Press Release

Table of Contents

Preface

Chapter 1: Summary and Recommendations

Chapter 2: Energy System Security Criteria

Chapter 3: The Bush Administration and the IEER Energy Plans

Chapter 4: Vulnerability Comparison: The Bush and IEER Energy Plans

Chapter 5: Policy Recommendations

References

In this chapter, we will examine the vulnerabilities of the Bush administration's energy plan, which is essentially the same as that recommended by a task force led by Vice-President Cheney in May 2001. We will then design an energy plan to address the main vulnerabilities relating to oil imports, nuclear power and materials, and electricity infrastructure. The time horizon we choose is about 40 years. This is because it will take time to eliminate some of the vulnerabilities or reduce them greatly. One result of reducing vulnerabilities and the consequences of an attack, should one take place, is to reduce the attractiveness of any particular portion of the system to attack. We will assess each plan according to the vulnerabilities that we have discussed in the previous chapter.

In May 2001, a task force led by Vice-President Cheney published a National Energy Policy report, which has become the energy blueprint of the Bush administration.⁴³ The basic stance of the administration has not changed in light of the events of September 11. Yet, it is essential that a more stringent standard be applied to security-related issues and to greenhouse gas emissions.

The Bush administration plan was unsatisfactory in a number of respects on non-proliferation, safety, and environmental grounds even before the severe increases in certain risks that have been pointed up by September 11. The following list of bullet points shows the highlights of the National Energy Policy, as noted in an earlier IEER review:⁴⁴

• Oil and natural gas: The proposed policy would (i) open up federal lands to drilling for oil and gas, notably by reducing "restrictions" currently placed on such drilling; (ii) open a part of the Alaska National Wildlife Refuge (ANWR) for oil and gas drilling (estimated to contain several billion barrels of recoverable oil reserves (up to about 10 billion barrels); (iii) encourage drilling in offshore Arctic areas off Alaska; (iv) consider measures for reducing "risk associated with production [of oil and gas] in frontier areas," and "incentives" such as reduction of royalty payments to the government from new offshore oil and gas production; (v) promote "enhanced oil and gas recovery from existing wells through new technology."
• Coal: The proposed policy would provide $2 billion for research on clean coal technologies and "provide regulatory certainty" that would make it easier to invest in coal burning for electricity generation. This appears to be an implicit reference to potential regulations on carbon dioxide emissions that have been a source of concern to the coal industry.
• Nuclear power: The proposed policy would "support the expansion of nuclear energy in the United States as a major component of our national energy policy." This support would include (i) easier re-licensing of existing nuclear power plants beyond their design lifetimes, (ii) encouragement of new nuclear power plants at existing nuclear power plant sites, possibly without any new environmental impact statement process, (iii) encouragement of research in a new form of reprocessing called pyroprocessing, in order to promote development of "advanced nuclear fuel cycles and next generation technologies for nuclear energy" (p. 5-17). This is an implicit reference to the Integral Fast Reactor, which is a sodium-cooled breeder reactor with a pyroprocessing plant attached to it. The plan also advocates foreign collaboration on commercial nuclear fuel reprocessing, with countries such as France. The nuclear energy part of Chapter 5 also states that a new reactor type called the Pebble Bed Modular Reactor has "inherent safety features" (p. 5-16), but does not mention any of its safety vulnerabilities.
• Electric power plants: The plan advocates that the United States should build between 1,300 and 1,900 new electric power plants by the year 2020 based on projected demand. (The standard power plant size assumed appears to be 300 megawatts.)
• Infrastructure: New natural gas and electricity transmission lines would be encouraged by granting rights of way on federal lands and by new "legislation to grant rights-of-way for electricity transmission lines, with the goal of creating a national transmission grid." This would create federal power to acquire land for interstate commerce on a basis similar to current law for natural gas pipelines (pp. 7-7 and 7-8).

The plan also tilts the federal decision-making process towards energy supply since it recommends that the president "[i]ssue an executive order directing all federal agencies to include in any regulatory action that could significantly and adversely affect energy supplies a detailed statement on the energy impact of the proposed action." (p. xiv). Yet it has no similar provision for energy demand or efficiency.

The Bush administration has not projected out the implications of its approach over a four-decade timetable. We have done so, with the following assumptions that are consistent with its central policy and economic premises.

