Energy Policy and Biomass

Global (International) Energy Policy and Biomass

Ralph P. Overend National Renewable Energy Laboratory

California Biomass Collaboration – First Annual Forum January 8th , 2004 Sacramento, CA.

NREL/PR-510-35561

Operated for the U.S. Department of Energy by Midwest Research Institute • Battelle • Bechtel Understanding Policy

• Policies are applied against uncertain futures! • Can be – EXPLICIT as in having an “Energy Policy” •OR – IMPLICIT derived from the sum total of previous actions • Biomass Specific Policy – At the Intersection of several policies and jurisdictions • Energy • Environment • Land Use – Agriculture – Forestry – Rural Development • Urban •ZEN Rules – not having an Explicit policy can still be an Energy Policy! – However well meaning a policy – there is a law of unintended consequences World TPES 2000 (Total Primary Energy Supply = 448 EJ)

• Food TPES – 2700 Cal/person/day 6% 2% – Popn. 6.1 Billion 6%

• Source for Food TPES 35% –FAO.org 10% • Nuclear conversion – kWh = 10.8 MJ • Hydro conversion 19% –kWh = 3.6 MJ • source for fuel TPES (9700 22% Mtoe) – Iea.org Oil Coal N.Gas Biomass Food Nuclear Hydro Business as Usual - World Energy according to IEA WEO2002 • 2030 time horizon • TPES grows at 1.7%/a from 9179 – 15267 Mtoe – No shortage of traditional fossil fuel resources (see next slide) – Requires considerable investment > 17 T$ (2002) • About 1% of global GDP • 50% goes for infrastructure replacement • Electricity system needs about 10 T$ (50% in T&D) • Oil and Gas each about 3 T$ • Coal < 400 G$ • RES < 500 G$ • OECD/Developing World about 50:50 in investments • What if it is not BAU? – Energy growth constrained environmentally • Global climate change – Increased investments for less TPES » Investments in sequestration » Increased renewables investment • Policies that follow the Precautionary Principle? • Kyoto is dead? Watch out for Contraction and Convergence! Sources: IEA World Energy Outlook 2002, IEA World Energy Investment Outlook 2003 World - conventional oil Mid-point year: 2005 Ultimate 2050: 1800 Gb To-date 1999: 822 Gb

140 Theoretical 40 Unconstrained 120 Model 35

100 Peak 30 Discovery 80 25 20 60 High Prices Curb Demand 15 40 10 Production, Gb/a Production, Discoveries, Gb/aDiscoveries, 20 5 0 0

1930 1950 1970 1990 2010 2030 2050 Peak Discovery 1965 Peak Production 2005 Time-lag: 40 years Basic Policy Instruments

• Research and Development • Demonstration and Deployment • Dissemination and Policy Promotion • Government Purchase • Feed In Laws • Portfolio Standards (RPS) • Net Metering • Revenue generation through fossil fuel taxes • Grants – Consumers – Business – Renewable energy industry • Loans – Corporate – Guarantees • Tax Incentives – Sales tax remission – Holidays – Personal/Corporate Income

IEA Country Biomass Policy Portfolios

• European Union – Directive on the Promotion of Electricity produced from RE sources – Portfolio Standard – Toward a European strategy for the security of energy supply (COM(2000) 769 Final) Green Paper – Policy Directive – Intelligent Energy Europe (EIE, 2003 – 2006), successor to ALTENER (RE for electricity and heat), – Demonstration and Dissemination and Policy Promotion, also STEER (transport) and SAVE (EE), COOPENER (International development of RE) –6th Framework RTD (Research, Technology and Demonstration) + Regional Funds - Research and Development, Demonstration and Deployment EU Policy Linkages

RUE-Rational Use of Energy (EE) RES -Renewable Energy Services IEA Country Biomass Policy Portfolios

• United States – R&D Biomass R&D Act of 2000 – RE (renewable energy) Production Credit (REPC) Corporate Tax Incentive – Renewable Production Tax Credit (PTC) Feed-In & Tax Incentive – Ethanol – Partial exemption from Excise Tax Tax Incentive – Farm Bill – Title IX. – Grants to Business Users – Historic • PURPA Feed-In Law • Section 29 Credit Tax Incentive • Canada – RE Deployment Initiative (REDI) – Grants to Business Users • Sweden – Energy Taxation on Fossil Fuels for Consumers Revenue Generation – Feed-In Tariff for Biomass – R&D – RE Investment support program – Grants to Business Users • Finland – Wood Energy Technology Program – Demonstration Projects – VAT (value added tax) reduction – Sales Tax Remission IEA Country Biomass Policy Portfolios

