Energy Technology Choices: Shaping Our

Future

July 1991

OTA-E-493

NTIS order #PB91-220004
Recommended Citation:

U.S. Congress, Office of Technology Assessment, Energy Technology Choices: Shaping Our

Future, OTA-E-493 (Washington, DC: U.S. Government Printing Office, July 1991).

For sale by the Superintendent of Documents

U.S. Government Printing Office, Washington, DC 20402-9325

(order form can be found in the back of this report)
Foreword

This assessment responds to a request by the House Committee on Energy and

Commerce, the House Committee on Government Operations, and the Senate Committee on

Energy and Natural Resources to provide an evaluation of the technical risks and opportunities

facing our Nation’s energy future.

The report provides a broad overview of energy choices facing the Nation. It is not an

exhaustive analysis of any one technology; rather, it draws together the main themes of OTA

reports from the past 16 years, and other documents, into an outline of the main directions the

country could follow. We hope that the report will be used as a ‘‘roadmap,’ not an

encyclopedia. It reviews options for increasing energy supply and using energy more

efficiently in the face of resource constraints and the contrasting goals the Nation faces. It then

analyzes packages of options that would be appropriate to meet national objectives. There is

an old Chinese proverb that is appropriate to U.S. energy strategy: “If we don’t change

direction, we’re very likely to end up where we’re headed. ”

OTA appreciates the invaluable assistance provided by the project’s advisory panel and

reviewers during the course of this study.

w Directo r

. . . Ill
Advisory Panel—Energy Technology Choices: Shaping Our Future

Charles A. Berg

Mechanical Engineering

Northeastern University

James H. Caldwell, Jr.

Consultant

Daniel A. Dreyfus

Strategic Analysis and Energy Forecasts

Gas Research Institute

Frederick J. Ellert

Consultant

David Lee Kulp

Fuel Economy Planning and Compliance

Ford Motor Co.

Edwin Rothschild

Citizen Action

Maxine Savitz

Garrett Ceramic Components Division

Jessica Mathews

World Resources Institute

Reviewers

John Sampson Toll

University Research Associates

Jack W. Wilkinson

Sun Company, Inc.

Mason Willrich

Corporate Planning and Information Systems

Pacific Gas and Electric Co.

Rosina Bierbaum

Office of Technology Assessment

Robert Fri

Resources for the Future

Robert Friedman

Office of Technology Assessment

William Fulkerson

Energy Division

Oak Ridge National Laboratory

Karen Larsen

Office of Technology Assessment

Steven Plotkin

Office of Technology Assessment

Richard E. Rowberg

Science Policy Research Division

\ Congressional Research Service

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members.

The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the

report and the accuracy of its contents.

iv
OTA Project Staff—Energy Technology Choices: Shaping Our Future

Lionel S. Johns, Assistant Director, OTA

Energy, Materials, and International Security Division

Peter D. Blair, Energy and Materials Program Manager

Project Staff

Alan T. Crane, Project Director

Andrew H. Moyad, Research Analyst

Joanne M. Seder, Analyst

Administrative Staff

Lillian Chapman, Office Administrator

Linda Long, Administrative Secretary

Phyllis Brumfield, Secretary

Contributors

Robin Roy

Kathryn Van Wyk

v
Contents

Page

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 1: Introduction: The Changing Context for Energy Technology Policy . . . . . . . . . . . . 7

Chapter 2: Technologies Affecting Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Chapter 3: Technologies for Energy Supply and Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Chapter 4: Potential Scenarios for Future Energy Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Chapter 5: Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

vi

>
Overview

The energy crisis of the early seventies has

evolved into a more complex and subtle national

situation that still entails major dangers. Some fuels,

gasoline in particular, are actually cheaper now in

real terms, and none shows any signs of imminent

resource constraints. Energy is used with far greater

efficiency than 20 years ago and with less environmental damage per unit of consumption. However,

the long-term problems of our growing energy

use-accumulating environmental degradation, the

national security costs of imported oil supplies, and

a worsening trade imbalance from rising levels of oil

imports-are as intractable as ever.

Improved technology is a major reason for the

present lull in attention to energy. A vast number of

options that improved overall energy efficiency

allowed the economy to grow 39 percent from 1972

to 1985 with essentially no increase in energy

consumption. New technology has also improved

the production of oil and natural gas and the

combustion of coal. Success in moderating demand

and improving supply has led to the present situation

of ample supplies at moderate cost. Technology can

continue to provide new benefits in the future. Many

more technologies for the conversion and use of

energy are well along in the development process

and can be expected to be cost competitive with

further refinement or energy cost increases. Tables

1 and 2 show the technologies that are available or

under development for greater efficiency or alternative energy sources.

The three greatest uncertainties facing energy

policymakers are: how to assure a long-term supply

of reasonably priced, convenient fuels, especially for

transportation; how to protect the country against

disruptions of petroleum imports; and how to

mitigate emissions of carbon dioxide if global

warming concerns require it. Just as energy itself is

useful only insofar as it enables one to achieve some

desired service, energy policy is important only in its

contribution to the three fundamental national goals

of a clean environment, healthy economy, and

security. Some initiatives contribute to all three

goals, while others have conflicting results.

Failure to address these uncertainties could have

very serious implications eventually. All indications

suggest that U.S. oil production is in an irreversible

decline. Not only are imports almost certain to rise,

but peaking production in petroleum fields in other

countries indicates that an increasing share of

production will be from the Middle East. If the

instability of the last several decades continues in

that region, it is likely that major disruptions of

supply, possibly exceeding our ability to protect the

economy against them, will occur. U.S. production

of natural gas, the cleanest conventional fuel, may

rise some, but it is likely that within a decade the

lowest cost resources will be significantly depleted.

Oil and gas supply almost two thirds of our energy

demand, so the economic cost of price increases will

be great unless alternative modes of production or

substitutes are available. Failing to prepare for new

environmental concerns could lead to extremely

costly impacts if global warming develops into a

major threat. Complacency on energy issues entails

a major risk for the country on all counts-security,

economic, and environmental.

High energy prices in the seventies and early

eighties were largely responsible for the rapid

development and implementation of energy saving

technologies that reduced energy demand and led to

today’s relatively low energy prices. Conversely,

these low prices, while good for the economy, are

limiting further efficiency, resource exploration, and

alternative fuel investments.

Energy investments, whether supply or demand,

typically last for decades. Thus, the energy system is

slow to change, and problems that are unlikely to be

critical for 20 years or more will be far more difficult

to manage then if not addressed now. These critical

problems include responding to the threat of global

climate change, securing affordable supplies of

energy, and protecting against oil import disruptions.

There is not now, and probably never will be, any

single energy option that will ideally solve our

long-term requirements. All options entail some

compromises. Opportunities to improve energy

efficiency are closest to the ideal. Many costeffective opportunities exist, even at today’s energy

prices. Such investments are generally environmentally beneficial because they reduce energy production and consumption, economically beneficial because they more nearly approach rational distribution of resources, and beneficial to security because

they reduce petroleum imports. However, significant structural and behavioral barriers impede their

implementation. Alternative energy sources (e.g.,

–1–
2 ● Energy Technology Choices: Shaping Our Future

Table l—Technologies Affecting Demand

Technology Sector Availability Comments

- . . .-. -. . . Variable speed heat pump. . . . Residential/commercial

Scroll-type compressors (heat

pump/air conditioning).... . . Residential/commercial

Thermally active heat pump. . . Residential/commercial

Low-emissive windows . . . . . . . Residential

Heat pump water heaters. . . . . Residential/commercial

Alternative insulation materials. Residential

Refrigerator insulation . . . . . . . . Residential

Efficient lighting products . . . . . Residential/commercial

Building energy management

and control systems . . . . . . . Residential/commercial

Industrial process changes:

—Separation . . . . . . . . . . . . . Industrial

—Catalytic reaction . . . . . . . . Industrial

—Computer control and

sensors . . . . . . . . . . . . . . . Industrial

Advanced turbine:

-Steam-injected gas turbine

(STIG) . . . . . . . . . . . . . . . . . lndustrial/utility

—Intercooling (ISTIG) . . . . . . lndustrial/utility

Electric motors. . . . . . . . . . . . . . Industrial

2-stroke engine . . . . . . . . . . . . . Transportation

Direct injection/adiabatic

diesel . . . . . . . . . . . . . . . . . . . Transportation

Ultra-high bypass engines . . . . Transportation

Alternative fuels:

—Alcohol fuels . . . . . . . . . . . . Transportation

—Electricity. . . . . . . . . . . . . . . Transportation

C,N

c

R

C,R

c

R

R

C,N,R

C,N

C,N,R

C,N,R

C,N

C,N

N

c

R

C,R

c

C,N,R

R

Improves energy efficiency and provides more flexible control.

Widely used in Japan. Increasing market share in United States.

Newer scroll-type compressors are 10 to 20 percent more efficient

than reciprocating ones. Widely produced in Japan. .

Could have significant impact in 10 to 20 years.

Significant impact on reducing thermal energy loss in homes.

Research needed on improving durability, lowering emittance,

and reducing condensation.

Offers significant reduction in electricity use; premium cost.

Commonly used in Scandinavia.

Needed to counter loss of chlorofluorocarbon-blown insulation.

Now being developed and tested.

Greatest potential for appliance efficiency improvements. New

products include vacuum insulation, compact vacuum

insulation, and soft vacuum insulation.

Combination of lighting options can cut commercial energy use

significantly. Improved fluorescents, compact fluorescents, and

electronic ballasts commercially available. Research and

development continuing on improving phosphors.

Greatest potential for savings in the commercial sector. Advances

in this technology have been continual.

Improvements in separation and control, and the use of membrane

technology and solvent extraction could reduce energy use

considerably.

By increasing reaction rates, Iower temperatures and pressures can

be used that reduce heating and compression requirements.

Discovery and use of new synthetic zeolites have contributed to

energy efficiency gain in petroleum refining and chemicals

industries.

Improved monitoring and control optimizes conversion and

distribution of energy. Potential savings range from 5 to 20

percent.

Currently used in cogeneration applications.

Has potential to raise efficiency to about 50 percent. May be better

suited for utility applications; pilot-plant stage.

Adjustable-speed drive and new high-efficiency motors account for

about half of the total potential savings in U.S. motors.

Holds promise for long term. Questions remain about ability of

engine to comply with emissions standards.

Limited passenger car application in Europe; offers considerable

efficiency improvements for both light-duty vehicles and heavy

trucks. Questions remain regarding meeting more stringent

emission standards.

Can raise efficiency by about 20 percent but costs two times as

much as current generation bypass engines.

Use of methanol and ethanol should result in greater engine

efficiency but costs are higher.

Big greenhouse advantage if derived from nuclear or solar energy.

KEY: C - commercial; N - nearly commercial; R - research and development needed.

SOURCE: Office of Technology Assessment, 1991.

nuclear, renewable, synthetic fuel) have some high dependence on conventional fossil fuels for

advantages, but none will be cheap relative to several decades, increasingly interfering with envicurrent fossil fuels. Thus without major policy ronmental and security goals and using more than

initiatives, our energy system is likely to maintain its the optimal amount of energy.
Overview . 3

Table 2—Major Technologies for Energy Supply and Conversion

Technology Availability Comments —. Oil

Deepwater/arctic technologies

Enhanced oil recovery techniques

—thermal recovery

—miscible flooding

-chemical flooding

0il shale and tar sands

—Surface retorting

—Modified in situ

Natural gas

—Hydraulic fracturing

Coal

—Atmospheric fluidized-bed combustion (AFBC)

—Pressurized fluidized-bed combustion (PFBC)

—Integrated gasification combined cycle (IGCC)

—Flue-gas desulfurization (FGD)

—Sorbent injection

-Staged combustion

Nuclear

—Advanced light water reactor

—Modular high-temperature gas reactor

(MHTGR)

—Power Reactor inherently Safe Module

(PRISM)

Electricity

—Combined cycle (CC)

—Intercooilng Steam injected Gas Turbine

(ISTIG)

—Fuel ceils

—Magnetohydrodynamics (MHD)

—Advanced batteries

-Compressed air energy storage (CAES)

Biomass

—Thermal use

—Gasification

—Production of biofuels

C,R

C,R

C,N

c

N,R

N

c

C,N

R

c

N,R

R

c

N

R

R

R

c

c

c

C,R

Existing technologies that are promising for deepwater areas include

guyed and bouyant towers, tension leg platforms, and subsea

production units. Advances in material and structural design critical;

innovative maintenance and repair technologies important.

Widely adopted over the past two decades.

Uneconomic at present oil prices.

Very complex process; not well understood although successful for some

formations. Key to unlocking unconventional gas reserves.

Small-scale units commercial. Utility-scale AFBC in demonstration stage.

PFBC is less well developed; pilot-plant stage.

Demonstration stage. Primary advantages are its Iow emissions and high

fuel efficiency.

Mature technology; considerable environmental advantages.

Commercially available control technology. Can remove nitrogen oxides

up to 90 percent.

Has potential to remove up to 80 percent of nitrogen oxides.

Incorporates safety and reliability features that could solve past problems;

public acceptance uncertain.

improvements to familiar technology; incorporates passive safety

features; design of modular reactor completed.

Conceptual designs expected to be completed this year.

Conventional CC is a mature technology; advanced CC is in

demonstration stage.

Pilot-plant stage. *

Several types being developed. Fuels cells that use phosphoric acid as

electrolytes are in demonstration stage. Molten carbonate and solid

oxide are alternative electrolytes that are less developed. Late 1990s

availabiiity, at the earliest.

Difficult technical problems remain, especially formal-fired MHD systems.

Research and development needed in utility-scale batteries to improve

lifetime cycles, operations maintenance costs. Promising batteries are

advanced lead, zinc-chloride and high-temperature sodium-sulfur..

First U.S. plant (110-MW)to begin operation in 1991; owned and operated

by Alabama Electric Cooperative, Inc.

Use of biomass by utilities is usually uneconomical and impractical.

Anaerobic digestion used commercially when biomass costs are low

enough. Methane production from biomass not yet competitive with

conventional natural gas unless other factors considered.

Research being done on wood-to-ethanol/methanol conversion

processes. Could be demonstrated by 2000.

(Continued on next page)

Policies to address long-term energy concerns titive (at current energy prices) investments. Regulainclude a wide range of initiatives. Energy taxes can tion can apply standards to raise performance of

internalize costs, e.g., security or environmental automobiles, appliances and buildings, and control

damage otherwise not considered in decisions on the conditions under which Federal lands are availappliance, automobile, and industrial process pur- able for oil and gas exploration. Information prochases. Financial mechanisms, e.g., subsidies, can grams can improve decisionmaking. Research, detarget particularly favorable but otherwise uncompe- velopment, and demonstration can make available
4 ● Energy Technology Choices: Shaping Our Future

Table 2—Major Technologies for Energy Supply and Conversion-Continued

Geothermal N

—Dual flash

—Binary cycle

Solar thermal electric

—Central receiver R

—Parabolic solar trough c

—Parabolic dishes R

Photovoltaic N,R

—Concentrator system

—Fiat-plate collector

Wind power c

Ocean thermal energy conversion (OTEC) R

Single-flash system used extensively. Little commercial experience with

dual flash. Binary cycle system maybe available in 40 to 50 MWerange

by 1995.

Several plants built, including one in California; 30-MW plant in Jordan is

major project today.

several commercial plants built in California;additional capacity planned

appears to be marketable.

Testing being conducted in new materials and engines such as free-piston

stirling engine.

Improvements needed to make photovoltaic cells economic in the bulk

power market advances in microelectronics and semiconductors can

make photovoltaics competitive with conventional power by 2010.

Renewable source closest to achieving economic competitiveness in the

bulk power market. Current average cost is 8 cents/kWh.

Research focused on dosed and open cycle systems; no commercial

plants designed. May be competitive in 10yearsforsmallislandswhere

direct-generation power is used. Use of OTEC domestically for electric

power is unlikely except for coastal areas around Gulf of Mexico and

Hawaii.

KEY: C - commercial; N = nearly commercial; R - research and development needed.

SOURCE: Office of Technology Assessment, 1991.

new options. The Federal Government can contrib- ●

ute directly to ameliorating energy problems by

taking advantage of highly cost-effective measures

to reduce energy purchases for Federal facilities by ●

at least 25 percent. ●

Initiatives generally could be aimed at improving A

minimizing the use of energy as far as is

technologically possible,

emphasizing renewable energy sources, and

emphasizing nuclear energy.

the efficiency of use of energy and the supply of Any of these scenarios could be the most approenergy. This report contrasts a baseline scenario (no priate path depending on the resolution of uncertainties over climate changes induced by the greenhouse major initiatives or surprises) with five variations

representing different paths the Nation could follow: effect, technological developments, and resource

discoveries. Each scenario presents risks as well as

● emphasizing production of conventional fuels, opportunities. This report describes the choices

● improving efficiency of use to the economic available to policymakers and the implications of

optimum, choosing one path versus another.
Chapter 1

Introduction:

The Changing Context for

Energy Technology Policy
CONTENTS

Page

THE ENERGY POLICY CONTEXT . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

TRENDS SHAPING ENERGY POLICY AND TECHNOLOGY CHOICES . . . . . . . . . . 9

Declining Energy Intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Sharply Increasing Dependence on Foreign Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Change in the Electric Utility Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Changing Environmental Dimensions of Energy Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The Nuclear Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Renewable Energy Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Technology Research, Development, and Demonstration . . . . . . . . . . . . . +.. . . . . . . . . . . . 16

CANDIDATE ENERGY POLICY GOALS TO REFLECT A NATIONAL

ENERGY STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Limit Oil Import Dependence and Diversify Supply Sources . . . . . . . . . . . . . . . . . . . . . . . 17

Improve Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Improve Environmental Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Implications of Goals on U.S. Oil Import Dependence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Linking U.S. Energy Strategy to Global Climate Concerns . . . . . . . . . . . . . . . . . . . . . . . . . 18

CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Boxes

Box Page

l-A. National Energy Strategy: A Historical Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

l-B. Changes in U.S. Oil Supply and Demand Since 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

l-C. The Changing U.S. Electric Utility Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figures

Figure Page

1-1. Index of U.S, GDP, Energy Intensity, Energy Use, and Electricity Use . . . . . . . . . . . 11

1-2. U.S. Oil Imports, 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 12

1-3. Total Oil Use and Imports U.S., Europe, and Japan, 1973 and 1988 . . . . . . . . . . . . . . 12

1-4. U.S. Electricity Consumption, 1989 Base Case to 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table

Table Page

1-1. OTA Reports That Address Energy Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Chapter 1

Introduction: The Changing Context for

Energy Technology Policy

In the 17 years since the Arab oil embargo of

1973-74, our perceptions of the role of energy in the

United States and world economies have changed

considerably. Throughout the 1970s, concern about

energy price and availability spurred the development of a wide range of new energy supply and

demand technologies. The dramatic increases in

energy efficiency of the U.S. economy were second

only to Japan’s during that period. Those efficiency

improvements coupled with the decontrol of oil and

gas prices initiated during the late 1970s led to

increases in supply and falling energy prices in the

mid- 1980s. The result is that current policy concerns

about energy are not driven by the sense of urgency

about price and availability typical of the 1970s, but

rather by other factors such as environmental

quality, international competitiveness, and national

security.

In addition, our understanding of how energy is

produced and used has matured significantly since

the 1970s, and we are much better equipped to make

systematic, long-term decisions about energy policy

and its interactions with other social, economic, and

environmental policy. Today, a comprehensive,

strategic national energy policy cannot be viewed as

an end in and of itself. Rather, its direction must

come from broader and more fundamental national

goals of economic health, environmental quality,

and national security. Therefore, as we consider the

steps necessary to articulate a national energy

policy, it only makes sense to develop it in ways that

support these three and other related goals.

Congress currently is considering the President’s

National Energy Strategy and a wide range of other

energy-related legislative proposals. The various

options reflected in these proposals must be weighed

in the context of the three overarching goals noted

above. This is difficult, since the goals can conflict.

For example, increased reliance on coal could cut oil

import dependence, but exacerbate problems of air

pollution and global climate change. Nonetheless,

some energy options support all three goals, particularly those that improve efficiency of production and

use.

New energy technology has always been a cornerstone of our strategies for dealing with current and

long-term energy policy issues. Such technologies

hold promise for cleaner and more efficient energy

use, safer and more efficient recovery of energy

supplies, and a smooth transition to a postfossil fuel

era. Indeed, after two decades of mixed experiences

with new energy technology, we understand much

better the role of new energy technology in energy

policy. In this overview report we review a number

of the long-term U.S. energy technology and policy

trends, discuss their interaction and implications,

and finally consider a range of strategic energy

technology policy options. Further, we reflect on

some of these experiences and examine the risks and

opportunities offered by major energy supply and

demand technology options.

OTA has examined new energy technologies for

the Congress since 1975 (see table l-l). This report,

designed to be an overview of energy supply and

demand, is drawn largely from past OTA reports.

Hence, it is not an exhaustive analysis of any one

factor. Rather, it tries to draw together the main

thoughts of a whole series of OTA reports and other

documents into a broad outline of the main directions the country could follow with energy. We

expect the report will be used by Congress as a

roadmap, not an encyclopedia.

THE ENERGY POLICY CONTEXT

Annual global energy use grew from about 18

quads (quadrillion British thermal units)--equivalent to about 800 million tons of coal or 8.5 million

barrels of oil per day—to 333 quads from 1900 to

1989. Industrialized countries account for 70 percent

of annual worldwide commercial energy consumption. Coal, oil, and natural gas combustion currently

account for about 80 percent of this energy use, and

these fuels will likely continue to dominate for

another 50 years. Many developing countries still

depend heavily on noncommercial fuels, e.g., wood,

dung, and crop wastes, but as their economies

develop, they increasingly incorporate fossil fuels,

–7-
8 . Energy Technology Choices: Shaping Our Future

Table l-l-OTA Reports That Address Energy Technologiesa

Energy and Materials Program:

Energy Efficiency in the Federal Government: Government by Good Example? OTA-E-492 (May

1991).

Energy in Developing Countries, OTA-E-486 (January 1991).

Rep/acing Gasoline: Alternative Fuels for Light-Duty Vehicles, OTA-E-364 (September 1990).

Energy Use and the U.S. Economy, OTA-BP-E-57 (June 1990).

Physical Vulnerability of Electric Power Systems to Natural Disasters and Sabotage, OTA-E-453

(June 1990).

High-Temperature Superconductivity in Perspective, OTA-E-440 (April 1990).

Electric Power Wheeling and Dealing: Technological Considerations for Increasing Competition,

OTA-E-409 (May 1989).

Biological Effects of Power Frequency Fields Electric and Magnetic Fields-Background Paper,

OTA-BP-E-53 (May 1989).

Oil Production in the Arctic National Wildlife Refuge: The Technology and the Alaskan Oil Context,

OTA-E-394 (February 1989).

Starpower: The U.S. and the International Quest for Fusion Energy, OTA-E-338 (October 1987).

U.S. Oil Production: The Effect of Low Oil Prices, OTA-E-348 (September 1987).

New Electric Power Technologies: Problems and Prospects for the 1990s, OTA-E-246 (July 1985).

U.S. Natural Gas Availability: Gas Supply Through the Year 2000, OTA-E-245 (February 1985).

U.S. Vulnerability to an Oil Import Curtailment: The Oil Replacement Capability, OTA-E-243

(September 1984).

Nuclear Power in an Age of Uncertainty, OTA-E-21 6 (February 1984).

lndustrial Energy Use, OTA-E-198 (June 1983).

lndustrial and Commercial Cogeneration, OTA-E-1 92 (February 1983).

Increased Automobile Fuel Efficiency and Synthetic Fuels, OTA-E-185 (September 1982).

Energy Efficiency of Buildings in Cities, OTA-E-168 (March 1982).