• Economic and demographic parameters, such as economic and population growth, will be at the long-term historical averages. Car use will continue to grow, air transportation will quadruple by 2040, demand for space heating and even more so for cooling will grow faster than population (1.5 and 3 percent respectively).
• The focus of energy policy will be on supply, notably increasing domestic oil supply including the Alaska National Wildlife Refuge, nuclear power plants, and coal supplies. The Bush plan mentions new kinds of nuclear power plants. These have not been proved or licensed as yet and it will be some time before they may be. As a base case, we have assumed that the reference plant designs will be large light water reactors of the present basic types that have been approved by the Nuclear Regulatory Commission.
• Energy efficiency - that is economic production per unit energy input - will grow approximately at historical rates.
• There will be no major coordinated governmental effort to reduce carbon dioxide emissions beyond those achieved by the business-as-usual increases in energy efficiency and a doubling of nuclear power by 2040. As a result there will be major increases in carbon dioxide emissions.
• There will be no major effort on transportation efficiency beyond that implied in business-as-usual efficiency increases, to impose strict efficiency standards on automobiles, trucks or aircraft.
• After September 11, the Bush administration has asked Congress to pass its energy plan in essentially the same form as it was before that date. We assume therefore that the main approach to security will be what one might call the "guns-and-guards" approach, with no major effort to re-shape the energy or transportation system in light of the vulnerabilities revealed by September 11.

The outline of energy supply over time for the Bush plan is shown in Figure 1 in Chapter 1. We assume that the Bush administration will be successful in opening up ANWR as well as many other areas to oil exploration and production. We assume also that such exploration will add as much as two-and-a-half million barrels a day of oil production by 2010 for about two decades, declining to about 1 million barrels per day by 2040. This added production is superposed on the declining trend of production from existing U.S. fields and areas now open for new exploration and production (See Figure 3 in Chapter 1).

The Bush administration's current plan includes a filling of the strategic petroleum reserve to its capacity of 700 million barrels. This would provide some needed additional cushion in case of import disruption. The IEER plan also includes this goal. The same reserve would stretch much farther as a strategic reserve, if cars and other oil using equipment were more efficient.

IEER's energy plan uses the same economic and demographic parameters as the Bush plan. Only the ways in which the energy services are provided for the economy are different - that is the IEER plan has the same number of car miles and degree of lighting or heating or cooling. But the energy system that provides these services would be structured differently. This approach allows a direct comparison of the vulnerabilities of the two plans given the same overall economic outcomes. But this approach also has some defects, which we do not attempt to remedy in this report. It does not allow the factoring in of major economic initiatives to change the underlying structure of entire energy using systems, such as the transportation system. The present system is one in which huge investments of time, energy, money, land, and ecosystem integrity are put into a car-centered transportation system, especially for urban and suburban living. This system is also at the center of urban pollution problems. Public transportation that is safe, economical, and frequent should be seen as a utility necessary for urban living, which deserves public resources at least in the same measure as roads. The long-term impact of such an approach would be to change patterns of living in relation to school, work and shopping. We do not attempt to assess the energy implications of that in this report though we do discuss an approach to metropolitan area transportation policy.

The technological assumptions behind IEER's plan are described below. The governmental policies needed to bring them about are discussed after that. The overall assumption about technology is that only those technologies that have already been tried and tested will be in widespread use enough to greatly affect energy efficiency and the energy production structure in the next two to four decades. We have not included many technologies that are highly desirable where public development expenditures should play a role, and which could make major contributions should they become more economical. Specifically, we have not included a significant role for a hydrogen economy based on wind and solar energy, even though this is a desirable direction for the energy system for a number of reasons.