• United Kingdom – Pioneer in Liberalization (aka deregulation) – NFFO (Non-Fossil Fuel Obligation) • Fossil fuel levy to generate income • Portfolio standard implicit • Feed in-law designed for price convergence • Effective for biomass – see next slide • Reviewed and replaced in 2002 – New and Renewable Energy Program • R&D + Demonstration and Dissemination – Renewables Obligation (UK Utilities Act 2000) • Administered by Ofgen (Independent regulator) • Portfolio standard started in 2002 – Compliance through Renewable Obligation Certs – Payments from the Climate Change Levy – ENERGY WHITE PAPER: Our energy future creating a low carbon economy – 60% CO2 reduction by about 2050, with real progress by 2020; Policy in Action A vision of the Biomass Future

Century The Framework Convention… stabilization of greenhouse gas concentrations in the atmosphere

16 WRE 750 WRE 750 800 WRE 650 WRE 650 WRE 550 14 WRE 550 750 WRE 450 WRE 450 WRE 350 12 WRE 350 700

10 650

600 8 550 ppmv PgC/yr 6 500 4 450 2 400

0 350

-2 300 1990 2015 2040 2065 2090 2115 2140 2165 2190 2215 2240 2265 2290 1990 2015 2040 2065 2090 2115 2140 2165 2190 2215 2240 2265 2290

Global Annual CO2 Concentrations JJ Dooley, Staff ScientistEmissions Joint Global Change Research Institute at the Pacific Northwest National Laboratory There are Two Critical Innovation Gaps that must be bridged

50.0 Emissions with Frozen 1990 Technology 45.0 IS92a(1990 technology) IS92a 40.0 550 Ceiling 35.0 Upper Gap = 1300 Gigatons

30.0

25.0 PgC/yr 20.0 Innovation-As-Usual (i.e., IS92A)

15.0 10.0 Lower Gap = 480 Gigatons 5.0 550 ppmv stabilization pathway

0.0 1990 2010 2030 2050 2070 2090

1300 Gigatons of carbon are simply assumed away before we ever introduce any explicit climate policy. Emissions Reductions “Frozen Tech” to IS92a Once Again No Climate Constraint, Just Assumed to Happen

90,000 Nuclear, Solar & Hydro 80,000 Biomass

70,000 Transportation Energy Intensity Industrial Energy Intensity 60,000 Residential-Commercial Energy Intensity Upper Gap

50,000 Fossil Power Efficiency Synfuels Production 1300 Gigatons

TgC/year 40,000 Reference Case

30,000

20,000 CO concentrations 10,000 2 682 ppmv and -

1990 2005 2020 2035 2050 2065 208 2095 rising rapidly 0 by 2100 CO2 emissions reductions by technology. If we lived in a CBF 550 world, where would the emissions reductions come from

Global CBF550 Stabilization “Gap Chart”

soil carbon sequestration sequestration from fossil power generation 20,000 sequestration from synfuels production 18,000 sequestration from H2 production 16,000 other nuclear 14,000 solar Lower Gap 12,000 biomass 480 Gigatons 10,000

8,000 6,000 4,000 Millions of Tonnes of Carbon per year per Carbon of Tonnes of Millions 2,000

1990 2005 2020 2035 2050 2065 2080 2095 CO2 emissions reductions by technology. Composition of Global CO2 Emissions Reductions in 2050 for a CBF 550 World

Deployment Beyond Innovation as 13% of emissions Usual Nuclear Central Power reductions from biomass? 4% Plant Sequestration 6% Sequestration Solar from H2 5% Production 37% of emissions Biomass 12% 13% reductions from soil carbon sequestration?

Sequestration from Are we willing to bet the Synfuels Production global economy on these 23% agricultural/energy technologies and the

Soil Carbon cooperation of farmers Sequestration 37% everywhere? JJ Dooley, Staff Scientist Joint Global Change Research Institute at the Pacific Northwest National Laboratory