Solar Power Satellites, OTA-E-144 (August 1981).

Nuclear PowerPlant Standardization: Light Water Reactors, OTA-E-134 (April 1981).

World Petroleum Availability: 1980-2000, OTA-TM-E-5 (October 1980).

Energy from Biological Processes, OTA-E-124 (September 1980).

An Assessment of Oil Shale Technologies, OTA-M-1 18 (June 1980).

The Future of Liquefied Natural Gas Imports, OTA-E-110 (March 1980).

Residential/ Energy Conservation, OTA-E-92 (July 1979).

The Direct Use of Coal, OTA-E-86 (April 1979).

Application of Solar Technology to Today’s Energy Needs, OTA-E-66 (September 1978).

Enhanced Oil Recovery Potential in the United States, OTA-E-59 (January 1978).

Gas Potential From Devonian Shales of the Appalachian Basin, OTA-E-57 (November 1977).

Analysis of the Proposed National Energy Plan, OTA-E-51 (August 1977).

Nuclear Proliferation and Safeguards, OTA-E-48 (June 1977).

Oceans and Environment Program:

Changing by Degrees: Steps To Reduce Greenhouse Gases, OTA-O-482 (February, 1991).

Facing America’s Trash: What Next for Municipal Solid Waste, OTA-O-424 (October 1989).

Catching Our Breath: Next Steps for Reducing Urban Ozone, OTA-O-41 2 (July 1989).

Oil and Gas Technologies for the Arctic and Deepwater, OTA-O-270 (May 1985).

Acid Rain and Transported Air Pollutants: Implications for Public Policy, OTA-O-204 (June 1984).

International Security and Commerce Program:

Energy Technology Transfer to China-A Technical Memorandum, OTA-TM-ISC-30 (September

1985).

Technology and Soviet Energy Avai/abi/ity, OTA-ISC-153 (November 1981).

‘Avalable through the U.S. Government Printing Off iCe, Washington, ~.

SOURCE: Office of Technology Assessment, 1991.

especially coal and oil, in their industrial and quads of total energy will be required by 2010,

commercial sectors.l

assuming moderate economic growth. The baseline

he United States currently consumes about 81 scenario in this report, which includes noncommerquads of energy. Many analysts project that over 100 cial energy, increases from 84 quads in 1990 to 112

lsee Us. con~ss, OKlce of Technology Assessment Energy in Developing Counrries, OTA-E-486 (Washington, DC: U.S. @veM.ment ~b

Office, January 1991).
Chapter 1--Introduction: The Changing Context for Energy Technology Policy ● 9

in 2015. The National Energy Strategy’s Current

Policy Base projects U.S. energy consumption will

reach approximately 115 quad by 2010.2 With no

changes in policy, the sources of energy we use to

fuel the economy are expected at that time to be very

similar to what they are today: about 40-percent oil,

23 percent each for natural gas and coal, and

14-percent renewable and nuclear power.3 Still,

some important features of U.S. energy supply and

demand balance are changing and, in turn, are

changing the environment within which policy

decisions will be made, especially decisions about

technology.

various “national energy plans” have been

initiated frequently since 1939 (see box l-A),

usually instigated by concerns over resource shortages. Perhaps the lesson to be learned from this

repeated attention is that energy policy must be

fundamentally grounded in long-term strategies but

must also accommodate short-term perturbations.

Oil price disruptions have been the major perturbations in recent years, such as the 1990 price increase

stemming from the Persian Gulf crisis.

However, reducing vulnerability to oil supply

shortages will require more than a large petroleum

reserve. Without policy action, imports of oil are

very likely to increase substantially. Increasing

dependence on imports, especially those from unstable regions, will necessitate a gigantic and extremely

expensive reserve to maintain present protection

against an extended import supply disruption. Increasing efficiency and fuel flexibility in the transportation fleet, the sector most dependent on oil, will

be increasingly attractive. These measures would

also serve the vital goal of reducing air pollutant

emissions. Far greater changes will be required if

major carbon dioxide (CO2

) emissions reductions

are required to minimize climate change. Major

changes in energy systems require decades and

steady commitment from political leaders, industry,

and citizens, and planning now for such changes

would be prudent.

If the United States wishes to succeed in easing oil

import dependence, cutting emissions, and increasing energy productivity, we must establish longterm efficiency and supply goals, and stick to the

plan to achieve those goals through periods of both

crisis and calm and through periods of varying oil

prices. During the past decade, steady supplies, easy

efficiency gains, and a retreat in the price of oil

seduced us into largely abandoning efforts to push

research in energy efficiency and alternative supplies. The war in the Middle East generated concerns

over energy security reminiscent of the 1970s. Nonetheless, as the current crisis passes, we may be once

again beguiled into a false sense of energy complacency.

TRENDS SHAPING ENERGY

POLICY AND TECHNOLOGY

CHOICES

The trends that have significant implications for

long-term energy policy choices are: 1) the declining

energy intensity of the U.S. economy between the

1970s and mid- 1980s, 2) the sharply increasing U.S.

reliance on foreign sources of oil, 3) the changing

structure of the electric utility industry, and 4) the

changing relationship between energy and the environment. This section discusses these trends and

three areas of particular interest for energy technology policy: nuclear power, renewable energy, and

research and development.

Declining Energy Intensity

For many years most observers believed that

energy use and the gross national product (GNP)

were firmly linked, moving upward in lock step. We

learned from the energy shocks of the 1970s, however,

that ingenuity can substitute for supply when the

price is right. In the 1970s as energy prices rose,

consumers responded by shifting their market basket

of purchases and by developing more efficient ways

to provide energy services. The energy intensity of

the economy, the energy consumed per unit of GNP

produced, fell 2.5 percent per year between 1972 and

1985, most of which was due to improved efficiency

(see figure l-l). The other major factor was the

changing structure of the U.S. economy (e.g., the

decline in energy-intensive industries, replaced by

energy-intensive imports). OTA addressed these

issues in its 1990 background paper Energy Use and

the U.S. Economy.

2Natio~/ Energy ~rra~egy: Powefiz Zdeasfor America, 1st ed. 1991/1992, DOE/S-0082P (Washington DC: U.S. GoVerMent ~fig ml%

February 1991), p. C-9.

3SM tie U.S. ~aw wo~tion Adrninismtioq Annual Energy Outlook 1990 (DOE/EIA-0383(90), JWI. 12, 1~.
10 ● Energy Technology Choices: Shaping Our Future

Box 1-A--National Energy Strategy: A Historical Note

In 1939 President Franklin Roosevelt appointed a National Resources Planning Board to examine the Nation’s

resources policy options. The Board recommended Government support of research to promote "efficiency,

economy, and shifts in demand to low-grade fuels” and that a “national energy

prepared that “would be more than a ‘simple sum’ of policy

resources policy” should be

 directed at specific fuels.”1

Later efforts included : a refinement of the Board’s recommendations .

in 1947 by President Truman‘s National

Security Board; Truman's Mat erials Policy Commission of 1950-52 (known as the Paley Commission

after its Chairman William s. Paley); President Eisenhower’s 1955 Cabinet Advisory Committee on Energy

supplies and Resources Policy the 1961 National Fuels and Energy Study commissioned by the U.S. Senate during

President Kennedy’s term; President Johnson’s 1964 “Resources Policies for a Great Society Report to the

President by the Task Force on Natural Resources”; President Nixon’s 1974 “Project Independence Blueprint”;

President Ford’s 1975 Energy Resources Council reflected in his omnibus proposal “Energy Independence Act of

1975’ ‘; President Carter's 1977 “National Energy Plan”; President Reagan’s 1987‘ ‘Energy Security” report; and,

of course most recently, President Bush’s 1991 “National Energy Strategy (NES).”

The major stated goals of the NES are the following:

● encourage the adoption of cost-effective energy efficiency technologies in all sectors, including electricity

generation;

● increase the use of renewable energy in electricity generation and the residential and commercial sectors;

● in the industrial sector, increase fuel flexibility and decrease waste generation, particularly by recycling

wastes and increasing their use as process feedstock;

● in the transportation sector, expand the use of alternative fuels, accelerate the scrappage of older, leas

efficient automobiles, promote mass transit and ride sharing, and evaluate whether the corporate average fuel

economy (CAFE) standards should be changed

l reduce U.S. vulnerability to fossil-fuel supply disruptions by improving and implementing advanced oil

recovery technology, increasing U.S. and global oil and natural gas production generally, and expanding

stocks (a major focus of supply expansion will include increased outer continental shelf (OCS) and Arctic

National Wildlife Refuge (ANWR) exploration and development);

l revive the growth of nuclear power by standardizing powerplant design, accelerating the introduction of

advanced designs, reforming the powerplant licensing process to hasten the growth of new nuclear capacity,

and site a permanent waste facility, and

l enhance Federal research and development to reduce oil use, increase oil supplies, and develop alternative

fuels.

The above list of NES goals is not complete, but it represents the key elements of the plan. There have been

disputes over the goals of the strategy, whether the policy approaches suggested m the document match these goals,

and whether it offers a viable mix of demand control and supply enhancement options. These issues are for

policymakers to resolve. For its part, the NES is a broad plan that premises to affect the way Some of our most

important economic, environmental, and national security policies develop m the coming years.

1EnergyResources and National Policy. Report of Energy Resources Committee to the Natural Resources Committee,

DC: u.s. Government Printing Office, 1939); also summarized in C. Goodwin (ed.), Energy Policy in Perspective (Washington,

Institution, 1981).

Technology was at the heart of this changing Sharply Increasing Dependence on

intensity-technology ranging from dramatically Foreign Oil

increased efficiency in delivery of traditional energy

services, e.g., heating, cooling, industrial processes, Today, the United States consumes about 17

and transportation, to entirely new services that million barrels of oil per day, 13 percent greater than

changed our lifestyles, e.g., improved airline travel, in 1983. At the same time, the level of domestic oil

personal computers, and fax machines. In chapter 2 production has declined, due to depletion of lowwe examine the changing nature of U.S. energy cost resources and a lack of new discoveries. The net

demand and the implications of technology on result is that imports rose from about one-third of

demand growth and efficiency improvement. total U.S. consumption in 1983 to nearly 45 percent
Chapter 1--Introduction: The Changing Context for Energy Technology Policy ● 11

Figure I-l—Index of U.S. GDP, Energy Intensity,

Energy Use, and Electricity Use

, ~ 1972 ■ 1.00

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

0

1952 1956 1960 1964 1968 1972 1976 1980 1984 1988

— Btus — GDP (1982$)

~ Intensity (Btus/GDP) ‘ - Electricity

SOURCE: U.S. Energy Information Administration, Month/y Energy Review, March 1991, DOE/EIA-0035(91 /03) (Washington DC:

U.S. Government Printing Office, Mar. 28, 1991).

in 1990. This is addressed in OTA’s 1987 report U.S.

Oil Production: The Effect of Low Oil Prices, and in

its 1989 report Oil Production in the Arctic National

Wildlife Refuge: The Technology and the Alaskan

Oil Context.

Moreover, the fraction of total imports coming

from Persian Gulf nations has increased from about

4 percent of total U.S. consumption (10 percent of

total U.S. oil imports) to over 10 percent (26 percent

of current U.S. imports), as shown in figures 1-2 and

1-3. As the Soviet Union, the United States, and

other non-OPEC (Organization of Petroleum Exporting Countries) nations deplete their lowest-cost

oil reserves over the next decade or two, the

geopolitics of energy will increasingly focus on the

comparatively vast resources in the Middle East.

OPEC4 controls three-quarters of proved world

crude-oil reserves, including all major recent additions. At least part of the rationale for Operation

Desert Storm was due to our dependence on that

region’s oil reserves or, in President Bush’s words,

“U.S. economic interests there. ”

In this case, the disruption was minor because Iraq

and Kuwait provided less than 5 percent of U.S.

supply, and Saudi Arabia was willing and able to

compensate for the shortfall. In the future, however,

major U.S. supplies could be interrupted or lost, with

limited replacements available only at great economic or political cost. For example, if the recent

Gulf War had also interfered with Saudi Arabian oil

exports, U.S. supply losses would have been much

more severe.

Dependence on imported oil also strains our

international balance of payments considerably. In

the first half of 1990, the U.S. imported 24 billion

dollars’ worth of oil, an amount equal to 57 percent

of our total trade deficit for that period. High levels

of oil imports do not by themselves lead to poor trade

balances (Japan is one counter example), but such a

high cost warrants strenuous efforts to ensure that oil

is used with optimal efficiency. Many opportunities

for increasing energy efficiency are noted in this

report.

In addition, even in peacetime, the Pentagon

spends many billions of dollars to protect oil

supplies. With the conclusion of Operation Desert

Storm, military expenditures linked to preserving oil

supplies rose substantially. Rebuilding the war-torn

countries of the Middle East may also prove very

expensive. These are part of the costs of imported

oil, even though they are not reflected in the price of

oil and oil products.

Some characteristics of today’s U.S. oil use,

domestic supply, and import dependence are similar

to those of the 1970s, e.g., the almost total reliance

of our transportation sector on oil. Other features,

however, have evolved considerably, including the

efficiency of oil use in many industries, lower

dependence of electric utilities on oil, diversification

of world oil supplies (albeit not reserves), international agreements on oil sharing, the strategic

petroleum reserve, changes in energy regulation

(e.g., removal of oil price controls and restrictions on

natural gas use), and the emergence of active spot

and futures markets for oil supply. (See box l-B.)

All of these changes have had an effect on the

possible future of oil use and of U.S. dependence on

imported oil. Despite these changes, the U.S. economy is and will be increasingly dependent on foreign

supplies of oil for years to come. This dependence

will continue to threaten our national security, and it

promises to continue aggravating our balance of

payments.

 of Arabia, Iraq, Qatar, Venezuela, Iran, United Arab 

 and Nigeria.
12 ● Energy Technology Choices: Shaping Our Future

Figure 1-2—U.S. Oil Imports, 1989 (millions of barrels per day)

Asia 0.8

0.3

1.22

Total: 8.1 million barrels per day Total: 2.1 million barrels per day

Total U.S. oil consumption, 17.3 million barrels per day

SOURCE: U.S. Central Intelligence Agency, International Energy Statistical Review, 1990.

Figure 1-3-Total Oil Use and Imports U.S., Europe,

and Japan, 1973 and 1988

Million tons of oil equivalent

“ ooo

~ ~

800

i

600-

400-

200-

o ’ mU.S. Europe Japan U.S. Europe Japan

1973 1988

_ Oil imports = Domestic production

SOURCE: U.S. Energy Information Administration, International Energy

Annual 7988, DO13EIA-00219(88) (Washington DC: U.S.

Government Printing Office, Nov. 7, 1989).

Change in the Electric Utility Industry

The U.S. electric utility industry has weathered

dramatic change in the last two decades. A dominant

factor precipitating change in the 1970s was the

price of fuel. On average, utilities had to pay over

200 percent more in real dollars for fossil fuels in

1984 than in 1972. In addition, the construction costs

of new powerplants, particularly nuclear, rose dramatically due to a combination of factors: increased

attention to environmental and safety issues (contributing to extended construction leadtimes and

added equipment costs), high inflation and interest

rates, delays in construction schedules and, in some

cases, poor management. The higher costs of fuel

and capital meant higher electricity costs, and

utilities sought higher rates for the first time in

decades. Most utilities (and industry analysts) seriously underestimated the price elasticity of electricity demand. Demand growth plummeted from 7

percent a year in the early 1970s to less than 2.5

percent by the end of the decade. Though consumers

began using electricity more frugally, powerplant

construction schedules did not shrink accordingly,

and an oversupply of capacity resulted, adding to

utilities’ problems.

The outlook for the electricity generating industry

has improved. The demand for electricity has risen

substantially (see figure 1-4) and fuel costs have

stabilized. However, the industry continues to

change, as evidenced by:

●

●

●

●

the emergence of an independent power producer industry and other signs of increasing

competition in the industry (e.g., a number of

major mergers and acquisitions and proposals

to modify the Public Utility Holding Company

Act);

the accelerating trends of least-cost planning,

integrated resource planning, and other innovative State regulation;

increased attention to demand-side management and investment;

the restoration of natural gas as an important

fuel for electric power generation;
Chapter Introduction: The Changing Context for Energy Technology Policy ● 13

Box l-B-Changes in U.S. Oil Supply and Demand Since 1973

Energy Efficiency of the US. Economy As noted above, energy efficiency has risen considerably in all sectors

of the economy, often through permanent structural changes driven by economics. Changes include improvements

in both the efficiency and flexibility of energy-using technologies. 1 For example, automobile, industrial boiler, and

electric powerplant fuel efficiency have all improved substantially. Nonetheless, many opportunities still remain,

although they may be more difficult to secure without higher energy prices,2

Strategic Petroleum Reserve (SPR,): “The United States now has an SPR containing approximately 585 million

barrels of crude oil,3 the equivalent of about 100 days of oil imports at current levels. Similarly, Europe and Japan

have also added to their strategic storage, although not to the same extent as the United States.

Diversified World Oil Production: Sources of world oil production have become substantially more diversified

since the 1970s, with the OPEC share of the world oil market declining from 60 percent in 1979 to approximately

35 percent today. For several years, at least, no single country or cohesive group of countries will be able to control

as large a share of the world market as was possible previously. Eventually, however, OPEC will regain substantial

market share, especially as U.S. and Soviet production declines.

Concentrated World Oil Reserves: Despite diversified world oil production, nearly all recent reserve additions

have been in the Middle East. Moreover, the costs of exploration, field development, and production in the Middle

East remain considerably below that of other oil producing regions and are likely to remain so.

Increased Flexibility of Oil Use: A considerable portion of any increase in oil consumption both in the United

States and in the remainder of the free world is reversible. For example, much of the increase in Us. oil use in

transportation over the last decade involves changes in consumer behavior, e.g., increased driving, that could be

quickly reversed in case of an oil shortage or large price increase. In the industrial sector, many of the shifts to oil

for a boiler fuel can be rapidly reversed with a shift back to coal or natural gas. Similarly, in the electric utility sector,

a substantial portion of any increased oil use is likely to involve the use of existing oil-fired generating

capacity-removed from baseline service when oil prices rose in the 1970s--in favor of coal, gas, or even nuclear

plants. As long as the industry retains excess generating capacity, this use can be readily reversed, and even with

diminishing capacity, fuel switching capability is much more common now than in the 1970s.

New International Oil Trading Mechanisms: Most of the world’s oil is now traded through spot markets, in

contrast to the long-term contracts of the 1970s. Coupled with an active futures market, this new oil trading situation

makes single country embargoes, which could never be airtight even in the past, still less of a threat.

Increased Availability of Natural Gas: The widespread concern in the 1970s about scarcity of natural gas

resources has given way to aggressive increases in natural gas use, especially in industry, commercial space heating,

and electric power generation.

International Agreements on Oil Sharing: The International Energy Agency (IEA) was created in the 1970s

in part to coordinate maintenance of strategic stocks of petroleum as well as plans for demand reduction for use

during an emergency. In early 1991, the IEA governing board voted to draw on 2 billion bards of crude oil reserves

to avert any shortages caused by the Middle East war.

Changed Energy Regulation: United States oil prices are no longer controlled as they were during the 1970s.

In the event of a new price increase, the market forces that act to reduce demand and increase supply will be felt

in full. In addition, restrictions on the use of natural gas in electric utility boilers and other industrial applications

are no longer in effect. These and other regulations, e.g., the national 55 miles-per-hour speed limit, could be

reimposed m case of crisis, but the overall trend has been toward letting the market control the allocation of energy.

Changing Economic Structure: Over the last decade, the steady decline in energy intensity (energy consumed

per unit of gross domestic product produced) accelerated in response not only to the influence of improving energy

efficiency, as noted above, but also to changing patterns of consumer demand, a shifting balance of imports and

exports of both energy and nonenergy goods, and the changing market basket of goods produced in the United

States. These changes have, as a consequence, had an effect on the future oil replacement potential m the U.S.

economy.

1See U.S.Congress, Office of Technology Assessment, Technology and the American Economic Transition: Choices for the Future,

OTA-TET-283 (Washington, DC: U.S. Government Printing Office, May 1988).

2OTA is examining this in much more depth in its ongoing assessment U.S. Energy Efficiency: Past Trends and Future Opportunities.

3Energy Information Administration, Monthly Energy Review, February 1991, DOE/EIA-0035(91/02), Feb. 25, 1991, p. 41.
14 ● Energy Technology Choices: Shaping Our Future

Figure 1-4--U.S. Electricity Consumption,

1989 Base Case to 2020

Millions of GWH

,

6

5

4

3

2

1

0

1990 1995 2000 2005 2010 2015 2020

E%?%! Coal ZZ Oi l ~ Ga s

~~ Nuclear ~ Other (nonfossil)

SOURCE: Gas Research Institute Baseline for 1989.

● the anticipated effects of the Clean Air Act

Amendments of 1991; and

. the long-term implications of policies concerning global climate change.

These changes are certain to affect future technology choices, operating characteristics, and regulatory policy. Box 1-C summarizes these changes in

more detail.

Changing Environmental Dimensions of

Energy Policy

Much of the energy policy enacted in the last

decade has actually been driven by environmental

concerns. Moreover, the impetus for accelerated

development of some new energy technologies has

been spurred primarily by environmental concerns,

e.g., clean coal technologies such as gasifiers and

alternative transportation fuels such as methanol.

The evolution of environmental regulation in air,

water, nuclear waste, surface mining, oil exploration

and development, and other areas will strongly

influence the evolution of energy supply and demand technologies in the coming decades. These

issues are discussed in chapters 2 and 3.

The Nuclear Dilemma

In much of the industrialized world, including the

United States, nuclear power is playing an increasing role in electric power generation, while simultaneously encountering serious obstacles to further

development, In the United States, nuclear power

provides almost 20 percent of our electricity, but the

last viable order for a new nuclear powerplant was

made in 1974.

In 1984 OTA delivered its report Nuclear Power

in an Age of Uncertainty, which addressed the issues

involved in keeping nuclear as an option, and

concluded: “Without significant changes in the

technology, management, and level of public

acceptance, nuclear power in the United States is

unlikely to be expanded in this century beyond

the reactors already under construction. ” The

conclusion is still valid today, but increasing concern over CO2 emissions, which nuclear can help

control, greatly increases the importance of resolving the issues.

Most of the major issues besetting the nuclear

option are related to the technology:

●

●

●

●

Are reactors sufficiently safe?

Can they be built, operated and eventually

decommissioned economically?

Can nuclear waste be disposed of safely?

Does nuclear power significantly increase the

risk of the spread of nuclear weapons?

Several technological approaches to these issues,

e.g., improved safety and economics, are discussed

in chapters 3 and 4. Whether these efforts will be

enough to improve public opinion is still uncertain.

Renewable Energy Technology

Some renewable energy technologies are already

mature, e.g., hydropower, solar collectors, and

passive solar design features. At the other extreme,

solar power satellites would require decades of

research and development (R&D). Some renewable

technologies, e.g., photovoltaics and wind, are

commercially available but are competitive with

traditional fuels only for specific sites and can make

only a limited contribution at present. Finally, other

renewable technologies, e.g., solar thermal electric

power and some advanced biomass technologies

(including biomass-based synthetic liquid and gaseous fuels), have few commercial applications, but

have great potential for improved cost and performance.