1. Local electricity generation through high efficiency use of natural gas along with cogeneration of heat will be the basic approach enabling the creation of a distributed grid as well as an increase in efficiency of heating and cooling. A 60 percent electricity generation efficiency is assumed. This can be achieved with fuel cells today (though not on very small scales at present) and with advanced combined cycle natural gas fired power plants.
2. Large scale wind energy generation, notably in Midwestern states, will be the mainstay of wind energy supply. A relatively small role is assumed for solar energy.
3. Coal consumption is only marginally reduced for the first decade, then reduced to 45 percent of the year 2000 level by 2030 and then reduced to ten percent of current levels by the year 2040. Natural gas would be the main fossil fuel used in centralized electricity generation, with combined cycle plants of 60 percent efficiency being the norm in the year 2000. The large reduction of the use of coal provides a corresponding reduction in carbon dioxide emissions. A significant use of coal for three decades will allow time for transition in a vital industry and also provide for flexibility in the energy system that will provide for additional security. For instance, a decision to phase out nuclear power plants faster for security reasons would be more feasible if a coal industry is maintained at a substantial level until all nuclear power plants are closed. The maintenance of a coal industry at the 50 to 100 million tons per year would provide for flexibility in the energy system, for instance, in preventing exclusive reliance on natural gas as an interim fuel during the transition to renewables.
4. The reference technology for space heating and cooling and water heating is the geothermal heat pump, which would be used in conjunction with high efficiency local electricity generation with heat recovery.⁴⁵ The fuel-based coefficient of performance for heating would average 2.4 for heating and 3 for cooling. Geothermal heat pumps are commercially available today and have been used in recent years, including by the government for energy efficiency improvements.⁴⁶
5. New passenger vehicles will average 100 miles per gallon in the year 2020. A government regulation to that effect will be needed in the near future if this is to be realized.⁴⁷
6. Average fuel efficiency of all new passenger vehicles will be 100 mpg by the year 2020 and the average for the whole fleet will be 100 mpg by 2030, improving 2 percent per year after that for 10 years.
7. Aircraft efficiency will improve by 2 percent per year over the whole period in terms of fuel per seat mile.
8. Cargo transport efficiency will improve by about 3 percent per year. This will probably require efficiency standards for truck transport.
9. A CO2 decline of at least 40 percent and preferably 50 percent by 2040 should be achieved and made compatible with other security goals.⁴⁸
10. Nuclear power will be phased out by 2030.
11. Local solar, hydropower, and some cogeneration plants are largely managed for peaking power provision. Inefficient gas turbine units now used for peaking power would be phased out by 2040.
12. About 40 percent of the hydropower capacity will be dismantled by the year 2040 for a combination of security and environmental reasons.
13. A forty percent improvement in efficiency of electricity use in non-HVAC sectors is possible relative to the Bush administration's supply side plan, through government procurement policies, appropriate regulations for new developments, appliance standards, and the general use of high efficiency lighting and motors.
14. Industrial heat requirements will be met by cogeneration systems wherever possible.

The resulting energy use pattern by 2040 is shown in Figure 2 in Chapter 1. Figures 3 through 7 in Chapter 1 compare the Bush and IEER plans using various vulnerability measures.

There have been a number of technical advances that provide the basis for a completely revamped energy sector. They include:

• Advances in electric power generation efficiency from natural gas have made it possible to increase efficiency, reduce carbon dioxide emissions, and maintain electricity generation levels all at the same time.
• Advances in electronics have made it possible to economically interconnect the smallest household level electricity generation systems to electricity grids.
• Advances in wind power technology have made it economical in vast areas of the United States where the collective wind potential far exceeds current U.S. electricity generation.
• Advances in solar energy have brought it to the point where consistent, long-term procurement program by various levels of government could spur changes to make it competitive, possibly in less than a decade, for a significant portion of the electricity supply. It is currently competitive only in very selected situations in the United States.
• Advances in automobile technology, notably hybrid cars and vehicles powered by fuel cells, have made it possible to have enormous increases in efficiency that are as yet untapped.
• Developments in a variety of fields from microturbines to fuel cells to geothermal heat pumps could enable drastic reductions in energy supply requirements.
• Highly efficient lighting systems and motors are available but have not yet come into general use.

Next: Chapter 4: Vulnerability Comparison: The Bush and IEER Energy Plans

⁴³ Bush Energy Plan 2001. This was called the Cheney Plan at the time it was issued as a recommendation to President Bush. The Bush administration has since adopted this report as the basis of its energy policy.
⁴⁴ Makhijani 2001a.
⁴⁵ The use of a reference technology does not imply a universal adoption of that technology. It indicates the average efficiency that can be expected to be achieved by a variety of methods. The use of geothermal heat pumps as a reference technology here is meant to set the efficiency bar for various cogeneration and space conditioning technologies. As with other technologies, the actual achievement of high efficiencies will depend on the implementation of appropriate public policies, including procurement programs.
⁴⁶ See for instance, Hughes and Shonder 1998. Geothermal heat pumps use the relatively constant temperature of soil a few feet beneath the surface to provide much or most of the heating requirements in the winter and cooling requirements in the summer. This requires pipe to be buried in the earth to extract the energy in the soil. For large buildings in very densely built-up areas, cogeneration can be used instead.
⁴⁷ For a chronology of high efficiency vehicles, statement by manufacturers about capabilities, recent actual history of high mileage cars, see the Rocky Mountain Institute web page at http://www.rmi.org/sitepages/pid414.php
⁴⁸ We used EPA published emissions of CO2 per unit of fuel: Coal: 207 lbs./Million Btu; Oil: 168 lbs./Million Btu ; natural gas: 117 lbs./Million Btu Source: http://www.lanl.gov/projects/cctc/climate/Coal_CO2.html, which bases the data on the Clean Coal Technology Compendium.