High-Efficiency Aviation Net-Zero Buildings Expanded Solid-State Lighting Transformational Technologies for

Energy-Intensive Industries Advanced Energy Storage & Controls

Large-Scale Wind Power Community-Scale Solar Bio-Fuels, Bio-Refineries Advanced Bio-Refining of Cellulose &

Biomass FutureGen Scale-Up Gen IV Nuclear Energy

Improved CO2 Capture Safe Geologic Storage Environmental Guidelines Bio-Based & Recycled Products Soils Uptake & Land Use

Methane Emissions Reduction Precision Agriculture PFC Substitutes

Low-Emission Intelligent Transport Systems

Net-Zero Communities Low-Emission Industrial Production Closed-Cycle Products & Materials Low-Loss Energy Transmission &

Distribution

Widespread Renewable Energy Bio-Inspired Energy & Fuels Zero-Emission Fossil Energy H2 & Electric Economy Widespread Safe Nuclear Energy Fusion Power Deployment

CO2 as Commodity Chemical Large Global CO2 Storage Large-Scale Sequestration Carbon-Based Products & Materials

Low Emissions of Other GHGs Low-Emission Agriculture Genetically Designed Forages & Bacteria

Technologies That Will Make A Difference

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October 6, 2005

U.S. Department of Energy

Conclusions . . .

Energy is, Again, in the “Big Picture” So Is the Environment

– Air and Water Quality, Locally, Regionally, Trans-Boundary– Global Warming, Oceans, Atmosphere

Solutions Must Engage Innovation and Technology Planning is Increasingly:

– Longer-Term, with Century-Long Horizons– International and Cooperative– Searching for Ways to Engage Developing Nations

Is Fusion Energy on the Cusp of Realizing Its Potential?

The Circumstances Have Never Been Better

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October 6, 2005

U.S. Department of Energy

Back-Up Slides

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October 6, 2005

U.S. Department of Energy

Presidential Leadership . . .

“(We will) set America on a path to slow the growth of our greenhouse gas emissions and, as science justifies, to stop and then reverse the growth of emissions.”

- President George W. BushFebruary 14, 2002

“I reaffirm America’s commitment to the United Nations Framework Convention and its central goal, to stabilize atmospheric greenhouse gas concentrations at a level that will prevent dangerous human interference with the climate.”

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October 6, 2005

U.S. Department of Energy ** CEQ, OSTP, and OMB also Participate

Climate Change Policy and Program Review by NSC, DPC, NEC

Office of the President

Chair: Secretary of Energy* Co-Chair: Secretary of Commerce* Executive Director: OSTP Director

Secretary of State NEC Director Secretary of TransportationSecretary of Agriculture NASA Administrator Secretary of DefenseEPA Administrator Secretary of the Interior CEQ Chairman OMB Director Secretary of HHS NSF Director

Committee on Climate Change Science and Technology Integration

Chair: Deputy/Under Secretary of Commerce*Chair: Deputy/Under Secretary of Energy

Executive Secretary: OSTP Associate Director for Science

Members DS/US Level:CEQ, DOD, DOI, DOS, DOT, EPA,

HHS, NASA, NEC, NSF, OMB, USDA

Interagency Working Group onClimate Change Science and Technology

Director: Assistant Secretary of CommerceFor Oceans and Atmosphere

Members:**DOC, DOD, DOE, DOI, DOS, DOT, EPA, HHS,

NASA, NSF, Smithsonian, USAID, USDA

Climate Change Science Program

Director: Senior OfficialU.S. Department of Energy

Members:** DOC, DOD, DOE, DOI, DOS, DOT, EPA, HHS,

NASA, NSF, USAID, USDA

Climate Change Technology Program

* Chair and Vice Chair of Committee and Working Group alternate annually.

Cabinet-Level Engagement

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October 6, 2005

U.S. Department of Energy

Near-Term Actions . . . Voluntary Programs

– Climate VISION (www.climatevision.gov)– Climate Leaders (www.epa.gov/climateleaders)– SmartWay Transport Partnership (www.epa.gov/smartway)– Voluntary Reporting of Emissions Reductions, EPACT 1605(b)

Incentives for Investment– Tax incentives for Renewable Energy, Hybrids, Deployment Partnerships– USDA Incentives for Sequestration– USAID and Global Environmental Fund Funding– Tropical Forest Conservation

Rules and Regulations– Fuel Economy Increase for Light Trucks– Non-Road Diesel Rule– Interstate Air Quality Rule– Initiative Against Illegal Logging

White House Climate Change Fact Sheet website:http://www.whitehouse.gov/news/releases/2005/05/20030930-4.html

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October 6, 2005

U.S. Department of Energy

Financial Incentives for Investment . . .