The technologies in the latter two categories—

those with some commercial applications and those

that are near-commercial, waiting for escalations in

fossil fuel prices, continued technical development,

and possible public policy changes--could potentially be in a position for significant commercial
Chapter 1--Introduction: The Changing Context for Energy Technology Policy ● 15

Box 1-C-The Changing U.S. Electric Utility Industry

Uncertainty in Electricity Demand Growth: A crucial legacy of the 1970s and 1980s is the uncertainty in future

electricity demand growth. The experience of the 1970s reveals that users of electricity are able to alter the quantity

they use much more quickly than utilities can accommodate these changes with corresponding changes in

generating capacity. The current range of published forecasts is about 1-to 4-percent average annual peak demand

growth, This translates to a range of around a 30-gigawatt (GW) surplus of electric generating capacity to a 280-GW

shortfall of capacity beyond currently planned additions and retirements by 2010. Even within individual forecasts,

the range of uncertainty is typically very high. For example, the North American Electric Reliability Council

projects that total electricity demand (summer peak demand) for 1999 with an 80-percent probability band will be

128,000 megawatts (MW)--amounting to a 1OO-GW shortfall or about a 28-GW surplus at the ends of the

uncertainty range compared to currently planned additions and retirements. 1

Shifting Electricity Markets: Compounding the demand uncertainty is the changing nature of demand. For

example, in the residential sector there is saturation in some markets, e.g., many major appliances in homes, but

there is also intense competition between natural-gas-fired space heating and electric heat pumps. The future of

industrial demand is clouded as some large industrial users of electricity are experiencing declines in domestic

production due to foreign competition while others, like steel, are improving. At the same time, rapid growth

continues in other areas, e.g., space conditioning for commercial buildings and electronic office equipment.

Predicting the net impact of these offsetting trends, along with continued movement toward increased efficiency,

has greatly complicated the job of forecasting demand.

Increasing Costs of Electricity Generation: Increased attention to environment and safety issues over the last

two decades has contributed to both extending leadtimes in the siting, permitting, and construction of new

powerplants as well as to rapidly rising per kilowatt costs of these plants, especially coal and nuclear plants. In the

‘‘old’ days (1960s for the utility business) of steady demand growth, falling marginal costs (due largely to

improving technology) and low interest rates, an excess of new capacity was not all that costly and demand growth

would quickly erase the excess. Now, uncertainty about demand growth dominates. It is not only greater, but also

more important, and overcommitting to new capacity can be very costly.

More Flexible Planning Strategies: Uncertainty has forced utilities to plan for contingencies. They now plan

for a range of plausible future scenarios rather than committing to a fixed plan. When load growth exceeds

expectations, as in New England and the Mid-Atlantic Regions in the 1980s, shorter leadtime resources such as

demand-side management (DSM) and combustion turbines are called upon. Also, some utilities are performing

pre-construction planning and site preparation to reduce the time required to construct new units, in case demand

grows rapidly.

More Technology Options: Utilities now seek technology that comes in smaller unit sizes that can much more

flexibly meet uncertain demand growth. The uncertainty in load growth provides the opportunity to dramatically

expand the role of DSM and smaller-scale, shorter leadtime generating technologies (e.g., natural gas-fired

combined cycle units) in utility resource plans. In addition, the prospects for advanced coal technologies renewable

are expanding, although their commercial penetration is being slowed by low fuel prices.

Changing Regulatory Structure: In 1978, the Public Utility Regulatory Policies Act (PURPA) amended the

1935 Federal Power Act to require electric utilities to purchase electricity from nonutility generating facilities that

met standards established by the Federal Energy Regulatory Commission, i.e., cogenerators and small power

producers termed qualifying facilities (QFs). PURPA was the first major Federal move to open the electric utility

market to nonutilities. Opening electricity markets to increased competition was the focus of the policy debates in

the electric utility industry throughout most of the 1980s. Until the late 1980s, however, competition played a minor

role in electricity markets, with the notable exception of facilities operated under PURPA.

In the last several years, as utilities resolved technical concerns and gained more experience with nonutility

generation through PURPA, State regulators established mechanisms to foster competition for new generating

facilities, e.g., competitive bidding by independent nonutility power producers. Also until recently, most State

regulation of electric utilities has in effect linked utility profits with the amount of electricity sold, discouraging

utilities from motivating their customers or undertaking themselves cost-effective energy conservation options.

Some State utility commissions are establishing integrated resource planning programs that allow utilities to profit

from investing in energy conservation programs or promoting such programs by their customers.

1North American Electric Reliability Council, 1990 Electricity Supply & Demand for 1990-1999, NOVember 1990, p. 15.
16 ● Energy Technology Choices: Shaping Our Future

application in the 1990s, but not at their current rate

of technical development. For most renewable, the

goal of research, development, and demonstration

(RD&D) remains to reduce costs and increase

performance so that these technologies can compete

with the conventional energy sources under traditional terms.5 Performance improvements, cost reduction, and resolution of uncertainties will all

occur, but the rate at which these improvements

occur will depend on sustained progress in RD&D

and survival of an industry infrastructure. Moreover,

as we gain experience with some renewable, we

learn more about their own adverse environmental

impacts, e.g., hydropower’s aquatic ecosystems

impact and wind energy’s noise impacts.

Technology Research, Development, and

Demonstration

Many technologies are available to supply energy

or improve its use. Many more will be available as

R&D programs are pursued. Some of these were

noted above. A continued Federal presence in

RD&D is essential to sustain energy technology

development. OTA’s 1985 report New Electric

Power Technologies: Problems and Prospects for

the 1990s identified a number of alternative policy

options aimed at accelerating the commercial availability of technologies potentially useful in the

electric power industry. These options apply in

many respects to other new energy technologies as

well since they focus on reducing cost, improving

performance, and resolving uncertainty in both cost

and performance. The major policy questions are on

the level and direction of the Federal programs, and

whether it should include commercialization initiatives.

The appropriate level and direction of RD&D

depends on the perceived need for new technology.

Economically, it is likely that a significantly larger

RD&D program could be justified even under

current, noncrisis conditions. New technology can

save money, and the energy system is so large that

even a small saving can pay back a large investment

in R&D. If a major reduction of CO2 emissions

proves necessary, the RD&D program should be

much larger. Every available efficiency, nuclear, and

renewable energy option would be necessary, and

most of these could be made available sooner with

greater funding. These technologies are discussed in

the following chapters.

Under less drastic conditions, the current level

may be adequate, but shifts in emphasis among

programs may be considered, depending on the

results desired. The scenarios in chapter 4 assemble

the technologies according to the conditions under

which they would be most useful.

The current U.S. R&D strategy assumes that

private industry will commercialize new energy

technologies as they become viable. This strategy

reflects the desire to avoid repeating premature

commercialization failures, e.g., the Synthetic Fuels

Corporation. However, it is legitimate to ask if this

strategy may not be an overreaction to past failures,

especially since the Federal Government may have

a greater interest in promoting particular technologies than has private industry. In particular, private

industry is not traditionally expected to include

environmental concerns or nonmarket considerations of foreign policy and national security in

corporate investment decisions. The Federal Government plays the principal role in encouraging and

sponsoring technology development for such reasons. Of particular concern is assuring availability of

liquid fuels as substitutes for oil and improving

efficiency in the use of oil, on which virtually our

entire transportation system relies. Another concern

is finding more environmentally acceptable ways to

provide energy services. The current period of low

and stable world oil prices, which may well continue

through the 1990s, provides a window of opportunity for developing supply substitutes and new, more

efficient end-use technologies, to ensure commercial availability of these technologies in the 1990s.

CANDIDATE ENERGY POLICY

GOALS TO REFLECT A

NATIONAL ENERGY STRATEGY

Long-term energy policy goals must be responsive to the three long-term policy interests of

economic health, environmental quality, and national security because energy’s importance is

Scomwtition under traditio~ terms neglects to amount adequately for the pollution and other externalities of energy production and use. For

renewable to compete better in our current economic and regulatory system further RD&D will be needed. Of course, if externalities such as

environmental damage were captured in the price system renewable technologies would at present be far more competitive with conventional fossil and

nuclear sources.
Chapter 1--Introduction: The Changing Context for Energy Technology Policy ● 17

mostly gauged by its ability to sustain such societal

goals. The following prospective energy goals are

aimed at this end.

Limit Oil Import Dependence and Diversify

Supply Sources

Candidate goals to reflect a strategy of limiting

oil import vulnerability are: 1) to limit overall oil

imports to a fraction of total U.S. oil use (perhaps

50 percent); and 2) to diversify sources of world

oil production and, therefore, U.S. sources of

imports to regions of the world outside the

Middle East, where such imports can be aligned

with other U.S. policy interests. The latter includes

the transfer of technology to the Soviet Union to

improve oil production from depleted wells. Such

transfers were discussed in 1981 in the OTA report

Technology & Soviet Energy Availability. Since

these decisions are primarily political not technological, this report focuses on the first goal.

Supply mechanisms to limit oil imports include

sustaining or slowing the decline in domestic oil

production, and developing and producing alternative transportation fuels. Demand and fuelswitching mechanisms include improved efficiency

of use in all sectors and shifting industrial, residential, and commercial oil use to other sources, e.g.,

natural gas or electricity.

All of these options imply commercial development of new technologies. Some technology options, however, may lead to policy conflicts. For

example, the current strategy for developing alternative transportation fuels is driven by the need to

improve air quality in urban areas. Likely options

include alcohol fuels (methanol and ethanol), compressed natural gas, and electricity. If methanol

produced from natural gas proves to be the most

practical and cost-effective option, most of the

additional demand would have to be met with

imports, because U.S. production is unlikely to

increase sufficiently. The world natural gas market

is more diversified than is oil, but the most

inexpensive and plentiful supplies are, like oil,

located in the Middle East.

Improve Energy Efficiency

OTA’s studies over the past decade have consistently shown that energy efficiency is an essential

cornerstone to a comprehensive energy policy framework. About two-thirds of the growing U.S. energy

productivity of the last decade is attributable to

improving energy efficiency. Efficiency gains have

also affected electricity use, which historically has

grown faster than the economy but, in the last

decade, has fallen back to the same rate of change as

GNP. Moreover, these efficiency gains generally

have been realized with net cost savings and without

sacrifice of comfort or dollars. Considerable future

energy efficiency gains are still possible in all

sectors of the economy using existing technology.

Even greater cost savings and efficiency gains will

be possible with technologies under current R&D.

An efficiency goal of sustained improvement of 2

percent per year6 is realistic for the United States.

With more vigorous research on energy efficiency,

coupled with investment and policy leadership, this

goal can be met or exceeded-and with options that

are no more costly than pursuing the supply-side

path. Moreover, pursuing such a goal supports all

three policy interests of economic health, environmental quality, and energy security.

Improve Environmental Quality

A responsible energy policy should complement

as much as possible a responsible environmental

policy. Clearly there are some activities that can spur

our economy and enhance national security but run

counter to environmental goals (e.g., aggressively

pursuing a long-term strategy of alternative transportation fuels such as methanol, but allowing the

feedstock for these fuels to be coal rather than

biomass). But those activities should be seriously

considered only if we have exhausted other options

that more generally support all three goals (e.g.,

developing economical fuel cells that burn biomassderived fuel efficiently and cleanly to power automobiles).

With a wealth of existing or in some cases

near-commercial technology, we see no reason why

6 Mer= ~lciency is ~ to me~me for individual products or processes but difficult to define in the aggregate. ‘lbtd energy use divided by GNP

yields the energy intensity of the economy, but shifts in the energy intensity may signal changes in the mix of the economy or the goods and services

involved that do not necessarily mean changes in eftlciency. If the economy maintains its characteristics, then intensity and eftlciency are identical. In

that case, thegoalcouldbemet by, e.g., a2-percent growth in GNPwith constant energy demand. If the economic trends of the past decade are maintainm

i.e., energy-intensive industries such as steel declining while less intensive service industries grow, then energy intensity would have to decline by 3

percent to show a 2-percent gain in efilciency; see U.S. Congress, Office of Technology Assessment, Energy Use and the U.S. Economy, OTA-BP-B57

(TWshingtow DC: U.S. Government Printing Offke, June 1990).
18 ● Energy Technology Choices: Shaping Our Future

existing environmental goals need to be significantly compromised to achieve energy goals. Energy and environmental goals are, of course, closely

linked and, therefore, neither energy nor environmental policies should be developed, assessed, or

changed in isolation.

Implications of Goals on U.S. Oil Import

Dependence

In chapter 4 we consider several aggressive

strategies in supply, efficiency, and fuel shifting for

reducing U.S. oil import dependence. The options

include improving efficiency of energy use in

transportation, industry, and buildings; increasing

domestic production of oil; and encouraging the use

of alternative fuels.

It is clear that vigorous and sustained efforts

would be required to stabilize oil import dependence

over the next several decades-even at a level of 50

percent. The biggest opportunities for this lie on the

demand side. Fortunately, these can provide important new economic activity and strength at home. To

the extent that we improve efficiency cost-effectively,

supplies will last longer, environmental problems

will be eased, and international tensions lessened.

But improved efficiency is unlikely to be enough.

The opportunities on the supply side, e.g., enhanced

domestic production in the lower 48 States, offshore,

and in Alaska, are more modest than increased

demand efficiency, but still potentially important.

And, as noted earlier, there are opportunities for

using alternative transportation fuels, e.g., methanol

and electricity. These fuels have extensive long-term

implications, however. The oil replacement potential must be weighed against the economic, energy,

and environmental costs associated with producing

and using these fuels. Last fall OTA released its

report Replacing Gasoline: Alternatives for LightDuty Vehicles, which addresses this subject in more

depth.

The pacing and mix of all the efforts described

above are very important. Much can be done to

counterbalance the ominous projected growth of oil

import dependence, but even with relatively heroic

measures the United States is likely to face a future

of high dependence on imports. We are not as

optimistic here as the administration’s position in

the National Energy Strategy. In particular, the

National Energy Strategy projects that the implementation of its domestic oil production policies

along with assumed increases in the use of alternative fuels will lower net crude imports to just under

41 percent of domestic demand by 2010.7 As this

National Energy Strategy projection of slackening

import dependence is largely based on assumptions

about domestic production increases from enhanced

oil recovery technologies and yet unverified Arctic

National Wildlife Refuge reserves, OTA considers

this drop in the level of oil imports improbable and

optimistic. Coupled with aggressive efficiency efforts, however, this projection would appear more

reasonable. In the following chapters we outline the

technology dimensions inherent in alternative strategies for reducing import dependence.

Linking U.S. Energy Strategy to Global

Climate Concerns

For decades we assumed that fossil fuels could

supply our energy needs for several more centuries.

Our only serious “bet-hedging” to fossil fuels has

been nuclear power—fission and fusion. While the

latter goal remains frustrating and elusive, the

former now accounts for 20 percent of U.S. electricity, or about 8 percent of our total primary energy

budget. Other nonfossil (mostly hydroelectric and

biomass) fuels add another 8 percent, so our present

nonfossil energy budget is about 16 percent. But the

nuclear fission power enterprise, as noted earlier, is

in deep trouble. Our long-term efforts to harness

solar energy have been inadequate to produce

options that could be widely deployed at reasonable

cost.

The rising specter of air pollution and climate

change creates added concerns for continued reliance on fossil fuels. This means that renewed efforts

to develop solar and nuclear power (fission and

fusion) must be considered. Developing and preserving nuclear and solar options are certainly

possible, but they will require long-term commitments of research, development, and investment.

The OTA report Changing by Degrees: Steps To

Reduce Greenhouse Gas Emissions outlines the

technical steps that would be necessary to reduce

U.S. carbon dioxide emissions.

% its integrated analysis of proposed policy options, the National Energy Strategy projects that total U.S. oil demand in 2010 will amount to 19.2

million barrels/day (MMB/D), while net imports in that year will be only 7.8 MMB/D. National Energy Strategy, op. cit., footnote 2, pp. C22-C23.
Chapter 1--Introduction: The Changing Context for Energy Technology Policy . 19

CONCLUSIONS

In addition to providing for contingencies and

interruptions, a priority policy consideration is to

decide whether it is wise to constrain the growing

U.S. appetite for imported oil. Another key policy

avenue is the need to make an explicit commitment

to a smooth, multidecade transition to the postfossil

fuel age as well as an era of constantly advancing

energy productivity. If we want to accomplish such

goals at minimum cost, it will take more than a

decade from whenever we start to stabilize our

dependence on imported oil, and it will take a

half-century or more to get beyond fossil fuels.

Our long-term economic, environmental, and national security future hangs on such transitions,

and the specter of global warming could greatly

foreshorten the time we once thought we could

depend on coal and other carbon-rich fossil fuels.

The relationships among the long-term goals of

economy, environment, and security provide some

important guiding principles-principles from

which a systematic, integrated, and comprehensive

energy strategy, which is responsive to all three

goals, can logically follow. In the following chapters

we examine the technology dimensions of affecting

these transitions.
Chapter 2

Technologies Affecting Demand
CONTENTS

Page

U.S. ENERGY USE . . . . . . . . . . . . . . . . . . . . ....23

Changes in Energy Use From 1972 To 1988.23

Future Energy Use . . . . . . . . . . . . . . . . . . . . . . . 26

Energy Use by Sector-An Overview ....., 27

OPPORTUNITIES FOR ENERGY

EFFICIENCY IMPROVEMENTS IN THE

RESIDENTIAL AND COMMERCIAL

SECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Opportunities for Improving Space Heating

and Cooling Efficiency . . . . . . . . . . . . . . . . . 30

Opportunities for Improving Building

Envelope Efficiency . . . . . . . . . . . . . . . . . . . . 32

Opportunities for Improving Water Heating

Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Opportunities for Improving Lighting

Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Opportunities for Improving Appliance

Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Opportunities for Improving Energy

Management and Control Systems . . . . . . . 37

OPPORTUNITIES FOR ENERGY

EFFICIENCY IMPROVEMENTS IN THE

INDUSTRIAL SECTOR . . . . . . . . . . . . . . . . . . 37

Computer Control and Sensors . . . . . . . . . . . . 38

Waste Heat Recovery . . . . . . . . . . . . . . . . . . . . . 38

Cogeneration ● . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Separation . .........,...,..,,.....,,.,. . 40

Catalytic Reaction . . . . . . . . . . . . . . . . . . . . . . . . 40

Combustion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Electric Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Pulp and Paper Industry ...................42

Petroleum Refining Industry ..............43

Steel Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Chemicals Industry . . . . . . . . . . . . . . . . . . . . . . . 45

OPPORTUNITIE S FOR ENERGY

EFFICIENCY IMPROVEMENTS IN THE

TRANSPORTATION SECTOR ...........46

Automobile Efficiency . . . . . . . . . . . . . . . . . . . . 46

Heavy-Truck Efficiency . . . . . . . . . . . . . . . . . . . 47

Aircraft Efficiency . . . . . . . . . . . . . . . . . . . . . . . 47

Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . 49

OTHER FACTORS THAT AFFECT

ENERGY USE . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Page

Environmental Concerns . . . . . . . . . . . . . . . . . . 54

Appliance Efficiency Standards . . . . . . . . . . . . 55

Building Energy Codes . . . . . . . . . . . . . . . . . . . . 56

Corporate Average Fuel Efficient (CAFE)

Standards . . . . . . ., . . . ., . . ., ., ., 57

Electric Utility Programs-Demand-Side

Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Oil Supply and Price Uncertainties . . . . . . . . . 58

Fuel Switching . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Figures

Figure Page

2-1. Furnace Replacement Accumulated

Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

2-2. Potential Energy Savings With Improved

Sensor Technology . . . . . . . . . . . . . . . . . . . . . 38

Table

2-1.

2-2.

2-3.

2-4.

2-5.

2-6.

2-7.

2-8.

2-9.

2-1o.

2-11.

2-12.

Tables

Page

Technologies Affecting Demand . . . . . . . 24

Energy Overview, Selected YearS,

1970-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Consumption of Energy by Sector,

1970-89 . .............,... . 26

Household Energy Consumption by

Application and Fuel Source, 1978,

1980-82, 1984, and 1987.......,,.... 28

Comparison of Residential Energy Use

Forecasts . 29

Comparison of Commercial Energy Use

Forecasts . . . . * . . . . . * * . . . ., * * . . . . . . . . . . 29

Estimated Energy Used To produce Paper

and Paperboard Products . . . . . . . . . . . . . . 42

Technologies for Improving Energy

Efficiency in the Steel Industry . . . . . . . . 45

Energy-Intensive Processes in chemical

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . 46

Reported Efficiency Improvements

for Developed or Near-Term Technology. 48

Pros and Cons of Alternative Fuels . . . . 50

Cumulative Energy Impacts of the

National Appliance Energy Conservation

Amendments of 1988, 1990 to 2015 . . . 56
Chapter 2

Technologies Affecting Demand

After the oil crises of the 1970s, the United States

made tremendous strides in improving energy efficiency. This was accomplished by technological

advances in energy-using equipment and production

processes and structural shifts in the economy

toward less energy-intensive products and services.

By the mid-1980s, however, stable oil prices and

supplies shifted the Nation’s focus away from

energy efficiency to other issues. As a result, energy

use began to rise and energy efficiency improvements slowed. Many opportunities for improving

efficiency were not realized. Recent events in the

Middle East have renewed concerns about U.S.

dependence on foreign energy supplies and stimulated interest in energy efficiency. There are a

variety of technologies that have the potential for

improving energy efficiency over the next 20 years.

New technologies are constantly being added. This

chapter describes some of these technologies. (See

table 2-l.) But first, the chapter characterizes energy

use today, the changes that have occurred since the

early 1970s, and what we can expect in the future.

Also, this chapter discusses nontechnical factors that

influence energy use.

U.S. ENERGY USE

In 1989, the United States used a record-breaking

amount of energy. (See table 2-2.) Low oil prices

stimulated economic growth (3 percent in 1989) and

an increase in energy demand. Petroleum consumption accounted for the lion’s share (42 percent) of

total U.S. energy use. Natural gas use rose substantially, while coal use registered a slight increase

from 1988 to 1989.1

Net energy imports also grew, with petroleum

accounting for most of the trade. Petroleum net

imports reached their highest level since 1979,

accounting for 41 percent of U.S. crude oil demand

in 1989. Record energy use and a slight decline in

domestic production accounted for the increase.2

The U.S. Department of Energy (DOE) indicates

that petroleum net imports for 1990 declined by

2 percent.3

All sectors of the economy experienced increased

energy use in 1989. In fact, the residential/

commercial and transportation sectors used more

energy than ever before.4 (See table 2-3.) While

energy use increased, energy intensity5 declined by

1.7 percent. According to the U.S. Energy Information Agency (EIA), favorable weather conditions

contributed to the decline.

Changes in Energy Use From 1972 To 19886

From 1972 to 1988, two trends in energy consumption are discernible. The frost trend, from 1972

to 1985, can be characterized by decreasing energy

use per dollar of gross domestic product (GDP) and

rising energy prices. This was a departure from the

1950s and 1960s when energy use and GDP

increased at the same rate. From 1985 to 1988, the

trend of steady decreases in energy intensity was

broken.

Changes in Energy Use From 1972 To 1985

Between 1972 and 1985, energy use remained

essentially flat (0.3 percent per year) while the

economy experienced an average growth rate of

2.5 percent per year. This relatively flat level of

energy use coupled with economic growth resulted

in a drop in energy intensity by 2.4 percent per year

or about 25 percent over this period. Fuel use also

changed during this period. An almost nearly equal

increase in coal and electricity use was offset by a

relatively large decrease in crude oil and natural gas

consumption.

The implementation of energy efficiency improvements in production processes and structural

shifts in the economy toward less energy-intensive

W.S. Enqy reformation AdminiS&ation, Department of Energy, Annual Energy Review 1989, DOE/EIA-0384(89), my 24, 1990, P. 1.

%id., p. 2.

3u.s. Ener~ reformation Administration, MOMMY Energy Review March J991, DOE/EIA-0035(91 /03), Mm. 28, 1991.

4u.s. &erg rnformar.ion Administration, op. cit., footnote 1.

sEnergy intemi~ is defined M the Wout of energy used per net unit of economic value (e.g., Btu per dolk of grOSS domestic product).

