Alternative Energy Future EXECUTIVE SUMMARY Under the Alternative Energy Future analyzed in this study, substantial environmental benefits would be achieved with little net direct effect on economic health and employment in the energy industries. Emissions of greenhouse gases would decline significantly from current levels and criteria air pollutant emissions would be considerably below conventional projections. This is possible through economically and technologically feasible measures that increase efficiencies in the production and consumption of energy, and the adoption of conservation measures across end-use sectors. Greenhouse Gas Emissions Exhibit 1.5 shows the Alternative Energy Future scenario's projected level of carbon dioxide emissions by fuel type through 2010 compared with the 1992 American Gas Association's Total Energy Resource Analysis (A.G.A.-TERA) model Base Case and the 1992 Department of Energy's Energy Information Administration's (DOE/EIA) Reference Case, two more conventional energy forecasts. Throughout this report, except where noted, all references to the Base Case are to the 1992 A.G.A.-TERA Base Case. Alternative Energy Future Typically, conventional energy forecasts project increasing levels of carbon dioxide emissions from fossil fuel use over the projection period. For example, increases in CO2 emissions range from 14 to 26 percent over 1990 levels under the Base Case and the DOE/EIA Reference Case, respectively. U.S. carbon dioxide emissions from fossil fuel use would decrease to 5.0 billion short tons by 2010 under the Alternative Energy Future scenario. This would represent over a 12 percent decline from 1990 carbon dioxide emissions levels. Although not quantitatively estimated in this study, fossil fuel-related methane and nitrous oxide emissions under the Alternative Energy Future scenario are expected to decrease, perhaps significantly. Any potential increases in methane due to increased natural gas consumption are expected to be more than offset by significant decreases in petroleum and coal consumption. Fossil fuel-related nitrous oxide emissions are also projected to decline as a result of increased natural gas consumption coupled with substantial declines in coal and petroleum products consumption. Criteria Air Pollutant Emissions The aggregate emission reduction in the year 2010 of criteria air pollutants, specifically sulfur dioxide, nitrogen oxides, non-methane hydrocarbons, carbon monoxide and total suspended particulates, of the Alternative Energy Future scenario relative to the Base Case scenario would be over 10.2 million tons for the five air pollutants analyzed. Reductions of each of the individual pollutants range from 1.1 to 3.5 million tons per year by the end of the forecast period. (See Table 1.2) Nitrogen oxide (NO) emissions of the Alternative Case would be 24 percent lower (3.4 million tons per year) than in the Base Case. About 80 percent of the NO, reduction is attributable to coal-fired electricity generating plants: both from the reduced utilization of these units due to reduced electricity demand, as well as the substitution of lower NO-emitting gas-fired combined-cycle plants for coal-fired plants. • Sulfur dioxide (SO2) emissions of the Alternative Case would be 1.1 million tons less than the Base Case in 2010 a reduction of roughly 8 percent. Approximately 60 percent of the SO, reduction is attributable to conversions to natural gas or conservation in oil-fired plants. No incremental reduction is projected for coal-fired electric utility plants -- SO2 emissions of these plants are projected to drop from 15.6 million tons per year to 8.1 million tons per year as a result of the acid rain provisions of the Clean Air Act Amendments, regardless of the scenario employed. However, the reductions may be achieved in a more economic fashion under the Alternative Energy Future scenario which relies more on fuel switching and conservation than capital-intensive scrubbers. • An additional reduction in non-methane hydrocarbon (NMHC) emissions of 1.2 million tons per year is achievable via the Alternative Case. This incremental Alternative Energy Future 7 percent reduction is attributable to the substitution of natural gas, electric and other alternative-fuel vehicles for gasoline vehicles. Despite the fact that nearly half of all NMHC emissions come from stationary sources, most future reductions will come from vehicles, as stationary sources are already tightly controlled, and further control of these sources would be very costly. • Carbon monoxide (CO) emissions will drop sharply over the forecast period due to tighter vehicular emission standards, enhanced inspection and maintenance programs, the