Nearly $4 Billion/Year in Tax Incentives $M / Year*

• Renewable Energy Production Credits ** 355

• Residential Solar Energy Systems (Tax Credit)** 10

• Hybrid and Fuel Cell Vehicles (Tax Credit)** 316

• Industry for Landfill Gas and Combined Heat and Power ** 133

• Biofuels, Coal Bed Methane (Production Credit) 1,000

• Biomass Ethanol (Exemption from Excise Taxes) 1,100

• Hydroelectric, Biomass Elec. (Excl. of Interest on Bonds) 100

• Clean Fuel Cars, Truck and Refueling Stations 50

• Investment Tax Credits for Solar, Geothermal Facilities 50

• Total 3,114

* Congressional Research Service Analysis of Tax Expenditures for 2003 ** Fed. Climate Change Expenditures Report, FY 2004

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October 6, 2005

U.S. Department of Energy

CCTP-Related Financial Incentives* in EPACT

2005-2015 ($ Millions) Renewable Energy

– Extend Renewable Electricity Production Credit 2,747– Renewable Energy Bonds 411

Nuclear – Production Credit for Advanced Nuclear 278

Fossil– Investment in Clean Coal Facilities, Including IGCC 1,612

Energy Infrastructure (Transmission) 1,549 Conservation and Energy Efficiency 1,284 Alternative Motor Vehicles and Fuels 1,318

Total CCTP Related Tax Incentives 9.2 B

10-Years

* Title XVII also authorizes loan guarantees not scored here

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October 6, 2005

U.S. Department of Energy

Energy Bill Tax Incentives 2005-2015 ($ Millions)

Fossil– Investment in Clean Coal Facilities 1,612– Domestic Fossil Fuel Production & Security 2,822– Amortization of Air-Pollution Control Facilities 1,147

Renewable Energy– Extend Renewable Electricity Production Credit 2,747– Renewable Energy Bonds 411

Nuclear – Decommissioning Rules 1,293– Production Credit for Advanced Nuclear 278

Energy Infrastructure 1,549 Conservation and Energy Efficiency 1,284 Alternative Motor Vehicles and Fuels 1,318 R&D Tax Credit 92

Total Tax Incentives 14,553

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October 6, 2005

U.S. Department of Energy

Science -- Seeking Better Knowledge and Understanding – to Inform Policy U.S. Climate Change Science Program

– An Ambitious Program of Research

– $2 Billion / Year Climate Science Goals

1. Improve Knowledge of Climate and Environment

2. Improve Quantification of Forces Driving Changes to Climate

3. Reduce Uncertainty in Projections of Future Climate Changes

4. Understand Sensitivity and Adaptability of Natural and Manmade Ecosystems

5. Explore Uses and Limits of Managing Risks and Opportunities www.climatescience.gov

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October 6, 2005

U.S. Department of Energy

Core Programs & Initiatives

Energy Efficiency & Infrastructure FreedomCAR Building America Industrial Process

Alternatives

Carbon Capture and Sequestration Regional Partnerships

Other Gases Methane to Markets

Energy Supply Renewable Energy Hydrogen Fuel

Initiative FutureGen Generation IV Nuclear

Power Fusion (ITER)

Basic Science

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October 6, 2005

U.S. Department of Energy

0

5000

10000

15000

20000

25000

1990 2005 2020 2035 2050 2065 2080 2095

MM

T C

arb

on

Example: Asia-Pacific Partnership

Data source: Placet, et. all, “Climate change technology scenarios: energy, emissions, and economic implications.” PNNL-14800, 2004* Australia and New Zealand data combined in data set. New Zealand not part of APP.

Projected Carbon Emissions from Asia-Pacific Partnership Countries

Non-APP Emissions

APP Emissions

0

100

200

300

400

500

600

700

800

GT

Ca

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n

100-Year Cumulative Emissions from Asia-Pacific Partnership Countries

United S

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Japan

Austra

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New Z

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nd*

South K

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All Oth

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China

APP Vision Statement: http://www.state.gov/g/oes/rls/fs/50335.htm