6Much of the ~omtion~ this ~tion is draw from the OTA repo~ Energy ~~e and the Us. ECOMWZZy, OTA-BP-E-57 (wWhklgtOQ DC: U.S.

Government Printing Office, June 1990).

–23–
24 ● Energy Technology Choices: Shaping Our Future

Table 2-l—Technologies Affecting Demand

Technology Sector Availability Comments

Variable speed heat pump . . . . Residential/commercial C,N Improves energy efficiency and provides more flexible control.

Scroll-type compressors (heat

pump/air conditioning) . . . . . .

Thermally active heat pump. . .

Low-emissive windows . . . . . . .

Heat pump water heaters. . . . .

Alternative insulation materials.

Refrigerator insulation. . . . . . . .

Efficient lighting products . . . . .

Building energy management

and control systems . . . . . . .

Industrial process changes:

—Separation . . . . . . . . . . . . .

-Catalytic reaction . . . . . . . .

—Computer control and

sensors . . . . . . . . . . . . . . .

Advanced turbine:

—Steam-injected gas turbine

(STIG) . : . . . . . ;. . . . . . . . .

—Intercooling (ISTIG) . . . . . .

Electric motors . . . . . . . . . . . . . .

2-stroke engine . . . . . . . . . . . . .

Direct injection/adiabatic

diesel . . . . . . . . . . . . . . . . . . .

Ultra-high bypass engines . . . .

Alternative fuels:

Residential/commercial

Residential/commercial

Residential

Residential/commercial

Residential

Residential

Residential/commercial

Residential/commercial

Industrial

Industrial

Industrial

Industrial/utility

Industrial/utility

Industrial

Transportation

Transportation

Transportation

—Alcohol fuels . . . . . . . . . . . . Transportation

—Electricity. . . . . . . . . . . . . . . Transportation

C

C,R

c

R

R

C,N,R

C,N

C,N,R

C,N,R

C,N

C,N

c

R

C,R

c

‘Widely used in Japan. Increasing market share in United States.

Newer scroll-type compressors are 10 to 20 percent more efficient

than reciprocating ones. Widely produced in Japan.

Could have significant impact in 10 to 20 years.

Significant impact on reducing thermal energy loss in homes.

Research needed on improving durability, lowering emittance,

and reducing condensation.

Offers significant reduction in electricity use; premium cost.

Commonly used in Scandinavia.

Needed to counter loss of chlorofluorocarbon-blown insulation.

Now being developed and tested.

Greatest potential for appliance efficiency improvements. New

products include vacuum insulation, compact vacuum

insulation, and soft vacuum insulation.

Combination of lighting options can cut commercial energy use

significantly. Improved fluorescent, compact fluorescents, and

electronic ballasts commercially available. Research and

development continuing on improving phosphors.

Greatest potential for savings in the commercial sector. Advances

in this technology have been continual.

Improvements in separation and control, and the use of membrane

technology and solvent extraction could reduce energy use

considerably.

By increasing reaction rates, lower temperatures and pressures can

be used that reduce heating and compression requirements.

Discover and use of new synthetic zeolites have contributed to

energy efficiency gain in petroleum refining and chemicals

industries.

Improved monitoring and control optimizes conversion and

distribution of energy. Potential savings range from 5 to 20

percent.

Currently used in cogeneration applications.

Has potential to raise efficiency to about 50 percent. Maybe better

suited for utility applications; pilot-plant stage.

Adjustable-speed drive and new high-efficiency motors account for

about half of the total potential savings in U.S. motors.

Holds promise for long term. Questions remain about ability of

engine to comply with emissions standards.

Limited passenger car application in Europe; offers considerable

efficiency improvements for both light-duty vehicles and heavy

trucks. Questions remain regarding meeting more stringent

emission standards.

Can raise efficiency by about 20 percent but costs two times as

much as current generation bypass engines.

C,N,R Use of methanol and ethanol should result in greater engine

efficiency but costs are higher.

. , R Big greenhouse advantage if derived from nuclear or solar energy.

KEY: C = commercial; N = nearly commercial; R = research and development needed.

SOURCE: Office of Technology Assessment, 1991.

industries were primarily responsible for lowering production processes that indirectly saved energy. If

energy intensity and changes in fuel use during this energy efficiency improvements had not been impleperiod. About two-thirds of the decline in energy mented during this period, the United States would

intensity can be attributed to energy efficiency have required 20 percent more energy in 1985 to

improvements. The remaining third came from a produce its output.

shift in the economy caused by changes in consumer Energy consumption per household declined as

demand and by technological improvements in well. A decrease in use of distillate fuel oil and
Chapter 2—Technologies Affecting Demand .25

Table 2-2—Energy Overview, Selected Years, 1970-89 (quadrillion Btu)

Activity and energy source 1970 1975 1980 1985 1986 1987 1988 1989

Production:

Crude oil and lease condensate . . . . . . . .

Natural gas plant liquids . . . . . . . . . . . . . .

Natural gasa. . . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nuclear electric power. . . . . . . . . . . . . . . .

Hydroelectric power . . . . . . . . . . . . . . . . . .

Otherb . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total production . . . . . . . . . . . . . . . . . .

Imports:

Crude oilc

. . . . . . . . . . . . . . . . . . . . . . . . . .

Petroleum productsd . . . . . . . . . . . . . . . . .

Natural gas , . . . . . . . . . . . . . . . . . . . . . . . .

Other e . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total imports . . . . . . . . . . . . . . . . . . . . . .

Exports:

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Crude oil and petroleum products . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total exports . . . . . . . . . . . . . . . . . . . . .

Adjustments . . . . . . . . . . . . . . . . . . . . . . .

Consumption:

Petroleum productsh . . . . . . . . . . . . . . . . .

Natural gas.... . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nuclear Power.. . . . . . . . . . . . . . . . . . . . .

Hydroelectric poweri . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total consumption . . . . . . . . . . . . . . . . .

20.40

2.51

21.67

14.61

0.24

2.63

0.02

62.07

2.81

4.66

0.85

0.07

8.39

1.94

0.55

0.18

2.66

–1.37

29.52

21.79

12.26

0.24

2.65

–0.04

66.43

17.73

2.37

19.64

14.99

1.90

3.15

0.07

59.86

8.72

4.23

0.98

0.19

14.11

1.76

0.44

0.16

2.36

–1.07

32.73

19.95

12.66

1.90

3.22

0.09

70.55

18.25

2.25

19.91

18.60

2.74

2.90

0.11

64.76

11.19

3.46

1.01

0.31

15.97

2.42

1.16

0.14

3.72

-1.05

34.20

20.39

15.42

2.74

3.12

0.08

75.96

18.99

2.24

16.91

19.33

4.15

2.94

0.21

64.77

6.81

3.80

0.95

0.54

12.10

2.44

1.66

0.14

4.23

1.31

30.92

17.83

17.48

4.15

3.36

0.20

73.95

18.38

2.15

16.47

19.51

4.47

3.02

0.23

64.23

9.00

4.20

0.75

0.48

14.43

2.25

1.67

0.14

4.05

-0.36

32.20

16.71

17.26

4.47

3.39

0.21

74.24

17.67

2.22

17.05

20.14

4.91

2.59

0.24

64.82

10.07

4.10

0.99

0.60

15.76

2.09

1.63

0.13

3.85

0.12

32.87

17.74

18.01

4.91

3.07

0.25

76.84

17.28

2.26

17.49

20.74

5.66

2.31

0.23

65.97

11.03

4.72

1.30

0.52

17.56

2.50

1.74

0.17

4.41

1.08

34.23

18.55

18.85

5.66

2.64

0.27

80.20

16.12

2.16

17.78

21.35

5.68

2.77

0.22

66.07

12.60

4.57

1.39

0.40

18.95

2.64

1.84

0.29

4.77

1.10

34.20

19.40

18.90

5.70

2.92

0.20

81.35

aDry natural gas. b[n~~e~elwt~itypr~uc~from g~~therma~w~,wa$te,~nd, photovolta~,and~larthermal $oUrce$connectedtodechic utilitydistribution systems

(see note below). clnd~e$inlpor~ ofmdeofl forthe Strategic Petroleum Reserve, which began in1977.

d[n~~e$imv~$ofu~ini$h~ oils and natural gasplantliquids.

elncl~e$ coal, coal coke, and hydroelectric power.

flndudes natural gas, coal coke, and hydroelectric Power.

9A balancing item. Includes stock changes, losses, gains, miscellaneous blending components, and unaccounted for supply.

hpetroleum pr~ucts suWli~ includes natural gas pla~ I@uids and cruds oil burned as fuel.

il~l~= industrial generation of hydroelectric power and electricity imports.

jlncludes electricity produced from geothermal, wood, waste, wind, Photovoltaic, and solar thermal sources connected to electric utility distribution systems

(see note below) and net imports of ma] coke.

NOTE: Data do not indude the consumption of wood energy (other than that consumed by the electric utility industry), which amounted to an estimated 2.4

quadrillion Btus in 1987. This table also does not indude small quantities of other energy forms for which consistent historical data are not available,

such as geothermal, waste, wind, photovoltaic, or solar thermal energy sources except that consumed by electric utilities. Sum of components may

not equal total due to independent rounding.

SOURCE: U.S. Energy Information Administration, Annua/ Energy Review 1989, DOE/EIA-0384(89) May 24, 1990; hfcmthfy Energy Review Apri/ 1991,

DOE/El&O035 (91/04), Apr. 26, 1991, p. 17.

kerosene accounted for most of the decline.7 Higher

oil prices triggered conservation, efficiency improvements, and fuel switching. The two recessions

that occurred during this period also helped to

restrain consumption. The OTA report Energy Use

and the U.S. Economy provides a detailed discussion

of shifts in energy use over the last two decades and

what is likely to happen in the future.

Changes in Energy Use From 1985 To 1988

Energy use increased by 8 percent, a significant

departure from the previous 13-year trend. More

than half of the increase was supplied by petroleum.

All sectors of the economy contributed to the

increase. Although energy use rose, energy intensity

continued to drop because of the pace of economic

growth (11 percent in 3 years). But the level of

W.S. Energy Information Administration, op. cit., footnote 1, p. 19.
26 ● Energy Technology Choices: Shaping Our Future

Table 2-3-Consumption of Energy by Sector,a 1970-89 (quadrillion Btu)

Residential Electric

Year and commercialbIndustrial b Transportation b

utilities Total

1970 . . . . . . . . . . . . . . . . . . . . . . .

1971 . . . . . . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . . . . . . .

1973 . . . . . . . . . . . . . . . . . . . . . . .

1974 . . . . . . . . . . . . . . . . . . . . . . .

1975 . . . . . . . . . . . . . . . . . . . . . . .

1976 . . . . . . . . . . . . . . . . . . . . . . .

1977 . . . . . . . . . . . . . . . . . . . . . . .

1978 . . . . . . . . . . . . . . . . . . . . . . .

1979 . . . . . . . . . . . . . . . . . . . . . . .

1980 . . . . . . . . . . . . . . . . . . . . . . .

1981 . . . . . . . . . . . . . . . . . . . . . . .

1982 . . . . . . . . . . . . . . . . . . . . . . .

1983 . . . . . . . . . . . . . . . . . . . . . . .

1984 . . . . . . . . . . . . . . . . . . . . . . .

1985 . . . . . . . . . . . . . . . . . . . . . . .

1986 . . . . . . . . . . . . . . . . . . . . . . .

1987 . . . . . . . . . . . . . . . . . . . . . . .

1988 . . . . . . . . . . . . . . . . . . . . . . .

1989 . . . . . . . . . . . . . . . . . . . . . . .

21.71

22.59

23.69

24.14

23.72

23.90

25.02

25.39

26.09

25.81

25.65

25.24

25.63

25.63

26.50

26.73

26.83

27.62

29.00

29.50

28.63

28.57

29.86

31.53

30.69

28.40

30.24

31.08

31.39

32.61

30.61

29.24

26.14

25.75

27.73

27.12

26.64

27.87

29.01

29.46

16.09

16.72

17.71

18.60

18.12

18.25

19.10

19.82

20.61

20.47

19.69

19.51

19.07

19.13

19.87

20.10

20.76

21.36

22.19

22.38

16.27

17.15

18.52

19.85

20.02

20.35

21.57

22.71

23.72

24.13

24.50

24.76

24.27

24.96

25.98

26.48

26.64

27.55

28.63

29.20

66.43

67.89

71.26

74.28

72.54

70.55

74.36

76.29

78.09

78.90

75.96

73.99

70.85

70.52

74.10

73.95

74.24

76.84

80.20

81.35

aDatadonotindude~nsum@ion ofwoodenergy(otherthan thatconsumed bytheelectric utility industry) which amounted toan=timatd 2.4qudrillbn

Btuin1987.Thistabledoesnotindudesmallquantities ofotherene~yformsforwhich~mistenthkton~l&taarenotavaNable,su&~~otherma~We,

wind, photovoltaic, orsolarthermal energy sources except that consumed byeleettic utilities.

blnd~estho~fo~flfuels ~nsum~dir~t[y in thesector, utility electricity salestothesector, and energy losses intheconversion and transmission of

electricity.Conversionand transmission losses areallocated tosectors in proportionto electricity salestosectors.

NOTE: Sum of components may not equal total due to independent rounding.

SOURCE: U.S. Energy Information Administration, Amtua/ Enegy Review 1989, DOE/EIA-0384(69), May 24, 1990; MorIth/y Energy Review Apn/ 7991,

DOE/EtA-0035 (91/04), April 26,1991, p. 35.

decline slowed considerably to -0.8 percent per year

during this period.

An increase in the level of overall spending and a

shift in spending toward more energy-intensive

products are two of the factors that contributed to the

increase in energy use. For example, Federal Government spending dramatically changed as nondefense purchases fell by 16 percent over the 3-year

period, and defense purchases grew by 1O percent. In

addition, household spending shifted away from

nondurable to durable goods like furniture and

electronics. OTA found no evidence that businesses’

energy efficiencies declined during this period.

Future Energy Use

Increases in energy use should be less in the future

than what was experienced between 1985 and 1988,

when the annual gross national product (GNP)

growth rate was 2.9 percent. The U.S. Department of

Labor’s moderate economic growth scenario assumes a 2.3 percent GNP growth rate for 1988-2000.

In addition, structural changes that result in less

energy use and improvements in energy efficiency

are likely to continue in the future.

The impact of technology on future energy use is

speculative. A variety of energy-saving technologies

are available and have the potential for significant

energy efficiency gains. The critical factor is

whether there is a willingness to implement these

technologies. Implementation or adoption will depend on the costs of the technology and the energy

it saves, government policies, and consumer acceptance.

Moreover, business decisions to invest in energysaving technologies are made in the context of many

other competing criteria. Industry makes investment

decisions that affect energy efficiency on the basis of

a strategic planning process that considers not only

energy costs but also a number of other factors. The

most important of these factors are perception of

product demand and competition; the cost of capital,

materials, and labor; and government policy.8

W.S. Congress, Office of Technology Assessmen6 Industrz”aZ Energy Use, OTA-13198 (WSShingtom DC: U.S. Government Printing Offke, June

1983), p. 9.
Chapter 2—Technologies Affecting Demand ● 27

Energy Use by Sector—An Overview

Residential/Commercial Sector

In 1989, energy use in the residential and commercial sectors accounted for about 36 percent of

total U.S. energy use. (See table 2-3.) Space heating

and cooling accounted for almost 59 percent of the

total energy used in the residential sector in 1987

(the most recent year for which data are available),

as shown in table 2-4.9

Natural gas is the primary energy source for space

heating in the residential sector. Electricity is

essentially the only energy source for air conditioning and the major source for appliances, which

commonly include refrigerators, TVs, ovens, and

clothes washers.

In the commercial sector, a few end-uses account

for a major portion of total energy use: space

heating, cooling and ventilation, and lighting. Electricity is the predominant energy source in commercial buildings, followed by natural gas. In 1986 (the

most recent year for which data are available),

electricity accounted for almost half of total commercial sector energy use, followed by natural gas

(34 percent) and fuel oil (9 percent).10

From 1979 to 1986, energy consumption per

household declined considerably. A number of

factors were responsible for the 20-percent drop in

residential energy intensity: reduced household size,

improved shell and equipment efficiencies, and

lifestyle changes. In the commercial sector, energy

use per square foot declined from 115,000 Btus in

1979 to about 89,000 Btus in 1986. The 23-percent

drop in commercial energy intensity was the result

of efficiency improvements in new buildings and

retrofits to existing ones. Geographical shifts and the

changing mix of commercial buildings also contributed to the decrease.11

The energy intensity of commercial buildings will

probably continue to decrease as new, more efficient

technologies are absorbed and new construction

practices are implemented, but the level of decline

will slow due to the proliferation of electronic

equipment, such as personal computers, copiers, and

communications equipment. From 1984 to 1989, the

number of computer workstations increased from

6.5 to 25.3 million.12 Modern office equipment now

requires as much electricity as is used for lighting. In

addition, some modern, more powerful electronic

equipment may require more electricity than older

models. For example, a laser printer requires 5 to 10

times as much electricity as an old impact printer.

And, more powerful desktop computers use almost

two times as much electricity as the previous

generation.

A number of organizations forecast residential

and commercial energy use. A few of these are

presented in tables 2-5 and 2-6. Each of the forecasts

took into account a number of variables, including

energy prices, GNP growth, and building and

housing stock expansion. With the exception of the

American Gas Association (AGA) forecast, residential electricity demand was projected to rise. The

electrification of space and water heating was cited

as one of the major reasons for the increase in

electricity demand. AGA projected no increases in

residential electricity demand from the period 1985

to 2000.13

These forecasts for commercial energy use are in

general agreement for 2000; however, by 2010

forecasts diverge. The variations are a result of

different assumptions, perspectives, and forecasting

approaches. For example, the EIA forecast assumes

electricity prices decrease at an average rate of 0.7

percent per year, while the AGA assumes electricity

prices increase at an average rate of 1.9 percent per

year.

14

A variety of energy-efficient products and systems have been developed and commercialized over

the past decade. These and new promising energy

efficiency developments are the focus of the section

$TJ.S. Energy Information Administration, op. cit., footnote 1, p. 43.

WIbid., p. 57.

l%id., p. 41.

W.S. Department of commerce, Bureau of the Census, Statistical Abstract of the United States 1990, lloth Edition Washington DC: U.S.

Government Printing Office) 1990, “Computers in the Oftlce,” special feature.

lsHoward S. Geller, American COUIICil for an Energy-Efficient Economy, Residential Equipment Eficiency: A State-of-the-Art Revt”ew, COnh’ilCtOr

report prepared for the Office of Technology Assessmen4 May 1988, pp. 39-40.

lhHow=d s. ~ller, ~encw Comcil for ~ ~er~.Efficient ~nomy, co~rcial Buil~”ng E@pwnt EfiCiency: A State-of-the-Art Review,

contractor report prepared for the OffIce of Tedmology Assessment, May 1988, p. 3.
28 ● Energy Technology Choices: Shaping Our Future

Table 2-4-Household Energy Consumption by Application and Fuel Source, 1978,1980-82, 1984, and 1987

Consumption (quadrillion Btu)

Application and fuel source 1978 1980 1981 1982 1984 1987

Space heating:

Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.26

Electricity a, ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.41

Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . . . 2.05

Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.23

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.95

Air conditioning.b

Electricitya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.31

Water heating:

Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04

Electricity a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29

Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . . . 0.14

Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.06

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.53

Appliances:

Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28

Electricity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.46

Liquefied petroleum gases . . . . . . . . . . . . . . . . . . . . . . 0.03

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.77

Totalb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.56

Natural gasb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.58

Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.47

Distillate fuel oil and kerosene . . . . . . . . . . . . . . . . . 2.19

Liquefied petroleum gases. . . . . . . . . . . . . . . . . . . . 0.33

3.32

0.28

1.32

0.25

5.17

0.32

1.24

0.31

0.24

0.07

1.86

0.38

1.55

0.04

1.97

9.32

4.94

2.46

1.55

0.36

3.81

0.30

1.13

0.22

5.45

0.33

1.10

0.33

0.21

0.06

1.69

0.49

1.53

0.03

2.05

9.51

5.39

2.48

1.33

0.31

3.31

0.27

1.05

0.19

4.81

0.30

1.08

0.33

0.09

0.06

1.56

0.39

1.52

0.04

1.95

8.62

4.77

2.42

1.14

0.29

3.51

0.30

1.10

0.21

5.13

0.36

1.10

0.32

0.15

0.06

1.62

0.35

1.53

0.04

1.92

9.04

4.98

2.48

1.26

0.31

3.38

0.28

1.05

0.22

4.94

0.44

1.10

0.31

0.17

0.06

1.64

0.34

1.72

0.04

2.10

9.13

4.83

2.76

1.22

0.32

alnd~es elWt~ity generat~ for distrihtion from wood, waste, geothermal, wind, photovoltaic, and Soiar thermal elwttiity.

b[nd~es a small amount of natural gas used for air conditioning.

NOTE: Sum of mmponents may not equal total due to independent rounding.

SOURCE: U.S. Energy Information Administration, Annudf%ergy Review 1989, DOE/EIA-0384(89) May 24, 1990.

“Opportunities for Energy Efficiency Improvements in the Residential and Commercial Sectors. ”

Industrial Sector

In 1989, energy use in the industrial sector

accounted for about 36 percent of total U.S. energy

use.

15 Energy is used for direct heat, steam generation, machinery operation, and feedstocks. Oil is

frequently used for the production of direct heat or

steam generation. Coal is used more for steam

generation. Natural gas is dominant in mining and

manufacturing because it burns cleanly and is

available. Natural gas has also been used as a

feedstock for fertilizers. Electricity is primarily used

for motors.

Over the years, the industrial sector has continued

to rely on these three fossil fuels and electricity, but

their relative contributions have changed. For example, coal accounted for a 26-percent share of

industrial energy in 1960 but registered only a

13-percent share in 1989. From 1960 to 1989,

petroleum’s share ranged from 33 to 41 percent to its

present 37-percent share. Natural gas use was very

similar to that of petroleum. During the same period,

electricity use increased from 7 to 14 percent.16

Since 1972, the industrial sector has takennumerous steps to reduce its energy use per unit of output.

A number of process changes and the application of

new technologies, such as sensors and control

systems, heat recovery systems, and continuous

steel casting have improved energy efficiency. For

example, U.S. industries used less energy in 1985

than in 1963 to produce the same mix and level of

products. A discussion of promising energyefficient technologies follows in the section “Opportunities for Energy Efficiency Improvements in

the Industrial Sector.”

Transportation Sector

In 1989, the transportation sector accounted for

about 27 percent of total energy consumption in the

United States. The sector, which is almost totally

15u.s. FMag Information Administration op. cit., footnote 1, p. 13.

161bid., p. 21.
Chapter 2—Technologies Affecting Demand ● 29

Table 2-5-Comparison of Residential Energy Use Forecasts

Primary energy use (quadrillion Btu)

Forecast 1985 1990 2000 2010

Lawrence Berkeley Laboratory (1987,)a . . . 15.5 17.0 18.0 19.9

U.S. Department of Energy (1985)b. . . . . . — 17.8 19.8 21.3

U.S. Energy Information Administration

(1987) C . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 16.9 18.6 —

Data Resources, Inc. (1986)d 

. . . . . . . . . . . 15.0 16.8 17.9 18.7

Gas Research Institute (1985)e 

. . . . . . . . . . — 16.9 17.8 18.7

American Gas Association (1986)f 

. . . . . . . 14.3 13.8 14.8 —

Oak Ridge National Laboratoryg . . . . . . . . . 16.0 17.2 18.4 20.4

National Energy Strategyh

. . . . . . . . . . . . . . — 18.2 (20.8) 23.3

a~mputer ~n provided by Jim McMahon, Lawrence Berkeley Laborato~, Berkeley, CA, November 1987.

b~f-ce of planning, poliq and Ana&sis, U.S. Department of Energy, “National Energy Policy Plan Projections to the

Year 2010,” Washington, DC, 1985.