use of oxygenated fuels and the expanded use of natural gas and other alternative-fuel vehicles. Alternative Energy Case CO emissions drop from the current level of 66.1 million tons per year to 39.8 million by 2010 -- 3.5 million tons below the projected Base Case level. Total suspended particulate (TSP) emissions of the Alternative Energy Case are projected to fall by 1 million tons more -- over 50 percent more -- than the Base Case reduction for the forecast period. This 1 million ton reduction is equally attributable to conservation and switching to natural gas in coal-fired boilers and to vehicular conversions from gasoline to clean alternative fuels. Table 1.2 Potential Emission Reductions of Alternative Energy Future Scenario As a result of the increased marketshare for natural gas and the increased penetration of conservation technology, all sectors would experience reductions in the cost of purchasing energy in the Alternative Energy Future scenario compared with the Base Case. The magnitude of the savings would increase over time as overall energy prices increased and conservation saved additional energy. The following comparisons of energy expenditures are made between scenarios, not in terms of the change from 1992 levels. Alternative Energy Future In the year 2010, total energy expenditures would be nearly 19 percent lower in the Alternative Energy Future scenario than in the Base Case. Total energy expenditures, projected to be $736.2 billion (1992 dollars) in the Base Case, would fall to $599.2 billion (1992 dollars) in the Alternative Energy Future scenario. Energy users would save $137.0 billion (1992 dollars) in energy bills as a result. (See Table 1.3) In the Alternative Energy Future scenario, residential energy bills would decline from the Base Case level by $41.2 billion (1992 dollars) or 24 percent in 2010. Commercial sector energy costs in 2010 would decline by 19 percent from the projected Base Case level thereby saving commercial establishments $29.0 billion (1992 dollars) in energy expenditures. The cost of energy purchased by industrial customers compared with the Base Case projection would also decline in the Alternative Energy Future scenario by 19 percent. As a result, U.S. industry would reduce its energy expenditures by $28.8 billion (1992 dollars). Transportation energy costs are projected to decline by 14 percent from the The Alternative Energy Future scenario would improve the U.S. merchandise trade deficit relative to the Base Case. The primary source of this improvement would be the reduction in the dependence on foreign oil. As noted in subsequent chapters, the Alternative Energy Future scenario not only constrains the growth of petroleum product demand but also projects a smaller decline in domestic production of oil than in the Base Case due to increased drilling activity and improved productivity. • As a result of increased reliance on foreign oil and increases in the world oil price, the Base Case projects that the cost of net oil imports (expressed in constant 1992 dollars) would grow from $45.5 billion in 1991 to $123.3 billion in 2010. The growth represents a 171 percent increase (in real terms) in this major drag on the U.S. economy. The net imports of oil in the Base Case are projected to grow from 6.6 million barrels per day in 1991 to nearly 11.3 million barrels per day in 2010. • By comparison, the Alternative Energy Future scenario projects that the net expenditures for crude oil and petroleum products imports would increase by a still alarming 78 percent from $45.5 billion in 1991 to $80.9 billion in 2010 expressed in constant 1992 dollars. Nonetheless, by 2010 the Alternative Energy Future scenario projects a $42.4 billion (1992 dollar) improvement in the Alternative Energy Future petroleum component of the merchandise trade deficit compared with the Base Case. The net imports of oil projected in the Alternative Energy Future scenario are stabilized at less than 8 million barrels per day. The growth in the petroleum merchandise trade deficit is a function of the projected increase in world oil prices. • In addition, the development of energy conservation and renewable energy technologies should allow U.S. industry to compete more effectively for the growing world market for energy development and energy conservation services. Estimates developed by the U.S. Agency for International Development project a world market of between $8 billion to $17 billion annually for energy efficiency technologies and services alone. The majority of U.S.manufactured renewable energy products and services are currently exported, at levels exceeding $150 million each year, with a market potential of several billion dollars. |