CU.S. Energy Information Administration, “Annual Energy Outlook 1987,” DOE/EIA-0363(87), Washington, DC, March

1988 (base case).

dData Resources, Inc., “Energy Review,” Lexington, MA, summer 1966.

eG= Resear& Instit@e, ‘11987 GRI Baseline proj~tion of IJ.S. Energy SUpply and Demati to 2010,” Chicago, IL,

December 1987. (Not including wood and other renewable energy sources.)

fAmeri~n Gas Ae~ation, “AGA-TERA Base Case 1986-l,” Artington, VA, January 1986.

9X Ridge National Laboratory, “Energy Efficiency: How Far Can We Go?” ORNUTM-1 1441, January 1990, p.7.

hNational Energy strategy, First Edition 1~1/1992 (Washington, DC: IJ.s. Government printing office, February

1991), p. C-l 5. NOTE: Year 2000 NES projection inte~lated from 1990 and 2010 figures.

SOURCES: Brookhaven National Laboratory, “Analysis and T=hnology Transfer Annual Report-1986,” Upton, NY

August 1987; and other references cited above.

Table 2-6-Comparison of Commercial Energy Use Forecasts

Primary energy use (quadrillion Btu)

Forecast 1985 1990 2000 2010

Lawrence Berkeley Laboratory (1987)a 

. . . 11.6 13.3 15.8 18.5

U.S. Department of Energy (1985)b . . . . . . — 13.3 16.1 18.0

U.S. Energy Information Administration

(1987)C . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 12.8 15.4 —

Data Resources, Inc. (1986)d 

. . . . . . . . . . . 11.5 12.8 14.6 17.4

Gas Research Institute (1985)e . . . . . . . . . . — 12.2 14.0 16.7

American Gas Association (1986)f 

. . . . . . . 12.7 13.3 15.6 —

Oak Ridge National Laboratoryg . . . . . . . . . 10.8 13.1 16.0 18.8

National Energy Strategyh. . . . . . . . . . . . . . — 13.8 (17.6) 21.3

apacific Northwest Laboratory Commercial Energy USS Model.

boff~e of planning, po[iq and Ana&sis, U.S. Department of Energy, “National Energy Poliq Plan Projections to the

Year 2010,” Washington, DC, 1985.

CIJ.S. Energy Information Administration, “Annual Energy Outlook 1987,” DOE/EIA-0888(87), Washington, ~, Mar*

1988 (base case).

dData Remurcm, IN., “Energy Review,” Lexington, MA, summer 1966.

eG= Resear~ lnstit~e, ‘11987 GRI Baseline proj~tion of fJ.S. Energy Supp& and Demati to 2010,” Chicago, IL,

December 1987. (Not including renewable energy sources.)

fAmeri~n Gas ~s~ation, “AG&TERA Base Case 1986-l,” Arlington, VA, January 1986.

90ak R“dge National Laboratory, “Energy Efficiency: How Far Can We Go?” ORNIJTM-1 1441, January 1990, p.7.

hNational Energy strategy, First Edition lggl/1992 (Washington, f)c: U.S. Government printing Offim, February

1991), p. c-15.

NOTE: Year 2000 NES projection interpolated from 1990 and 2010 figures.

SOURCES: Brookhaven National Laboratory, “Analysis and Technology Transfer Annual Report-1986,” Upton, NY

August 1987; and other references cited above.

dependent on petroleum, used 10.85 million barrels total U.S. automobile fleet alone accounts for about

per day in 1989, which is more than the United States 30 percent of all U.S. oil consumption; the total

produces domestically. Its share of total U.S. petro- light-duty fleet, which also includes vans and light

leum consumption was almost 63 percent.17 The trucks, accounts for about 39 percent. The automo1%id., p. 137.
30 ● Energy Technology Choices: Shaping Our Future

bile and light-duty fleets are the largest available

targets for reducing U.S. oil use.

Over the last two decades, tremendous strides in

automobile fuel efficiency have been made. The fuel

efficiency of the new car fleet has essentially

doubled between 1974 and today. The potential for

further reducing energy use in the transportation

sector is promising if the industry is given enough

lead time. A number of new energy-saving technologies are either on the market or under investigation.

They offer the potential to significantly improve

fleet fuel economy in the long term (by 2010). In

addition, recent interest in developing alternative

transportation fuels can have positive effects on

energy demand by diversifying fuel supplies and/or

reducing demand for gasoline. In the short term,

however, a number of factors are expected to slow

down the rate of efficiency improvement. These

include increasing sales of new high performance

and luxury cars, growth in the use of light trucks for

passenger travel, and a continued demand for certain

older car models. A discussion of promising technologies and alternative fuels follows in the section

“Opportunities for Energy Efficiency Improvements in the Transportation Sector. ’

OPPORTUNITIES FOR ENERGY

EFFICIENCY IMPROVEMENTS

IN THE RESIDENTIAL AND

COMMERCIAL SECTORS

From 1974 to 1986, technical advances in energyusing equipment and building construction practices

and materials have significantly improved energy

efficiency in the residential and commercial sectors.

High energy prices during this period were the

impetus for the rapid development and implementation of a variety of energy-saving technologies.

Strong government support for research and development (R&D) programs in energy efficiency also

contributed to accelerating technology development. However, considerable potential for energy

savings remains. In recent years lower energy prices

have slowed the rate of efficiency improvement and

dampened the prospects for near-term commercialization of new technologies. In addition, Federal

funding for energy technology R&D has declined

over the last decade. Increasing Federal R&D

support could accelerate the development and deployment of energy saving technologies. The following section discusses opportunities for improving energy efficiency in the residential and commercial sectors.

Opportunities for Improving Space Heating

and Cooling Efficiency

Space heating and cooling are the most energyconsuming applications in households and commercial buildings. Space heating alone accounts for

about two-thirds of total residential sector energy

use.

18

In homes and commercial buildings that use fuels

for space heating, newer more energy efficient

furnaces and boilers are already common. The Gas

Appliance Manufacturers Association (GAMA) estimates that about 47 percent of all new gas furnaces

sold have efficiency ratings of between 65 and 71

percent. Gas furnaces with efficiency ratings of 80

percent make up about 33 percent of the market, and

90-percent efficient furnaces make up about 20

percent of the market.l9 Since the early 1980s, these

highly efficient furnaces have been promoted by

manufacturers and relatively well-received by consumers.

The decision to purchase a super efficient furnace

must weigh the increase in initial cost against the

increased savings. An Illinois Department of Energy

and Natural Resources survey indicates that natural

gas furnaces in the 90+-percent efficiency range cost

on average about $2,100 to $2,600. An 80-percent

efficient furnace can be installed for an average of

about $1,500. A comparison of annual savings and

paybacks from furnace replacements is shown in

figure 2-1.20

The best modern furnaces are already close to

maximum efficiency (within 10 percent of maximum theoretical efficiency). Improvements in energy efficiency in the sector will depend less on new

technology than on encouraging people to use the

best available equipment.

In addition, older furnaces can be retrofitted to

achieve higher efficiencies by adding such features

181bid., p. 43.

l~e~ C. K@ and Nimk P. Hall, ‘‘Furnace Replacement: The High Effkkncy payOff,” Home Energy, vol. 7, No. 3, May/Jnne 1990, p. 22.

%id.
Chapter 2—Technologies Affecting Demand ● 31

Figure 2-l—Furnace Replacement Accumulated

Savings (60 percent efficient v. 80 and 92 percent)

Dollar savings (thousands)

I 1 1 1 , 1

3 4 5 6 7 8 9 10

Years after replacement

80% efficient + 92% efficient

80% payback ■ 92% payback

With 5-percent escalation included, 92 percent efficient furnaces take

2 years more to pay for themselves than the 80 percent efficient furnaces.

SOURCE: “Furnace Replacement: The High Cost Efficiency Payoff,”

Home Energy, vol. 7, No. 3, May/June 1990.

as flame-retention burners, electric ignition, power

burners, and condensing heat extractors. Flame

retention burners are a cost-effective measure for oil

furnaces. Double-digit energy savings with paybacks of 2 to 5 years are typical for this retrofit.

However, other retrofit programs have had mixed

success, indicating that investments have to be

chosen carefully .21

In homes and commercial buildings that use

electricity to space heat, heat pumps offer a major

opportunity for improving energy efficiency. Heat

pumps typically consume one-third to one-half as

much electricity for heating as do electric resistancebased systems. However, heat pumps operate at

cooler temperatures than furnaces, so the air from the

vents may feel drafty and heat the house more

slowly. In 1987, heat pumps were used in about 25

percent of all electrically heated housing units. The

number of commercial buildings with heat pumps

nearly doubled between 1983 and 1986.22

Current heat pump technologies do not operate

near their maximum theoretical efficiency. Thus, the

opportunities for improvement are significant. For

example, the development of variable speed controls

for capacity modulation will improve efficiency and

provide a better match between output and space

conditioning needs. One estimate notes that variable

speed heat pumps will use 25 to 50 percent less

electricity than typical heat pumps installed in the

mid-1980s. 23 Incorporating variable speed controls

also provides quieter operation, more flexible control, better dehumidification capability, and the

possibility of self-diagnostic features.

Variable-speed heat pumps have been available in

Japan since the early 1980s. About one-half of all

heat pumps in Japan use variable-speed control.24

Variable-speed heat pumps are also available in the

United States. The number of manufacturers offering this technology is growing; and newer, more

efficient models are continually being tested and

marketed.

Improvements in compressors for heat pumps and

air conditioners also promise to have higher efficiency rates than conventional types. For example,

newer scroll-type compressors have efficiencies of

10 to 20 percent higher than reciprocating compressors. In addition, scroll-type compressors are

smaller, lighter, and quieter. They are widely produced in Japan and are expected to be produced and

used in the United States in the near future.

The next major advance in heating/cooling technology may be the thermally active heat pumps

(TAHP). A TAHP is similar to a conventional

electric heat pump except that the electric motor is

replaced by ‘‘something” that burns fuel, e.g., an

internal combustion engine. Two of the advantages

of TAHPs are that they can use a variety of fuels, and

they are more efficient than a comparable electric

system. TAHPs use exhaust heat from the engine to

supplement the heating cycle.25 TAHPs could have

a significant impact on residential and commercial

energy use in the next 10 to 20 years, but they will

21sm Coheq “Fifty Million Retrofits Lder, ” Home Energy, vol. 7, No. 3, May/June 1990, pp. 14-15.

ZZu.s. Ener~~o~ationAW~@ation, Ho~~ing characte~”sties 1987, DOE~~.0314(87),” my 198$), p. 12; md Characteristics of commercial

Bui/dings 1986, DOE/EIA-0246(86), September 1988, p. 21.

~~ller, Residential Equipment E@ciency, Op. cit., fOOtnOte 13, P. 20.

~Debbie Lowe, “A New Generation of Heat Pumps,” Home Energy, vol. 6, No. 2, March/April 1989, p. 12.

tio~~dge Natio~~bomtoV,E nergy TechnozogyR&D: w~t couzd~akeaDifference? VO1. 2, part 1, “End-UseTechnolo~,” ORNL-65441 1

V2/Pl, December 1989, pp. 33-34.
32 . Energy Technology Choices: Shaping Our Future

have to be competitive with conventional systems in

terms of first cost and maintenance.

Both DOE and the Gas Research Institute (GRI)

have funded research on TAHPs. A number of

advanced TAHPs have been developed. These

include internal combustion engine-driven units,

Ike-piston Stirling engine systems, and absorption

systems. In the United States, the internal combustion engine-driven units are in the prototype stage

and have been tested in the laboratory. The Japanese

are also doing research in this area and have

manufactured and field-tested a number of internal

combustion-driven systems. The best performances

are comparable to the best electric systems in

cooling, about 75 percent better in heating, and very

competitive in operating costs.26

Several Stirling engine-driven heat pumps have

been developed and tested. Stirling engines are

attractive as heat pump drivers because they have the

potential to be highly efficient, quiet, and long

lasting. The performance of Stirling engine-driven

heat pumps has been similar to that of the internal

combustion engine.27

Similar progress has been made in advanced

absorption systems. A number of advanced absorption systems are under development and have been

tested in the laboratory. They are about 20-percent

more efficient in cooling than the best absorption

chillers28 available.29 Cost studies have shown that

the installed cost for a small absorption heat pump

is in the range of installed costs for a gas furnace plus

an electric air conditioner.30

Other refrigeration equipment efficiency improvements are being developed. These include the use of

capacity modulating systems and novel refrigeration

cycles. These advancements could improve energy

efficiency by 30 to 50 percent.3l

Opportunities for Improving Building

Envelope Efficiency

Efforts are being directed at improving the

thermal efficiency of building envelopes. Much of

the research has focused on materials that have

higher thermal resistance per unit thickness and new

envelope configurations that are more thermally

resistant.

For wall systems, alternative construction practices have promising potential for improving efficiency. These include innovative designs that keep

the structural elements away from the exterior shell

and retrofit insulation practices that shield existing

thermal bridges (highly conductive heat flow paths).

Thermal bridges can reduce the overall thermal

efficiency of some wall systems by 30 percent.

Demonstration homes in Minnesota that use new

insulation techniques use 68-percent less heat than

the average U.S. home.32

Prospects for new high-thermal-resistant products

for wall systems are being explored. These include

evacuated or foam cores molded to conform to the

exterior shape of the building and molded fiber

walls.33

Improving the thermal resistance of roofs is

somewhat difficult because roofing materials are

compact and not much can be done to improve

thermal resistance per unit thickness except to focus

on materials. Alternatives to chlorofluorocarbon

foam insulation are being developed and tested. In

addition, waterproof membranes must be developed

that can maintain their resiliency through continual

thermal stressing over periods of 20 years or more.

And, improved techniques must be developed for

fastening roof elements to the structural building.34

‘Ibid., p. 34.

2%id., p. 35.

~Abso@on c~ers ~the o~y av~ble fuel-b- refrigeration systems. They can burn either Mti g= or oil to produce chilled wter fOr

cooling. Absorption chillers are not widely used in the United States because they are not cost and/or performan ce competitive with current electric

systems. But in Japan, where energy costs are higher and the Government favors systems that use natural gas, 80 percent of all commercial buildings

are cooled with absorption chillers.

Mow ~dge hJatio~ Laboratory, op. cit., foonote 25, p. 35.

~Gellm, Residential Equipment Eficiency, op. cit., footnote 13, p. 23.

Sloa.k ~dge Natioti Laboratory, op. cit., footnote 25, p. 33.

32J.H. Gibbons, P.D. Blair, and H.S. Gw@ “Strategies fOr ~ergy Use,” Scientzjic American, vol. 262, No. 3, September 1989, p. 141.

330& ~dge National L&omtory, op. cit., footnote 25, pp. 25, 39.

‘Ibid., p. 39.
Chapter 2—Technologies Affecting Demand . 33

A number of successful innovations have improved the thermal efficiency of windows. As much

as 25 percent of residential and 4 percent of U.S.

total energy use escapes through windows.35 Thus,

the potential for reducing energy use is significant.

The introduction of two coatings technologies has

improved window performance substantially. One

technology applies a heat reflective coating directly

on the glass, and the other applies similar coatings to

a clear polyester film that is mounted inside sealed

insulating glass. Low-emittance (low-e) coatings

and films have increased glass insulation values up

to as much as R-4.5. For example, the addition of

low-e coatings to a double-pane glass increases the

insulation value of a window up to as much as R-3.

(A single-pane glass is roughly the equivalent of

R-1; double-pane, R-2; and triple-pane, R-3.) To

increase further the insulation value, a colorless inert

gas, such as argon, can be added inside a sealed

low-e window unit, thereby increasing the R value

to R-4. Using a heat reflective coating on a clear,

colorless film mounted inside a double-pane window unit can increase the R value to R-4.5.36

In January 1990, a window with an R-8.1 insulating value was introduced. The use of multiplecoated films mounted inside sealed insulated glass

made this development possible. This window

achieves almost the thermal resistance of an ordinary

insulated stud wall, thus greatly reducing a major

heat leakage. In addition, it reduces sound transmission much more effectively than ordinary windows

(important near highways and airports) and virtually

eliminates ultraviolet light, which damages fabrics.

However, it is significantly more expensive. Hurd

Wood Windows quotes prices for a typical 2’6” x 5’

casement window as: $257 for R-2.6 clear, doubleglazed; $320 for R-4.1 with a single coated film;

$441 for R-8.1 double film (quadruple glaze) with

inert gas. In a moderate climate, the R-8.1 window

would save less than 10 dollars’ worth of energy per

year relative to the R-2.6 window which is not a

good return for investment of $184. Thus these

windows are economical only in severe climates or

where the other features are valued.

Two of the most important advantages of improving window insulation performance are: 1) reducing

energy costs and 2) increasing the capacity of existing

heating, ventilation, and air conditioning (HVAC)

systems or allowing the use of smaller HVAC

systems in new construction and renovations.37

Many new window products that incorporate these

innovations are already on the market. In fact, a few

large window manufacturers have standardized lowe

glass products. And, DOE indicates that demand for

low-e windows has increased 5 percent annually

since the products were introduced in 1983.38

Additional research is being conducted on improving the durability of the coatings and lowering their

emittance and reducing condensation.

Opportunities for Improving

Water Heating Efficiency

Incremental efficiency improvements have been

achieved by adding insulation wraps or installing

convection-inhibiting heat traps to existing water

heaters. Also, more efficient conventional water

heaters are commercially available at a modest

increase in first cost of about $20 to $100. These

more efficient water heaters provide 10- to 25-

percent energy savings with a 11

/2- to 3-year

payback.

Innovative water heaters were developed and

commercialized in the 1980s. Heat-pump water

heaters, for example, use about 50-percent less

electricity than conventional electric water heaters.

A heat-pump water heater can cost anywhere from

$800 to $1,200, four times that of a conventional

electric water heater.39

Heat-pump water heaters can be operated together

with a mechanical ventilation system in houses that

have low infiltration. The heat pump removes heat

from the exhaust air stream during the heating

season and from the incoming air stream during the

cooling season and uses this heat to operate the water

heater. The ventilation air streams are a very efficient

3SRick Bevington and Mur H. Rosenfeld, “Energy for Buildings and Homes,” Scientific American, vol. 263, No. 3, September 1990, p. 80.

~Todd W. Si@ “windows for the ‘90s,” Public Power, May-June 1990, VO1. 48, No. 3, PP. 40-41.

S%id., p. 41.

“’Window Company Standardizes Low-E Glass,” Home Energy, vol. 7, No. 3, May/June 1990, p. 6.

3913. ~s~ J. Cktom H. &ller, ~d W. ~oner, American COWCil for an Energy-IMcient Economy, EnergyEflciency in Buildings: PWVSS and

Promise (Washington, DC: 1986).
34 . Energy Technology Choices: Shaping Our Future

source of heat for the heat-pump water heater. Such

systems are commonly used in Scandinavia.40

Highly efficient gas- or oil-fired water heating is

possible by coupling a hot water tank to a highefficiency space heating furnace. This achieves

water heating efficiencies of 80 to 85 percent and

saves fuel. A similar technology recently introduced

is a high-efficiency integrated space and water

heating system. It features electric ignition, a power

burner, and flue gas condenser to provide both space

and water heating at efficiency levels of 85 to

90 percent. Neither the heat-pump water heater nor

the high-efficiency integrated gas-fired space and

water heating system has significantly penetrated

the marketplace. Low sales are attributed to high

first cost and limited availability .41

GRI has supported the development of a gas water

heater with pulse combustion and flue gas condensation (similar to the most efficient gas furnaces). It is

estimated that the water heater will use 25 to

40 percent less fuel than conventional gas heaters

currently produced. The estimated retail cost is

about $900, roughly three times that for a standard

water heater.42

Opportunities for Improving Lighting Efficiency

Lighting is the second largest end-use in the

commercial sector and a significant portion of total

energy use. Fluorescent lights are heavily used in

commercial buildings.

Fluorescent lamps are being improved through

size and weight reductions. For example, switching

from standard fluorescent ballasts to electronic

ballasts that weigh only about four ounces can

decrease energy use. Lawrence Berkeley National

Laboratory developed a high-frequency, solid-state

ballast that increases lamp efficiency by 20 to

25 percent.43 Adding an optical reflector to fluorescent lamps increases useful light output by 75 to

100 percent, cutting energy use by 30 to 50 percent. 44

Photo credit: Chris Calwell, courtesy of Home Energy Magazine

The availability of energy-efficient lighting products has

increased significantly in recent years.

Another option for improving fluorescent lighting

efficiency is to develop more efficient phosphors.

Phosphors currently in use are 40-percent efficient.

Research is underway to develop phosphors that

convert one ultraviolet photon into two visible

photons, resulting in 75-percent efficiency and

reducing energy use by 50 percent.45

In the commercial sector, a combination of

options, such as replacing standard fluorescent

lamps and ballasts with energy efficient types;

replacing incandescent bulbs with fluorescent lighting; and installing reflectors, lighting controls, and

occupancy sensors could cut electricity use for

lighting by nearly 50 percent. Overall electricity use

in the commercial sector could drop by about

20 percent.46 Of course, the decision to retrofit must

weigh the initial costs against the increased savings.

 Residential op. Cit., footnote 6, 

 p. 7.

 pp. 19-20.

 Laboratory, op. cit., 25, p. 36.

 Equipment op. P. 

 Laboratory, op. cit., 25, p. 36.

 S. and C. “Commercial/Governmental Electricity Conservation Potential,” report prepared by Synergic Resources Corp. for the Public Service Commission of the District of Columbia, DC, March 1987.
Chapter 2—Technologies Affecting Demand ● 35

The costs of retrofitting conventional lighting

fixtures to more efficient ones are very site-specific.

A recent lighting retrofit project conducted by the

U.S. Postal Service showed a cost of $81 per lighting

fixture. The retrofit included the installation of

reflectors, magnetic ballasts, and new lamps.47

In the residential sector, energy use for lighting

accounts for only about 7 percent of the total sector

energy use.

48 Almost all residential lighting is

provided by incandescent lamps. One way incandescent bulbs can be improved is by placing a quartz

tube around the filament. The quartz tube has an

optical coating that passes visible light but reflects

infrared radiation. General Electric has introduced a

350-watt quartzline lamp that replaces a standard

500-watt lamp, and it is expected that this development will eventually reach households.49

In the early 1980s, compact fluorescent lamps

were introduced to replace incandescent bulbs.

Fluorescent lamps provide 3 to 5 times more light

per watt of power consumed and last 5 to 10 times

longer. But, they cost between $10 and $20 each.

Consequently, they have been marketed primarily to

the commercial and industrial sectors where lights

are used more extensively. The installation of

compact fluorescent light bulbs in Newark, New

Jersey schools, for example, cut electricity use by 15

to 20 percent, reduced maintenance, and increased

illumination levels.50

Because compact fluorescent lamps are larger

than incandescent types, have color rendering problems, cost the consumer more, and are often difficult

to find, residential market penetration is low. However, if the most heavily used incandescent bulbs

were replaced with compact fluorescent, total

electricity use for household lighting could drop by

30 to 40 percent.51 Thus, the potential for energy

savings is significant.

Opportunities for Improving Appliance

Efficiency

Refrigerators and Freezers

In recent years, the energy efficiency of refrigerators and freezers has improved considerably. However, there is still significant potential for improvements. About two-thirds of refrigerator/freezer energy use is due to heat transfer through walls and not

from door openings and food cooling.52

New advances in insulation products are under

development. These technologies take advantage of

the heat-transfer properties of a partial vacuum or

trapped layers of gas to achieve higher insulation

values. One type of vacuum insulation being examined uses rigid steel barriers, glass spacers, and a

very low pressure or hard vacuum. Others use

low-density fillers and a higher-pressure soft vacuum. Yet another concept uses no vacuum but traps

gas within a number of reflective barriers.53

For soft vacuum insulation designs, silicon-based

gels and fine powders are being tested. Aerogel

insulation panels have been installed in standard

refrigerators for testing by DOE. Thermalux, a

California firm that manufactures aerogel panels,

estimates that they would cost appliance manufacturers between $1 and $2 per square foot.54

Materials that have been examined for powder

insulation fillers are fumed silica, precipitated silica,

silica dust, perlite, glass fiber, glass wool, and fly

ash. Costs for these materials vary. For example,

fumed silica is expensive but performance is high.

Precipitated silica, fly ash, and perlite also work well

and are cheaper.55

The use of these new vacuum insulation designs

in refrigerator/freezers could reduce their electricity

consumption by 25 to 50 percent. Japanese manufacturers already incorporate first-generation, soft vacuum panels into some of their models. These panels

47- Ne.soq DiviSi~n Ener~ Cwrtitor,us. pos~ Service, pe~o~ comm~catio~ San Diego, C!A, Sept. 26, 1990.

4SU.S. En~~ ~o-tion Admini~~tio~ Department of Energy, Energy c~n~e~a~~n Multi-year plan, FY1989-93, 1987.

4gGeller, Residential Equipment Eficiency, Op. Cit., fOOtnOte 13, P. 24-

%levington and Rosenfeld, op. cit., footnote 35, p. 78.

Sllbid., p. 11.

s~avid J. HoUghtoq “Refrigerator hu+xdations for the zlst CentWY,” Public Power, November/December 1990, p. 48.

Wbid., p. 49.

Wbid.

Ssfiid.
36 ● Energy Technology Choices: Shaping Our Future

have measured insulating values of R-16 to R-20 per

inch of thickness. However, some concerns about

panel insulation durability and maintenance have

been raised. These concerns will have to be addressed before these products are used extensively in

the United States.5G

The Solar Energy Research Institute (SERI) and

the Lawrence Berkeley Laboratory (LBL) have

pursued different approaches to vacuum insulation.

SERI has built a number of prototype panels that

incorporate steel outer layers and glass spacers. The

prototype panels, called compact vacuum insulation

(CVI), are estimated to cost refrigerator/freezer

manufacturers between $1 and $4 per square foot.

Because the panel is very thin, the interior volume of

a refrigerator/fkeezer could be increased. Appliance

industry estimates indicate that additional volume

could be worth $45 to $50 per cubic foot, and could

help offset the high cost of the insulation. Thus far,

manufacturers have shown little interest in CVI.57

LBL has been developing superinsulated gasfilled panels that resemble windows more than

refrigerator/freezer insulation panels. The estimated

cost to the appliance manufacturer is $0.40 to $1.50

per board foot. The panels use a number of sheets of

low-e plastic separated by air gaps, which are

loosely filled with very thin, crumpled low-e plastic

material. The entire panel is filled with low conductivity gas and sealed. LBL has applied for a patent.58

Another promising option is to shift from one to

two refrigeration systems. This improves thermodynamic efficiency and results in less dehydration of

food in the refrigerator compartment. Refrigeratorfreezers with dual refrigeration systems are manufactured in Europe.59

The use of electronic variable speed controls is

another way to improve the efficiency of refrigeration systems. Electronic variable speed controls,

which modulate cooling output, can produce electricity savings of about 20 percent.60

Cooking and Laundry

There have been a number of promising developments in cooking technology and clothes drying. For

example, a high-efficiency electric oven, called the

biradiant oven, was developed and demonstrated in

the 1970s. Its features include highly reflective walls

and two heating elements that operate at relatively

low temperatures. Tests show that the biradiant oven

uses about 60-percent less electricity than conventional ovens. Manufacturers have shown little interest in producing the biradiant oven even though it

appears to be technically and economically viable.61

Another development, the infrared-jet impingement burner for gas stove tops, promises fuel savings

of 15 to 25 percent. This burner utilizes a high degree

of radiative heat transfer from a ceramic flame

holder. Other advantages of the infrared jet impingement burner are a reduction in nitrogen oxide and

carbon monoxide emissions, uniform heating, fast

response, and ease of cleaning. GRI field-tested the

burner and is continuing to reduce production cost

and increase lifetime.G2

Some promising advances in clothes dryers are on

the horizon. A heat-pump clothes dryer has been

developed, and tests show electricity savings of 50

to 60 percent relative to a conventional clothes dryer.

(Larger-scale heat pump dryers at-e used for drying

lumber and food products.) The heat-pump clothes

dryer has a drain pipe rather than an exhaust vent,

which is advantageous in apartment buildings. A

major disadvantage is its cost. The estimated retail

price of the dryer is $600 to $700, about twice that

of a conventional electric dryer. The payback on the

extra first cost is about 8 years. Commercialization

and marketing are expected to begin in the near

future.G3

Microwave clothes dryers are also under development. However, there are problems with high water

retention when drying larger loads.

56Gefl~, Residential Equip~nt Eficiency, op. Cit., fooblote 13, P. 18.

s7Hou@to% op. cit., footnote 52, p. 50.

58 fiid.

59Geller, Residential Equipment E@ciency, Op. Cit., fOOtflOte 13, P. 17.

@ibid.

611bid., p. 24.

‘%id., pp. 24-25.

G%id., p. 26.
Chapter 2—Technologies Affecting Demand ● 37

Opportunities for Improving Energy

Management and Control Systems

Energy management and control systems are used

to monitor and adjust heating and air conditioning,

lighting, and other energy-using appliances, primarily in commercial buildings. Energy management

and control systems are diverse and vary from a

simple thermostatic control to complex pneumatic

control systems with many sensors, microprocessors, and other components.

Behavioral changes, particularly changes in indoor air temperatures, are an important element in

building energy management programs. The EIA,

which has been tracking indoor air temperatures

since 1981, reports that winter indoor air temperatures dropped during the 1973-84 period. This drop

was an important factor in the decline in U.S.

residential energy use during this time.64

Improvements in control technologies and sensors, and diagnostic equipment could result in

energy savings as high as 10 to 15 percent of total

U.S. energy use. The commercial sector offers the

greatest potential for savings.65

Strides have also been made in the residential

sector. Automated control systems comparable to

those used in commercial buildings are now being

installed in houses. These “smart” houses, as they

are commonly called, are being promoted by a

number of manufacturers, utilities, the Electric

Power Research Institute, and the National Association of Home Builders. For example, the Southern

California Edison Co. and a number of local builders

initiated a House of the Future pilot project. New

homes are equipped with automated systems and

controls and a number of energy-saving technologies, such as compact fluorescent light bulbs, energy

efficient appliances, and occupancy sensors.66

Over the years, advances in energy management

and control have been continual. Nevertheless, some

opportunities still have not been realized. For

example, there is a lack of reliable, low-cost meters

for measuring oil and natural gas use in buildings.

Also, humidity sensors need further development.67

OPPORTUNITIES FOR ENERGY

EFFICIENCY IMPROVEMENTS IN

THE INDUSTRIAL SECTOR68

The industrial sector is both diverse and large. It

uses energy for probably a wider variety of purposes

than does any other sector of the economy. Energy

is used for direct heat, steam generation, machinery

operation, and feedstocks. The most intensive industrial processes involve the direct application of heat

to break and rearrange molecular bonds through

chemical reactions. Processes such as smelting,

cement manufacture, and petroleum refining typically involve large amounts of heat.

Since it peaked in 1970, industrial energy use per

unit of output (energy intensity) has been declining

due to a number of factors: efficiency improvements,

innovative process changes and the application of

new technologies, changes in the product mix (level

and demand for products), and the price of energy.

Many of the energy efficiency gains realized over

the last decade have been the result of good business

practices.

Most firms regard energy efficiency in the context

of a larger strategic planning process. Investments

are evaluated and ranked according to a variety of

factors: product demand, competition, cost of capital, labor, and energy. Thus, energy-related projects

are not treated differently from other potential investments and must contribute to the corporate goals of

increased profitability and enhanced competitive

position. This view has important policy implications

for reducing energy demand. Incentives aimed at

decreasing energy demand growth must compete

with other strategic factors and therefore have to be

substantial to make a significant impact.

OTA found that the best way to improve energy

efficiency in the industrial sector is to promote

general corporate investment. Lowering interest

rates would increase capital availability and allow

~stevel.1 Meyers, “Energy CO~ ption and Structure of the U.S. Residential Sector: Changes Between 1970 and 1985,” Annual Review of Energy

1987, vol. 12, 1987, pp. 92-93.

fio~ Ridge Natio~ Laboratory, op. cit., foomote 25, p. 28.

66B~@ton and Rosenfeld, op. cit., foomote 35, p. 82.

GT()~ Ridge Natioml Laboratory, op. cit, footnote 25, p. 28.

68For a more indep~ disc.sion of industri~ energy use, s= OTA ~pofi ]~~m”az Energy use, Op. Cit., fOOtnOte 8.
38 ● Energy Technology Choices: Shaping Our Future

more projects to be undertaken. Industries that

believe energy prices will continue to rise have a

strong impetus to use capital for more energy

efficient equipment. However, it should be noted

that growth in product demand is essential if

investment is to take place, even with lower interest

rates. The OTA report Industrial Energy Use provides a more indepth discussion of corporations’

investment behavior.

While the industrial sector has made impressive

strides in reducing energy use, opportunities for

further gains in energy efficiency have by no means

been exhausted. A number of promising developments in crosscutting technologies are discussed

below. They include computer control systems and

sensors, waste heat recovery, cogeneration, catalysts, separation processes, combustion, and electric

motors. Also, opportunities for improving energy

efficiency in four of the most energy-intensive

industries-pulp and paper, petroleum refining,

chemicals, and steel industries-follows.

Computer Control and Sensors

Computer control systems and sensors are added

to existing equipment, such as a boiler, to improve

the performance, or to an industrial process to

monitor the production line for wastage and quality

control. In a production line, computerized process

control systems can be used to optimize such things

as paper thickness, polymer color, or petroleum

viscosity. Almost any energy-using process can be

made more efficient if specific parameters at each

point in the process can be measured and conditions

optimized. Figure 2-2 shows the potential for energy

savings associated with improved sensor technology

for several industries. Potential savings in the range

of 5 to 20 percent can be achieved for each of the

industries. In addition, improved sensors have the

potential for reducing total industrial energy use by

10 percent.69

Waste Heat Recovery

Whenever fuel is burned, the products of combustion are a potential source of waste heat. Therefore

the recovery of waste heat has enormous potential

Figure 2-2—Potential Energy Savings With

Improved Sensor Technology

Food

Textiles

Wood and lumber

Pulp and paper

Chemicals

Petroleum

Ceramics and glass

Primary metals

Energy

0123456 7

Quads

use: m Current = Potential

SOURCE: U.S. Department of Energy, the DOE Industrial Energy Conservation Program, Research and Development in Sensor Technology, DOE/NBM-7012450, April 1987, p. 4.

for saving energy. Waste heat recovery systems can

improve the overall energy efficiency by recovering

heat from combustion gases in a steam boiler or from

excess thermal energy from a process stream product. A great deal of waste heat recovery has been

taking place, especially since 1974.

Traditional approaches to heat recovery include

transferring heat from a high-temperature, waste

heat source (combustion gases) to a more useful

medium, e.g., steam, for low-temperature use; or

upgrading thermal energy to a level that can be

useful as a heat source. Heat exchangers are used for

the former approach and vapor recompression and

heat pumps are used for the latter.

New approaches to waste heat recovery have been

broadened to include improved monitoring and

control to optimize conversion and distribution of

energy. A 1985 survey indicated that waste heat

recovery could reduce energy inputs by 5 percent in

petroleum refineries. In the chemicals industries,

existing waste heat recovery programs have reduced

energy usage per pound of product by 43 percent

since 1974.70

@OW Mdge Natio~ hborato~, Energy Technology R&D: What Could Make a Difference? vO1. 2, pm 3, “CrOSS-CUt@ S~CXMX ~d

Teehuology,” ORNL-6541/V2/P3, December 1989, p. 11.

7QIC ~dge Natioti Laboratory, op. cit., footnote 25, pp. 71,76.

ylAmorede~~&scus~ion of ~ogenerationmd is poten~ fipactsc~~ fo~d inlndmm”azandco~rciaz cogenerati~n U.S. CO~SS, ~Ce

of Technology Assessrneng OTA-E-192 (Washington, DC: U.S. Governrnent Printing OffIce, February 1983).
Chapter 2—Technologies Affecting Demand ● 39

Cogeneration 71

Cogeneration is defined as the production of both

electrical or mechanical power and thermal energy

from a single energy source. In industrial cogeneration systems, fuel is frost burned to produce steam.

The steam is then used to produce mechanical

energy at the turbine shaft, where it can be used

directly, but more often is used to turn the shaft of a

generator, thereby producing electricity. The steam

that leaves the turbine still has sufficient thermal

energy to provide heating and mechanical drive

throughout a plant.

The principal technical advantage of a cogeneration system is its ability to improve fuel efficiency.

A cogeneration facility uses more fuel to produce

both electric and thermal energy. However, the total

fuel used to produce both energy types is less than

the total fuel required to produce the same amount of

power and heat in separate systems. A cogenerator

will achieve overall fuel efficiencies 10 to 30 percent

higher than separate conventional energy conversion

systems.

Major industrial cogenerators are the pulp and

paper, chemicals, steel, and petroleum refining

industries. The pulp and paper industry has been a

leader in cogeneration because it has large amounts

of burnable wastes (bark, scraps, forest residues

unsuitable for pulp) that can supply energy needed

for plant requirements. The industry considers

power production an integral part of the manufacturing process.

In the 1980s, a favorable economic and regulatory

climate encouraged the growth of cogeneration in

the industrial sector. Since the passage of the Public

Utility Regulatory Policies Act (PURPA) in 1978,

the amount of electricity received by utilities from

nonutility sources has grown dramatically. According to the Edison Electric Institute, electricity sales

to utilities from nonutility sources increased from

6,034 gigawatt-hours (GWh) in 1979 to 93,677

GWh in 1989. The latter figure represents 3 percent

of the total electricity available to the utility industry

for distribution.72

Estimates of current and projected nonutility

capacity vary considerably, however, so it is difficult to measure the growth of this industry with

precision. Although there is no definite count of

nonutility capacity in the United States, the Edison

Electric Institute estimated that 40,267 megawatts

(MW) of nonutility capacity was in operation at the

end of 1989. Cogeneration accounted for 29,216

MW, or about 73 percent of the total.73

Estimates of future capacity growth also vary.

Several estimates suggest that roughly 38,000 MW

of capacity will be online by 1995. By the year 2000,

other studies estimate that nonutility capacity will be

as high as 80,000 MW.74

In the 1980s, a favorable economic and regulatory

climate encouraged the growth of cogeneration in

the industrial sector.

Advanced turbines have attracted renewed attention for cogeneration applications because they can

save energy and provide fuel flexibility. Over time,

turbine efficiency and size have increased considerably as new turbine technologies and advanced

materials allowed for hotter combustion temperatures. 75 Many of the advances in design and high

temperature materials for turbines result from military R&D for improved jet engines.

In addition to hotter combustion temperatures,

capturing the energy of the hot exhaust gases to

make useful steam offers further options to improve

efficiency. A process receiving increased attention is

the steam-injected gas turbine (STIG). In the STIG,

steam is injected into the turbine’s combustor. The

result is greater power and electrical efficiency. For

example, in turbine units based on General Electric’s

LM-5000 (which is derived from the engine used in

the Boeing 747, some DC-1 OS, and the Airbus

A300), steam injection allows an increase in power

from 33.1 MW to 52.5 MW and increases efficiency

from 33 to 40 percent.76 STIG units have been used

in cogeneration applications, allowing for greater

flexibility and efficiency when the industrial process

has variable steam requirements. Intercooling, a

further enhancement to STIGS, may further increase

72~Son Ek..~c~Sti~te, 1989 Capaciv ~~ Generation of Non-utility Sources of Energy, wxhkgto~ ~,Apd 1991, p. 29.

T%id., p. 1.

74u.s. ConWss, ~lce of Technology Assessment Electn”c Power Wheeling and Dealing: Technological Considerations for Increasing

Competition, OTA-E-4(I9 (Washington, DC: U.S. Government Printing Offke, May 1989), pp. 46-47.

75~~utili9 mbopow~ for the 1990S,” EPRIJournal, April/May 1988, pp. 5-13.

76R. willi~, E. Larson, “Aeroderivative llrbines for Stationary powm,” Center for Energy and Environmental Studies, Prineeto% May 1988.
40 ● Energy Technology Choices: Shaping Our Future

power and efficiency to nearly 50 percent. Technology transfer from future improvements in jet engines

could further raise efficiency to over 50 percent.77

Turbines that can use coal or biomass gasification

as fuel could be a promising technology for cogeneration applications.

Separation

Separation of two or more components in a mixture

is one of the most energy-intensive processes in the

industrial sector. Separations account for about 20

percent of industrial energy use. Separation of

liquids is commonly accomplished through the

distillation process, one of the most energyintensive separation technologies. Other separation

technologies include cryogenics, pressure swing

adsorption, and mercury or asbestos diaphragm

electrolytic processes.

Distillation retrofit projects offer significant potential for energy savings. For example, a small

increase in the number of trays in a distillation

column can reduce energy use. Also, improvements

in distillation control technologies will not only

enhance product quality but lower energy consumption as well. It is estimated that improvements in the

distillation process can reduce energy consumption

by 10 percent.78 Further reductions in energy use are

possible by using other currently available processes: the use of membranes for reverse osmosis and

microfiltration, or supercritical fluid (solvent) extraction.

Membrane technology is based upon the principle

that components in gaseous or liquid mixtures permeate membranes at different rates because of their

molecular characteristics. Solvent extraction uses

fluids with a high affinity for one component of a

chemical mixture, but immiscible with the remaining components. Both technologies are used by the

chemicals industry. In 1984, OTA noted that the use

of solvent extraction in a synthetic fiber plant saved

an estimated 40,000 barrels of oil equivalent annually. 79 Membrane separation technology is expected

to capture a number of other markets, including food

and beverage processing.

Catalytic Reaction

Another crosscutting technology is catalytic reaction. Catalysts are used in many industries to

facilitate chemical reactions. The petroleum refining

and chemicals industries rely heavily on catalysts to

perform a variety of functions, including raising

gasoline octane level, removing impurities, and

converting low-grade hydrocarbons to higher value

products.

Opportunities exist for improving energy efficiency through catalytic reaction. By increasing

chemical reaction rates, lower temperatures and

pressures can be used, which in turn reduce heating

and compression requirements.

The discovery and use of new synthetic zeolites in

catalytic processes also have contributed to energy

efficiency gains in both the petroleum refining and

chemicals industries. These industries have spent

considerable time and effort in identifying and

developing unique zeolites for use in synfuels

production, petrochemical manufacture, and nitrogen oxide (NOX

) abatement.80

Also, energy efficiency can be improved by using

catalytic reaction to recover organic acids in pulp

and paper industry waste streams and in processed

urban waste. Typically, these wastes are dumped

because there is no method for extracting the acids

unless the streams are first concentrated. A catalytic

process could convert the organic acids to hydrocarbons, which can be easily separated from water.81

Combustion

Combustion of fossil fuels is one of the principal

uses of energy in the industrial sector. The Oak

Ridge National Laboratory (ORNL) estimates that

more than 50 percent of industrial energy is burned

in boilers and process heaters. The combustion

process itself is very efficient, but inefficiencies

arise in the extraction and use of the thermal energy.

‘Ibid.

780m Ridge National Laboratory, op. cit., footnote 25, p. 70.

7~or additio~ ~omtion on oil rep~~ment ~pabi@ fi me industri~ ~tor, scx us. Congress, Hlce of TdIIIOIO~ Assessmen4 U.S.

Vulnerability to an Oil Zmport Curtailment: The Oil Replacement Capability, OTA-E-243 (Wastdngto~ DC: U.S Governrne nt Printing Office,

September 1984).

~OA Kdge National Laboratory, op. cit., footnote 25, p. 67.

Sllbid.
Chapter 2—Technologies Affecting Demand ● 41

A number of opportunities exist to improve energy

efficiency.

The pulsed gas or condensing furnace is a demonstrated improvement in the combustion process. The

furnace uses a pulsed combustion technique to

induce a draft. This technique has been applied

primarily to space heating systems, but there maybe

other applications for this technology in industry. In

addition, advances in cogeneration systems for

industrial and large commercial applications have

the potential to increase thermal utilization efficiencies and reduce first cost.

Foremost among new technologies is atmospheric

fluidized-bed combustion (AFBC). It is commercially available for industrial applications and has

the potential to be widely used in cogeneration

operations. Its major advantages include fuel efficiency, pollution control, and its small size. AFBC

plants currently in use by cogenerators appear to be

able to produce electricity at lower costs than other

conventional coal plants. However, this technology

is not without technology concerns. Difficulties with

fuel and sorbent feeding systems are two of the most

troublesome problems. According to ORNL, the

AFBC, when perfected, is likely to be the coalburning technology of choice for many industrial

applications because pollution control is relatively

easy to accomplish.

In addition, combustion control systems have

been extensively applied to industrial operations and

are expected to play an even greater role in the

future. For example, in the combustion process, a

given quantity of fuel requires a freed and easily

measured quantity of air. Having an excess quantity

of air or fuel results in either unused air being heated

or incomplete combustion of the fuel. A computer

control system could optimize the fuel:air ratio by

controlling the rate at which each is introduced into

the combustion chamber.

Electric Motors

Electric motors are the workhorses of the industrial sector. They power pumps, fans, and compressors, and drive heating and ventilation systems. In

the industrial sector, motors use 65 to 70 percent of

82 Pumps alone account for industrial electricity.

about 31 percent of total electricity used by electric

motors in the United States.83 Thus, there is a

significant potential for energy savings.

Standard electric motor efficiency generally

ranges from 80 to 90 percent. By increasing the iron

and copper content of the core and windings,

respectively, energy efficiencies can be improved to

beyond 95 percent. This incremental increase may

not seem significant at first blush, but even small

increases in electric motor efficiency could translate

into considerable savings. Electric motor capital

costs are only a small fraction of their operating

costs.84 A typical large industrial motor uses electricity that costs 10 to 20 times its capital cost per

year. Thus, even a 1 percent gain in efficiency could

translate into significant savings.85

Crucial to achieving greater energy efficiencies

with electric drive is the ability to control motor

speed. Typically, pumps and fans need to vary speed

to accommodate changing process needs. This is

often done by operating the pump or fan at full speed

and then throttling speed with a partly closed valve

or damper. When this method is used, enormous

energy losses are realized. According to one estimate, industrial and commercial pumps, fans, and

compressors have average annual energy losses of

20 to 25 percent.86 The adjustable-speed drive,

which is commercially available, can improve efficiency by 10 to 40 percent.87

New high-efficiency motors can reduce magnetic,

resistance, and mechanical losses by more than 50

percent, compared to the electric motor of a decade

ago. The use of higher quality materials and innovative

design have made these improvements possible.

Together, high-efficiency motors and adjustablegz~nold p. FiCke~ Clark W. &U.ngs, and Amory B. Lovins, “Effkient U* of Ekcticity, ‘‘ ScientijicAmerican, vol. 263, No. 3, September 1990,

p. 67.

gso~ Ridge National Laboratory, op. cit., footnote 25, p. 68.

84u.s. ConW~s, offl~e of T~~olo~ Assessment, Indus~”al Energy use, op. cit., fOOhlOte 8, p. .50.

ssFicke~ et al., op. cit., footnote 82, p. 67.

86s~F. Baldwin, “Energy EfiIcient Motor Drive Systems,’ Elecm”city: Eficient End-Use and New Generation Technologies and Their Planning

Implications, Thomas B. JohanssoIL Birgit Bodhmd, and Robert H. Williams (eds.) (Lund, Sweden: Lund University Press, 1989), p. 33.

sTFickett et al., op. cit., footnote 82, p. 68.
42 ● Energy Technology Choices: Shaping Our Future

Table 2-7—Estimated Energy Used To Produce Paper and Paperboard Products (in million Btu per ton produced)

From mixed recycled paper

From 100%

. .

Minimum virgin Change due virgin wood fiber content to recycling

Product Energy use (percentage) Energy use (percentage)

Paper products:

Newsprint . . . . . . . . . . . . . . . . 44.33 0 34.76 –21 .6

Printing paper . . . . . . . . . . . . . 67.72 16 43.43 -35.9

Packaging paper . . . . . . . . . . 47.07 70 43.48 -7.6

Tissue paper . . . . . . . . . . . . . . 68.52 0 29.46 -57.0

Paperboard products:

Liner board . . . . . . . . . . . . . . . 14.46 75 36.28 +150.9

Corrugated board . . . . . . . . . 37.22 0 36.28 -2.5

Box board . . . . . . . . . . . . . . . . 25.97 0 36.25 +39.6

Food service board . . . . . . . . 29.19 100 N/A

Other paper board . . . . . . . . .

—

17.65 0 36.32 +105.8

Construction board . . . . . . . . 31.71 65 32.24 +1.7

SOURCE: T. Gunn and B. Hannon, “Energy Conservation and Recycling in the Paper Industry,” Resources and ErMr,gy5:243-260, 1983.

speed drives account for about half of the total

potential energy savings in U.S. motors.88

Significant energy savings can also be realized by

better matching motor size to the load, improved

maintenance, and the use of controls to regulate,

among other things, the electricity supplied to the

motor and the torque transmitted to the machine.89

Pulp and Paper Industry

The pulp and paper industry is a major energy

user. In 1985 (the most recent year for which data are

available), the industry used 2.21 quads, making it

the fourth largest energy user of primary energy in

the industrial sector. A number of opportunities exist

to improve efficiency. Several of the cross-cutting

technologies discussed earlier can offer significant

energy savings. For example, the use of computer

control systems and sensors to optimize the combination of heat and chemicals can cut energy costs

and improve pulp quality. In one mill, sensors and

controls reduced steam requirements by 19 percent. 90

Technologies that integrate fermentation into the

conventional pulping process can also offer energy

savings. They include biopulping, chemical pulping

with fermentation and black liquor phase separation,

and ethanol organosolv pulping. A substantial amount

of research is still needed for each of these processes.

Recycling waste paper may provide further energy savings. Recycled waste paper, or secondary

fiber, can be used to make various paper and paperboard products. Using recycled fiber for some paper

products, like newsprint, printing paper and tissue,

may require less energy. Savings can result from

reducing energy demand in the process of making

paper from waste paper and from a reduction in need

to harvest and transport timber. However, savings

could be offset by the energy needed to collect,

transport, and de-ink the waste paper.91 Based on

studies done in the early 1980s, estimates of energy

used to produce paper and paperboard products are

shown in table 2-7.

According to the U.S. Environmental Protection

Agency (EPA), paper and paperboard recovery

totaled 18.4 million tons in 1988, a recovery rate of

25.6 percent. This compares to a recovery rate of

16.7 percent in 1970.92 Paper and paperboard mills

are the major consumers of secondary fiber.

8%id.

a%id.

~mc H. ROSS and Daniel Steinmeyer, “Energy for Industry,” Scientific American, vol. 263, No. 3, September 1990, p. 94.

glF~r a more ~.depth d~as~ion of ~yc@ technology= ~bets, s= Us. Co=ss, ~lce of TecMology Assessment, Facing America’s

Trash: What Nextfor Municipal Solid Waste? OTA-O-424 (Washington, DC: U.S. Government Printing Offke, October 1989).

92u.s. Environment@ fiotWtion Agmcy, Ctiractenzation Of Muni~pal solid waste in the Unitedstates: ]990 Update, EP..53O-SW-9O-O42,J1990, pp. ES-7, 11.

gsMuch of the ~ormation in this section is drawn from the OTA repo~ Industrial Energy Use, Op. Cit., fOOtnOte 8, pp. 99-100.
Chapter 2—Technologies Affecting Demand ● 43

Photo credit: American Petroleum Institute and Exxon Corp.

A large petroleum refinery complex.

Petroleum Refining Industry93

A number of energy efficiency opportunities have

been identified in the petroleum refining industry.

The most productive options appear to be in the

areas of improved combustion, the recovery of

low-grade heat, and the use of process modifications.

The greatest single loss of energy in a refinery

occurs during the final cooling of process streams.

Where feasible, heated streams first could be used to

heat other process streams, thus reducing the energy

needed to cool. However, opportunities for recovering significant amounts of low-level heat are unlikely to be found in existing plants but in new

facilities that are designed to optimize heat recovery.

Opportunities focus on how to recover heat in the

200 to 250 degrees Fahrenheit range and improve

heat exchange by better matching the heat source

and heat sink. A 1985 survey indicated that improved heat exchange could reduce refinery energy

use by about 9 percent. The survey also noted that

process modifications could save up to 11 percent of

energy use.94

Process heaters and steam boilers also offer

opportunities for reducing energy use. Options

include improving combustion by using stack gas

analyzers and combustion control instrumentation;

reducing stack gas temperatures by using air preheater to heat incoming combustion air; and installing convection sections at the heater outlets to heat

incoming feed or to generate steam.

Continued improvements in computer control

systems and sensors offer energy-savings benefits as

well. In addition to reducing energy use, these

 and “Survey Plants for Energy Savings,’ Hydrocarbon Process, vol. 64, No. 7, pp. 51-56; reported Oak Ridge National Laboratory report, op. cit., footnote 25, p. 76.
44 ● Energy Technology Choices: Shaping Our Future

systems improve performance, increase output, and

optimize product specifications. A number of energy

management control systems are available today.

One control system company estimates that energy

savings of 5 to 10 percent can be realized in the

petroleum refining industry.95

Steel Industry

While the energy intensity of steelmaking has

decreased over the years, steelmaking is still one of

the most energy-intensive industries. The steel

industry includes blast furnace-based integrated

mills; nonintegrated minimills; and independent

producers of wire, bars, and pipes who purchase and

process semifinished steel.

All stages of steel production use energy to alter

the chemical composition of the metal or to work the

metal into useful forms and shapes. The industry has

a number of options to save energy. These include

the electric-arc furnace and continuous casting. The

electric-arc furnace saves energy by allowing the

substitution of scrap metal for iron ore. This method

uses about 50-percent less energy than the blast

furnace or basic oxygen furnace methods.

Continuous casting saves energy by eliminating

the need for ingot stripping, heating, and primary

rolling. Continuous casting reduces energy use by

about 50 percent, as compared to ingot casting. Also,

the yield is much greater than from ingot casting

because less metal must be returned to the steelmaking process in the form of waste and unfilled ingot

molds. Continuous casting increased from 12 percent in 1977 to 53 percent in 1986.96 High product

quality and yield and reductions in production costs

are responsible for the increase.

A new steelmaking process—thin slab casting—

is attracting the attention of the industry worldwide.

This innovative process has the potential to reduce

energy use and production time considerably. For

example, the final slabs, which are only one-tenth of

an inch thick, can be made in only 3 hours instead of

as long as a week using conventional procedures.

Steel industry analysts indicate that the process

could change production methods throughout the

Photo credit: American Iron and Steel Institute

Steel slab emerging from a continuous slab caster.

industry. The first commercial use of thin slab

casting in the United States is done at the NUCOR,

Inc. plant in Indiana.97

Also, the innovative direct and ore-to-powder

steelmaking processes could offer substantial energy savings. The direct steelmaking process replaces the coke-oven/blast furnace steps with one

continuous process. The key to its success is

effectively transferring heat from postcombustion to

the bath. Another advantage of the direct steelmaking process is that it can use either iron ore or scrap.

ORNL estimates that the process can reduce energy

use by 20 to 30 percent and yield production rates

that are two to three times higher than those of a blast

furnace. 98

The ore-to-powder steelmaking process eliminates the ore-melting process with magnetic separation and chemical leaching. ORNL estimates that

this method may reduce energy use by 40 percent

and decrease capital costs. The need for highly

refined magnetic separation may be a technical

barrier to using this method.99

 Laboratory, op. cit., footnote 25, p. 78.

 p. 86.

 Steel Faster and Cheaper,” The New Times, Business Technology, Feb. 27, 1991, pp. D-6, D-7.

 National Laboratory, op. cit., footnote 25, p. 88.
Chapter 2—Technologies Affecting Demand ● 45

Table 2-8-Technologies for Improving Energy Efficiency in the Steel Industry

Investment option Energy efficiency-improving characteristics

Dry-quenching of coke . . . . . . . . . . . . . .

Coke-oven gas desulfurization . . . . . . .

Blast furnace top-gas turbine . . . . . . . . .

External desulfurization of hot metal . . .

High-pressure blast furnace . . . . . . . . . .

Electric-arc furnace (EAF) . . . . . . . . . . .

Water-cooled panel, EAF . . . . . . . . . . . .

Oxyfuel burners, EAF. . . . . . . . . . . . . . .

Open hearth, shrouded, fuel-oxygen

lances. . . . . . . . . . . . . . . . . . . . . . . . . .

Basic oxygen furnace (BOF) gas

collection. . . . . . . . . . . . . . . . . . . . . . .

Scrap preheating, BOF. . . . . . . . . . . . . .

Secondary, ladle refining, EAF . . . . . . .

Closed system ladle preheating . . . . . . .

Continuous casting . . . . . . . . . . . . . . . . .

Thin slab casting . . . . . . . . . . . . . . . . . . .

Continuous slab reheaters. . . . . . . . . . .

Continuous annealing and reheating

systems. . . . . . . . . . . . . . . . . . . . . . . .

Direct rolling . . . . . . . . . . . . . . . . . . . . . .

Indication heating of slabs/coils.. . . . . .

Steam-coal injection into the

blast furnace . . . . . . . . . . . . . . . . . . . .

Recovers waste heat of hot coke from ovens; saves coke; reduces environmental pollution

because coke is quenched in a closed system.

Natural gas substitute. Some loss of calorific value, but improved product quality.

Recovers waste energy by cogeneration. Only possible with the best high-pressure furnaces.

Saves coke by allowing lower slag volume and hot metal temperature in the blast furnace.

Some energy used in desulfurization.

Lowers coke consumption.

Allows for increased use of scrap, thereby lowering overall energy requirements for steel

production.

Allows for higher productivity and net energy savings in melting when refractory consumption

is considered.

Saves electrical energy and reduces melting time. Total energy consumption maybe

increased.

Reduces fuel requirements in the open hearth. May prolong useful life of open hearth.

Recovers calorific value of carbon monoxide with net energy savings.

Allows for greater use of scrap, thereby saving energy in ironmaking.

Saves electrical energy by removing refining function from EAF.

Saves natural gas used for preheating ladles.

Increases yield, thereby decreasing overall energy requirements; saves fuel gas in ingot

reheating.

Has the potential to reduce energy use and production time.

Saves clean fuel gas through increased efficiency.

Saves clean fuel gas through increased efficiency.

Saves clean fuel gas through the elimination of slab reheating.

Allows fuel switching to electricity, conserves total energy, and increases yield.

Allows fuel switching from more expensive gas or oil. Technology should be available in

5 years.

SOURCE: Office of Technology Assessment, 1991.

A number of other opportunities are summarized

in table 2-8. Many of these options require retrofitting existing equipment. Some of the energy-savings

opportunities will result in additional benefits such

as a reduction in environmental impacts and an

improvement in product quality.

Chemicals Industry100

Of the four industries examined, the chemicals

industry is by far the most complex. It produces

several thousand products and uses the most energy

of the four industries. Table 2-9 shows six of the

most energy-intensive processes in chemical manufacturing.

Dramatic improvements in energy use can result

from changes in physical separation. According to

OTA, incremental improvements in the distillation

process have achieved 25-percent energy savings in

many plants.

Alternative approaches to conventional distillation include vacuum distillation, freeze crystallization, and liquid-liquid (solvent) extraction. The

increased cost-effectiveness of turbocompressors

and advances in vacuum pumps and cryogenic

technology have vastly increased the relative attractiveness of both vacuum distillation and crystallization. The most appealing characteristic of freeze

crystallization as a separation technique is that the

process requires less energy. About 150 Btus are

needed to freeze a pound of water compared to about

1,000 Btus to boil water in the conventional distillation process.

The most promising of the alternative approaches

to conventional distillation appears to be liquidliquid extraction, which uses a solvent with a high

lmMuch of the info~tion in r.his s~tion is drawn from the OTA report, Zndusm.al Energy Use, Op. Cit., fOOtaOte 8, pp. 115.
46 ● Energy Technology Choices: Shaping Our Future

Table 2-9--Energy-lntensive Processes in

Chemical Manufacturing

Electrolysis includes all industrial electrolytic processes in which

electricity is used in direct chemical conversion.

Fuel-heated reaction for processes that require some type of

heat to force a chemical reaction to take place can be

subdivided into low- and high-temperature operations. Energy

sources include steam (except for high-temperature reaction),

natural gas, residual oil, distillate oil, and even fluidized-bed

coal combustion. Where precise temperature regulation is

required, natural gas and distillate fuel oil are used.

Distillation processes include those that require physical separation of end products from both feedstocks and byproducts by

evaporation and condensation.

Refrigeration includes processes that compress and expand a

refrigerant, such as ammonia or a fluorocarbon, for the

purpose of cooling feedstocks or products below ambient

temperatures.

Evaporation includes those processes that use passiveevaporation cooling. In general, the evaporated water is lost to

the atmosphere, and the heat energy is unrecoverable.

Machine drive is used by many chemical industry processes to

pump, compress, or move feedstock and end product materials. Machine drive arises from electric motors, steam turbines,

or gas turbines. A subcategory of machine drive processesmixing and blending (especially in polymerization processes)--can be very energy intensive due to the high viscosity

of the materials.

SOURCE: Office of Technology Assessment, 1991.

affinity for one component of a mixture but immiscible with the remaining components. One company

reported that this technology saved an estimated

40,000 barrels of oil equivalent annually.

Also, the use of membrane separation technology

in the chemicals industry is growing. The technology has been used to replace other more costly

separation technologies such as cryogenics, pressure

swing adsorption, and mercury or asbestos diaphragm electrolytic processes. One of its major

advantages is that membrane separation systems can

improve product quality.

Continued improvements in energy management

and advances in computer control systems and

sensors will contribute to reducing energy use in the

chemicals industry. ORNL estimated that the development of a full component of sensors could reduce

energy use by 10 to 15 percent in both the chemicals

and pulp and paper industries.101

OPPORTUNITIES FOR ENERGY

EFFICIENCY IMPROVEMENTS IN

THE TRANSPORTATION SECTOR

Since the early 1970s, efficiency improvements in

the transportation sector have been dramatic. The

retirement of older, less efficient vehicles and the

introduction of new, more efficient models have

been responsible for these improvements.

The fuel efficiency of the new car fleet doubled

between 1974 and 1989. The average fuel efficiency

of the light-duty fleet should continue to rise over the

next decade, but the rate of improvement will be

slowed by a leveling off of further efficiency

improvements in new vehicles. In the current OTA

“business as usual” scenario, new car fleet economy for 2001 is 33 mpg.102

The energy intensity of commercial air travel has

been cut by more than one-half since 1970, as a

result of more efficient aircraft and operations.

However, efficiency improvements in heavy truck

transport has been less dramatic than those achieved

by passenger cars.

In recent years, concerns about urban smog have

renewed interest in alternative fuels. Energy security

concerns have further stimulated interest in these

fuels. Alternative fuels of primary interest for the

U.S. light-duty fleet are methanol, ethanol, compressed or liquefied natural gas, hydrogen, and

electricity. The advantages and disadvantages of

these fuels are discussed later.

Automobile Efficiency

OTA has concluded that the fuel economy of the

new car fleet could range from 29.2 to 30.3 mpg in

1995. With no fuel economy standards or other new

policies that could alter fuel economy, such as

gasoline taxes, and no significant changes in market

forces, domestically manufactured new car fleet

economy will be about 28.3 mpg. Total new car fleet

economy will be about 29.2 mpg, assuming a

35-percent import share. OTA believes that the

industry could realistically meet a higher level—

30.3 mpg—for 1995.

Significant.ly higher levels of fuel efficiency in the

long term (by 2010) can be achieved without drastic

IOIO& ~dge FJatio~ Uih-iw-y, op. cit., footnote 25, P. 69.

10~.s. cowe~~, office of TW~olo= Assesment, Improving Automobile Fuel Economy: New &a&r&, New Approaches, fOlthUILlliIlg ~pofi.
Chapter 2—Technologies Affecting Demand . 47

shifts in size and performance, using only technologies that are generally expected to be commercialized shortly after the turn of the century. A fleet fuel

economy of 45 mpg is possible. Some of the

technology changes needed to achieve this fuel

economy level include extensive use of aluminum

and fiberglass reinforced plastics, 5-speed automatic

transmissions, improved packaging, low-rolling resistance tires, and engine improvements, such as

weight reduction of reciprocating engine components, low-friction pistons and rings, five-valve

designs, and intake valve control.

By 2010 even higher levels of fuel efficiency are

possible if significant technological advances are

commercially available in the 2000-10 timeframe.

For example, a fleet fuel economy of about 55 mpg

can be attained if maximum weight and drag

reduction and packaging efficiency benefits are fully

exploited. Also, the direct-injection diesel engine

and turbocharging must capture 20 percent of the

small car market to realize this level of fuel

efficiency.

Electric vehicles can make a major contribution to

efficiency gains as well as urban air quality, but only

if storage technology is improved to address consumer acceptance and cost considerations. A forthcoming OTA report, Improving Automobile Fuel

Economy: New Standards, New Approaches, discusses indepth the potential for long-term automotive fuel efficiency.

Table 2-10 lists a number of technologies whose

introduction or wider use offer the potential to

improve fleet fuel efficiency. In addition, there are

a number of technologies at various stages of

development that appear to show promise of achieving large efficiency gains. For example, new designs

of a two-stroke engine for automobile applications

may be capable of achieving fuel economy gains of

11 to 14 percent over conventional four-stroke

engines. However, questions remain about the ability

of the engine to comply with emissions standards.

The advanced two-stroke engine employs direct

injection of fuel and forced air scavenging. Due to

forced air scavenging, the exhaust stream is lean, and

the technology (three-way catalysts) for reducing

NOX emissions is not yet available. This problem

may be solved with better control of airflow, and it

appears possible that with further development the

engine can meet future NO, standards.103

Other engine designs said to hold considerable

promise include direct-injection diesels and lowheat rejection engines (also called adiabatic diesels).

The direct injection (DI) diesel has seen limited

passenger car application in Europe. The DI diesel

was rated by Volkswagen and Mercedes Benz as

being 12 to 15 percent more efficient than the

indirect injection (prechamber) diesel. Previous

problems meeting nitrogen oxide and particulate

emissions standards have been solved. Audi plans on

introducing a direct injection diesel in the United

States. 104 Stricter emissions requirements could

pose a problem, however.

Adiabatic diesels eliminate the cooling system

required by current engines and insulate cylinders

and pistons to retain thermal energy within the

combustion chamber and exhaust system. The ability of this and other diesel engines to meet more

stringent emissions standards is in some doubt.

Heavy-Truck Efficiency

Opportunities for heavy-truck fuel efficiency

gains include better aerodynamics, reduced rolling

resistance, and the development of adiabatic diesels.

In a conventional diesel engine, about 25 percent of

the fuel energy is lost as waste heat to the cooling

and lubricating of fluids, and another 35 percent is

lost as waste heat in exhaust gases. The adiabatic

engines offer the greatest potential for improving

efficiency of freight transport. It may be capable of

achieving 40 to 50 percent decreases in energy lost

to waste heat.105

The ceramic gas turbine has also be identified as

a potentially attractive heavy-duty engine because of

its anticipated fuel efficiency and flexibility.

Aircraft Efficiency

Passenger travel by commercial jet

more than tripled since 1970. At the

energy use increased only by about

Higher load factors, improved engine

aircraft has

same time,

43 percent.

efficiencies

los~erwand Environmental tiySiS, ‘‘AnAssessment of Potential Passenger Car Fuel Economy Objectives for 2010,’ contractor report prepared

for the U.S. Environmental Protection Agency, February 1991, pp. 4-21,4-22.

lwlbid., p. 4-24.

IOSO* ~dge Natio~ Laboratory, op. cit., foo~ote 25, p. 3.
48 ● Energy Technology Choices: Shaping Our Future

Table 2-10--Reported Efficiency Improvements for Developed or Near-Term Technology

Percent improvements over 1987 basea

EEA Industry

estimates estimates

Technology (% F/E benefit) (% F/E benefit) Commentb

Front-wheel drive . . . . . . . . . . . . . . . . . . . . . . . . .

Drag reduction . . . . . . . . . . . . . . . . . . . . . . . . . . .

4-speed auto transmission . . . . . . . . . . . . . . . . .

Torque converter lock-up . . . . . . . . . . . . . . . . . .

5-speed auto transmission . . . . . . . . . . . . . . . . .

Electronic transmission control . . . . . . . . . . . . .

Continuously variable transmission (CVT) only.

Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

oil (5W-30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advanced tires . . . . . . . . . . . . . . . . . . . . . . . . . . .

Engine improvement

Fuel injection

—Throttle-body fuel injection . . . . . . . . . . . . .

—Multipoint fuel injection (over throttle body

injection) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Overhead camshaft . . . . . . . . . . . . . . . . . . . . . .

Roller cam followers . . . . . . . . . . . . . . . . . . . . . .

Low-friction pistons/rings . . . . . . . . . . . . . . . . . .

4 valves per cylinder engine . . . . . . . . . . . . . . . .

4 cylinder replacing 6d . . . . . . . . . . . . . . . .

6 cylinder replacing 8d 

. . . . . . . . . . . . . . . .

Intake valve control . . . . . . . . . . . . . . . . . . . . . .

10.0

2.3

4.5

3.0

2.5

0.5

3.5

-0.5

0.5

0.5

3.0

3.0

6.0

2.0

2.0

5.0

8.0

8.0

6.0

0.5-1.0

2.0

3.0

1.5-2.0

0.1-2.0

0.5

1.0-2.5

1.0

0.2

1.0

3.0

1.0-3.0

1.0-3.5

3.0

2.0

1.0-3.5

(-2.0)-0.5

1.0-3.5

1.5-3.0

Over 1970s rear wheel drive vehicles

Per 10 percent coefficient of drag reduction

Widely used in 1988

Wldely used in 1988

Over 4-speed automatic transmission

For automatic transmission only

Over 4-speed automatic transmission oars only

Varies between 0.3 and 0.7 depending on

market class

Already used in some large oars

—

Widely used

Widely used

Over old overhead valve design

Widely used in domestic oars

Except for specific engines already

incorporating technology

At constant performance

At constant performance

At constant performance

Synergistic effects with 5-speed auto/CVT

aThe list of technolo~ benefits cannot be summed to provide an overall benefit.

bFord Motor CCL% ex~anationsfor the significant differences between EEA and indU.Stry estimates:

Front-wheel driv+Ford’s analyses and data indicate that front-wheel drive provides a smali potential forfuel economy improvement because of a slight

reduction in vehicle weight (60 pounds) for mid-size and smaller cars. Ford rear-wheel drive models introduced since the late 1970s are 660 pounds lighter

than their predecessors. There are no technological reasons for a net efficiency gain with front-wheei drive.

4 valve over 2 valve engine—8asad on U.S. Environmental Protection Agency data, Ford indicates that the average fuei economy improvement is 3

percent for equal performance engines which have incorporated 4-valve designs. The 10:1 compression ratio assumed by EEA may not be appropriate for

all vehicles.

4 cylinder replacing 6 cylinder; 6 cylinder replacing 8 cylinder-Reducing the number of cylinders will reduce engine friction but increase lugging

speeds. As a result, 4-cylinder engines tend to have higher idling speeds and thus lower fuel economies than 6-cylinder engines; 6-cylinder engines have

slightly higher iugging speeds than 8-cylinder engines. Thus, no substantial fuel economy effect is realized by replacing 8 cylinders with 6.

Intake valve control-Systems that provide 6 percent fuel economy benefits are not suitable for typical engines because they severely compromise

wide-open throttle performance.

%ecause newly designed engines all have multiple impmvements, the efficiency benefits representad by individual changes are not easily separated.

dl gW Distribution: 20.5 percent-V-8; 29.5 percent—V-6; 50 percent-4 cylinder)

KEY: EEA - Energy and Environmental Analysis. F/E - Fuel efficiency.

SOURCES: Energy and Environmental Analysis, “AnAssessment of Potential Passenger Car Fuel Economy Objectives for2010,” contractor report prepared

for the U.S. Environmental Protection Agency, February 1991; and the Ford Motor Co.

and aerodynamics doubled seat-mile per gallon

efficiencies. 106

Aircraft efficiency will continue to improve as

newer, more efficient planes replace the older, less

efficient ones. For example, the Boeing 747-400 and

the 737-500 are 10 to 20 percent more efficient than

the equipment they replaced. Also, advances in

engine technology, aerodynamics, controls, and

structural materials for frames and high-temperature

materials for engine components will be required to

achieve improvements in fuel efficiency in the

future.

Engines

The ultrahigh-bypass turbofan engine achieves

greater thrust per pound of fuel used by sending as

little as 15 percent of the air entering the engine

shroud through the combustor. The remainder

passes around the core and is accelerated by turbine

engine-driven fans.

Ducted ultrahigh-bypass engines have yielded

efficiency improvements of 10 to 20 percent. Unducted, or propfans, using advanced propeller designs, can achieve 20 to 30 percent efficiency

l~Ibid., p. 5.
Chapter 2—Technologies Affecting Demand ● 49

improvements over current high-bypass turbofan

engines. However, these advanced engines cost

twice as much as current-generation high-bypass

engines. 107

Improvements in engine efficiency are dependent

on the development of high-temperature materials,

such as metal matrix and ceramic matrix composites.

These materials will allow higher turbine inlet

temperatures, reduce the need for airfoil cooling,

permit higher pressure ratios, and reduce engine

weight. Because these ceramic materials are subject

to brittleness and sensitive to flaws, they are currently

not being used. To achieve advanced engines’

efficiency gains, research will have to focus on

high-temperature materials.

Aerodynamics and Aircraft Weight

Further reductions in aerodynamic drag and

airframe weight are needed to achieve future energy

efficiency improvements. Advances in computer

hardware and software programs will enable engineers to optimize aircraft design. In addition, controlling air flow to minimize turbulence is necessary

to improve efficiency. Some promising concepts

include using suction on key wing surfaces to

smooth airflow and changing wing shapes to adapt

to changes in speed, altitude, and weight. Perhaps

the most promising concepts involve putting

grooves in the portion of the wing in front of the spar,

through which air is vacuumed to reduce turbulence,

with ultrasmooth wing surfaces behind to maximize

the area of naturally laminar flow. It is expected that

some of these wing concepts will be introduced in

the early 1990s. Two of Airbus’ new models will

include variable-camber wings that adapt their

profiles automatically during flight to match

changes in weight, speed, and altitude.108

In addition, composite materials have the potential for reducing frame weight by 30 percent with

equal or better structural strength. Today, composite

materials are used only for a limited number of

components such as vertical fins and the horizontal

surfaces of sailplanes. It is possible that future

advances could enable planes to be constructed of

80-percent composites by the 21st century.109

Alternative Fuels110

Alternative fuels of primary interest for the U.S.

light-duty fleet are:

. reformulated gasoline,

● alcohol fuels-methanol and ethanol,

● compressed or liquefied natural gas (CNG or

LNG),

. hydrogen, and

● electricity.

Interest in these fuels is based on their potential to

address environmental and energy security concerns. The use of alternative fuels as a substitute for

gasoline is being promoted by EPA, the California

Energy Commission, and others as a way to address

these concerns.

Much is already known about alternative fuels.

Not surprisingly, each of these fuels has disadvantages as well as advantages. Aside from fuel cost, the

major barrier that most alternative fuels must

overcome is the need to compete with the highly

developed technology and massive infrastructure

that exists to support the production, distribution,

and use of gasoline as the primary fleet fuel.

Concerns about the performance and range of

vehicles that use alternative fuels are also barriers to

introduction and public acceptance. Nevertheless,

each of the suggested alternative fuels has one or

more features, e.g., high-octane, low emissions

potential, that imply some important advantage over

gasoline in powering vehicles. Table 2-11 presents

some of the tradeoffs among the alternative fuels

relative to gasoline.

The technologies for producing alternative fuels

are still developing and changing. Ongoing research

and development programs are attempting to address

technical problems and reduce overall costs. For

example, the success of ongoing research on lowcost manufacture of ethanol from wood waste would

radically improve ethanol’s environmental and economic attractiveness. The outcome of this and other

research initiatives is still uncertain.

1°71bid., p. 6.

1°81bid., p. 7.

l@?J.bid.

llOMuch of the ~o~tion in thk s~tion is drawn from U.S. Con~ss, Oftlce of Technology Assessment Replacing Gasoline: Alternative Fuels

for Light-Duty Vehicles, OTA-E-364 (WashingtoxL DC: U.S. Government Printing OffIce, September 1990).
50 ● Energy Technology Choices: Shaping Our Future

Reformulated Gasoline reactivity of these emissions. It is appealing because

it requires no vehicle adjustments or new infrastrucReformulated gasoline is gasoline that has been ture, aside from modifications to existing refineries.

reblended specifically to reduce exhaust and evapo- Although reformulated gasoline is now being sold in

rative emissions and/or to reduce the photochemical many locations in the United States, these gasolines

Table 2-1 l—Pros and Cons of Alternative Fuels

Fuel Advantages Disadvantages

Methanol . . . . . . ● Familiar liquid fuel.

● Vehicle development relatively advanced.

. Organic emissions (ozone precursors) will have

lower reactivity than gasoline emissions.

● Lower emissions of toxic pollutants, except

formaldehyde.

● Engine efficiency should be greater.

● Abundant natural gas feedstock.

● Less flammable than gasoline.

● Can be made from coal or wood (as can gasoline),

though at higher cost.

● Flexfuel “transition” vehicle available.

Ethanol . . . . . . . ● Familiar liquid fuel.

● Organic emissions will have lower reactivity than

gasoline emissions (but higher than methanol).

● Lower emissions of toxic pollutants.

● Engine efficiency should be greater.

● Produced from domestic sources.

● Flexfuel “transition” vehicle available.

● Lower carbon monoxide with gasohol (1 O percent

ethanol blend).

● Enzyme-based production from wood being developed.

Natural gas . . . . ● Though imported, likely North American source for

moderate supply (1 mmbd or more gasoline displaced).

● Excellent emission characteristics except for potential of somewhat higher nitrogen oxide emissions.

● Gas is abundant worldwide.

● Modest greenhouse advantage.

● Can be made from coal.

Electric . . . . . . . ● Fuel is domestically produced and widely available.

● Minimal vehicular emissions.

● Fuel capacity available (for nighttime recharging).

● Big greenhouse advantage if powered by nuclear or

solar.

. Wide variety of feedstocks in regular commercial

use.

Hydrogen . . . . . ● Excellent emission characteristics, minimal hydrocarbons.

● Would be domestically produced.

● Big greenhouse advantage if derived from photovoltaic energy.

● Possible fuel cell use.

Reformulated

gasoline.. . . . ● No infrastructure change except refineries.

● Probable small to moderate emission reduction.

● Engine modifications not required.

● May be available for use by entire fled, not just new

vehicles.

● Range as much as one-half less, or larger fuel tanks.

● Would likely be imported from overseas.

● Formaldehyde emissions a potential problem,

especially at higher mileage, requires improved

controls.

● More toxic than gasoline.

● Ml 00 has nonvisible flame, explosive in enclosed

tanks.

● Costs likely somewhat higher than gasoline,

especially during transition period.

● Cold starts a problem for M1OO.

● Greenhouse problem if made from coal.

● Much higher cost than gasoline.

● Food/fuel competition at high production levels.

● Supply is limited, especially if made from mm.

● Range as much as one-third less, or larger fuel tanks.

● Cold starts a problem for E1OO.

● Dedicated vehicles have remaining development

needs.

● Retail fuel distribution system must be built.

● Range quite limited, need large fuel tanks with added

costs, reduced space (liquefied natural gas (LNG)

range not as limited, comparable to methanol; LNG

disadvantages include fuel handling problems and

related safety issues).

● Dual fuel “transition” vehicle has moderate performance, space penalties.

● Slower refueling.

● Greenhouse problem if made from coal.

● Range, power very limited.

● Much battery development required.

● Slow refueling.

● Batteries are heavy, bulky, have high replacement

costs.

● Vehicle space conditioning difficult.

● Potential battery disposal problem.

● Emissions for power generation can be significant.

● Range very limited, need heavy, bulky fuel storage.

● Vehicle and total costs high.

● Extensive research and development effort required.

. Needs new infrastructure.

● Emission benefits remain highly uncertain.

● Costs uncertain, but will be significant.

● No energy security or greenhouse advantage.

SOURCE: Office of Technology Assessment, 1991,
Chapter 2-Technologies Affecting Demand . 51

have been rushed into the market in advance of

research results, and their formulations may change

as ongoing research begins to identify optimal

gasoline formulae.

Methanol

Methanol, which is commonly known as wood

alcohol, is a light volatile flammable alcohol usually

made from natural gas but can be manufactured from

coal and biomass. It has an energy content of about

half that of gasoline (i.e., the fuel tank has to be twice

as big for the same range), an octane level of 101.5,

and a much lower vapor pressure than gasoline.

The advantages of methanol include its potential

to reduce urban ozone, particularly in cities that have

significant smog, and its high-octane level, which

allows higher (or leaner) engine air-fuel and compression ratios. Engines that operate at leaner

air-fuel and higher compression ratios are more fuel

efficient.

One of its disadvantages is its potentially high

price in relation to current gasoline prices. The

economic competitiveness of methanol continues to

be a source of controversy. Estimates of methanol

costs have ranged from competitive with gasoline to

much higher than gasoline. OTA concludes that

methanol will most likely be more expensive than

gasoline in the early stages of an alternative fuels

program. Without government guarantees, methanol’s gasoline-equivalent price is likely to be at least

$1.50/gallon. During the initial period, government

guarantees could bring the cost down to as low as

/$1.20/gallon if natural gas feedstock costs were very

low. Costs of manufacturing methanol from coal

will be much higher. A recent report by the National

Research Council estimates methanol-from-coal’s

crude oil equivalent price to be over $50/barrel, and

methanol from wood, over $70/barrel.111

Another disadvantage of methanol is its low vapor

pressure, which is problematic for cold weather

starts. Also, methanol is more toxic than gasoline. It

is absorbed through the skin more quickly than

gasoline, but prolonged or frequent contact is

necessary for acute symptoms to appear.112

Methanol is the most “ready” of the alternative

fuels. Methanol for chemical use has been produced

for many decades and thus production technology is

well known. Recent attention has focused on the

potential for using methanol as an automotive fuel,

either 100 percent methanol or mixed with up to

15-percent gasoline. Vehicle technology capable of

burning a gasoline/methanol blend has been demonstrated and could be produced in a few years. Work

is continuing on improving the efficiency, driveability, and emissions characteristics of methanolburning engines.

A number of cities and States have expressed

interest in methanol use. California, for example, has

a program to stimulate the development of a fleet of

methanol-capable vehicles. Moreover, Congress has

passed measures to stimulate development and sales

of methanol-powered vehicles, and is considering

legislation to develop alternative-fueled fleets in

cities suffering from ozone problems.

Ethanol

Ethanol is a grain alcohol that is produced by

fermenting starch and sugar crops. It has an energy

content of about two-thirds that of gasoline and, like

methanol, an octane level of 101.5, and a much

lower vapor pressure than gasoline. Because of its

high octane level, an ethanol-powered vehicle will

outperform an equivalent gasoline vehicle and

provide some improvement in energy efficiency.

Ethanol made from food crops would be the most

expensive of the major alcohol fuels. Even so, it has

managed to gain support because of its potential

contribution to the agricultural economy. Every

year, nearly 1 billion gallons of ethanol are added to

U.S. gasoline stocks to create gasohol. The addition

of small quantities of ethanol to gasoline is viewed

primarily as a means to reduce carbon monoxide

emissions; the use of 100-percent ethanol is viewed

as a means to reduce concentrations of ozone in

urban areas.

Improvements in the current production system

are needed to enhance ethanol’s prospects for use in

transportation. SERI and others are conducting

R&D on ethanol-from-biomass production processes and have achieved important advances. SERI

lllcommitt= on fi~uction Tedmologies for Liquid Transportation Fuels, National Research Counc& “Fuels TO Drive @T FUtUR” (w_tOQ

DC: National Academy Press, 1990).

llzP.A.~c~ele, ~~Apew=tiveon~eF_bfli~, Toxicity, andEnviro~enM Safety Dis~ctiomBe~~n Methanol and Convention fidS, ”

American Institute of Chemical Engineers 1989 Summer National Meeting, Philadelpl@ PA Aug. 22, 1989.
52 ● Energy Technology Choices: Shaping Our Future

recently formed a cooperative partnership with the

New Energy Co. of South Bend, Indiana, to commercialize the process developed by SERI. SERI hopes

to be able to produce ethanol-horn-biomass for no

more than $25/barrel of oil equivalent by the end of

the decade.113

Currently, ethanol production is profitable because the Federal Government and about one-third

of the States subsidize ethanol use by partly exempting gasohol (a 90-percent gasoline/10-percent ethanol blend) from gasoline taxes. The current Federal

Government subsidy amounts to $0.60/gallon.

Under certain market conditions, ethanol production

may reduce Federal crop subsidies and generate

secondary economic benefits to the Nation. However, it also may generate large secondary costs by

promoting crop expansion onto vulnerable, erosive

lands.

Natural Gas

Either compressed or liquefied natural gas can

serve as an alternative fuel for vehicles. There are

about 700,000 CNG vehicles in use worldwide, with

the largest group in Italy. Generally, natural gaspowered vehicles are gasoline vehicles retrofitted to

use either gasoline or natural gas. At current prices,

dual-fueled vehicles are not cost competitive with

gasoline-powered ones in most uses, and they will

not become so unless oil prices rise sharply while

gas prices stay low or gasoline is heavily taxed.

Most of these dual-fueled vehicles have less

power and some driveability problems when powered by natural gas. The power loss and drivability

problems are due to the design and/or installation of

the retrofit components. Improvements in power and

driveability can be realized with more sophisticated

retrofit kits or in factory-built, dual-fueled vehicles.

Nevertheless, dual-fueled vehicles will have a difficult time competing with gasoline vehicles or

vehicles fueled with other, higher energy density

fuels.

Single-fueled vehicles optimized for natural gas

use are likely to be more attractive in terms of

performance and somewhat more attractive in terms

of cost. The cost of pressurized storage will make the

vehicles more expensive (about $700 to $800 more)

than a similar gasoline-powered vehicle. A natural

gas-powered, single-fuel vehicle should be capable

of similar power, similar or higher efficiency, and

substantially lower carbon dioxide (COZ

) emissions

but somewhat higher NOX emissions than an equivalent gasoline-powered vehicle. Natural gas-powered

vehicles have the potential to leak methane, which is

the prime constituent of natural gas. Methane is a

more powerful greenhouse gas per molecule than

COZ

. In addition, the range of natural gas-fueled

vehicles will continue to be unattractive compared to

gasoline-fueled vehicles.

The Ford Motor Co. has done extensive work with

CNG vehicles, including light-duty car and trucks,

as well as heavy-duty trucks.

Hydrogen

Hydrogen, which is the lightest gas, has a very

low energy per unit of volume because it is so light,

but it has the highest energy content per pound of

any fuel. It can be used in a fuel cell and in internal

combustion engines. Hydrogen is available from a

number of sources. It can be produced from hydrocarbons or from water by several processes: 1) coal

gasification; 2) combining natural gas and steam

(steam reforming); 3) applying high temperatures,

with or without chemicals, to water (thermal and

thermochemical decomposition); 4) adding an electrolyte and applying a current to water (conventional

electrolysis; potential sources of the electricity are

discussed in chapter 3), or by electrolyzing steam

rather than water (high-temperature steam electrolysis), or by using light with a chlorophyll-type chemical to split out the hydrogen (photolysis) from

water. Currently, steam reforming of natural gas is

the least expensive production method.

Hydrogen’s primary appeal is its cleanliness and,

ultimately, its enormous resource base (water). A

hydrogen-powered vehicle should emit virtually no

hydrocarbons, particulate, sulfur dioxide, COZ or

carbon monoxide, and only moderate NO= emissions. Disadvantages of using hydrogen include its

high cost, and low energy density (one-sixth that of

gasoline), and the need for onboard vehicle storage.

Onboard storage can be either in the form of heavy

and bulky hydrid systems that will adversely affect

range and performance, or in bulky cryogenic

systems that will reduce available vehicle space.

Both are expensive.

1

13’ ’SERI Signs First Cooperative R&D Agreernen~” New Technology Week, vol. 5, No. 19, May 6, 1991, p. 8.
Chapter 2—Technologies Affecting Demand .53

The thermal efficiency of a hydrogen-powered

engine should be at least 15 percent higher than an

equivalent gasoline engine, and even higher in a fuel

cell. As with other fuels, engine efficiency, performance, and emissions are interdependent, and maximizing one may increase or decrease the others. For

example, operating very lean will increase efficiency but decrease power and driveability.

The development of a hydrogen-fueled fleet is

still in the early stages of research. Work needs to be

done on storage and delivery systems, large-scale

production systems, and engines. The production

system with the largest resource base--coal gasification-may be the closest to becoming fully

commercial. (The Lurgi gasifier is fully commercial

and some others are arguably commercial.) However, coal gasification will create substantial negative impacts from COZ emissions. The Cool Water

integrated coal gasification combined cycle plant

has performed extremely well, and the next generation technology is expected to achieve substantial

improvements in cost and efficiency. The Japanese

and West Germans have strong hydrogen vehicle

development programs, but they have produced only

a small number of prototype vehicles. Major uncertainties remain about the configuration and performance of a hydrogen engine. Also, a breakthrough in

storage technology may be needed, and work needs

to be done on pipeline transport because pure

hydrogen will damage certain steels. Inhibiting

agents to be added to hydrogen must be found, or a

separate pipeline infrastructure must be built.

Electricity

The use of electricity as a fuel has several

advantages: available and adequate supply infrastructure, with the exception of home charging

stations, and virtually no vehicular emissions. The

latter advantage can be particularly important in

polluted areas. Pollutants that are emitted at generating stations that must be operated to charge the

batteries often play only a minor role in urban air

quality, but do contribute to problems associated

with long-range pollution transport, particularly acid

rain and degradation of visibility. OTA has concluded that a fleet of several tens of millions of

vehicles could be supported by existing generating

capacity, assuming that vehicles would be recharged

at night when electricity demand from most other

uses is low.

Disadvantages of electric vehicles (EVS) using

current technology, in particular lead-acid batteries,

include limited range, performance and capacity.

Most EVs built to date have required recharging at

about 100 miles or less. They are also expensive to

buy and may require a special charger. DOE

estimates the cost for a home recharging station to be

$400 to $600.

Improving the prospects for electric vehicles in

the marketplace will depend on extending their

range considerably and upgrading performance in a

variety of traffic situations. This can be accomplished by improving battery and powertrain technologies. The outlook for significant improvements

in commercial battery technology appears promising, but uncertainties remain about costs and the

environmental implications of disposing and recycling associated with battery production. The advanced batteries necessary for successful EV penetration in the urban market are too far away from

mass production to allow reliable cost estimates to

be made. A number of advanced battery types show

promise. These include nickel/iron, nickel/cadmium,

zinc/bromide, lithium/iron sulfide, sodium/sulfur,

and metal-air.

Some analysts consider the nickel/iron battery

very promising for the next generation of electric

vehicles because it has demonstrated long lifecycle

and ruggedness. This battery type, however, produces large quantities of hydrogen during recharge,

uses a lot of water, and is relatively inefficient.

Leading European battery developers have halted

developmental work on nickel/iron batteries. The

high-temperature sodium/sulfur battery offers much

higher energy and power densities than lead/acid

and nickel/iron types. Also, it has no water requirement, does not produce hydrogen when recharging,

and has very high charging efficiencies. In the long

term, the metal air battery holds some promise. This

battery type has high power density and can be

recharged rapidly by replacing the metal anodes,

adding water, and removing byproducts. However,

metal-air batteries are the farthest from commercial

readiness.

A consortium was recently formed to accelerate

research on EV batteries. The consortium consists of

the three U.S. automakers, the Electric Power

Research Institute (EPRI), and several utilities. The

members have proposed a 4-year, $300-million

R&D project that will focus on reducing or holding
54 ● Energy Technology Choices: Shaping Our Future

Photo credit: General Motors Corp.

General Motors’ prototype electric vehicle, the Impact. The

Impact’s battery pack, shown being installed, takes up the

center portion of the vehicle. The current range of the

vehicle is over 100 miles between charges. With improved

batteries-a key hurdle facing this technology-both range

and efficiency would increase.

the line on battery costs, reducing weight, and

increasing power capacity. DOE will provide

50 percent of the funding and participate in the

project, although it is not a member of the consortium. 114

Over the years, interest in EVs has fluctuated, but

recent concerns about air quality have put this

technology back on the R&D agendas of U.S.

automakers. In January 1990, General Motors introduced the Impact, its most recent electric-powered

car design. According to General Motors, the Impact

has a range of 120 miles at average highway speeds

of 55 mph. Battery charging can be done by simply

plugging in an onboard charger and will require

about 2 hours to complete. General Motors has not

announced production plans, and cost information is

not available.115

In addition, EPRI and the Chrysler Corp. recently

announced plans to develop an electric-powered

minivan suitable for passenger or light-service work.

The Chrysler electric-powered minivan will have a

top speed of 65 miles per hour and will be able to go

120 miles between charging. It will use a nickel/iron

battery with an onboard charging unit. Chrysler

hopes to begin production and marketing by 1994.116

EPRI and General Motors also have a similar

ongoing project. Production of the General Motors

electric-powered van has just begun.117

Also, hybrid electric vehicles have been attracting

attention as a way to exploit the respective advantages of gasoline and electricity. For example, in one

type of hybrid, an electric motor provides the motive

power, and a small gasoline-powered engine is used

as an electric generator to provide the range. In

another type of hybrid, a small gasoline-powered

engine provides the motive power with an electric

motor providing additional power. Yet another

hybrid is the fuel cell-powered electric vehicle. A

fuel cell is used to charge the battery and an electric

motor provides the motive power. The fuel cell can

operate on hydrogen or reformulated methanol.

Fuel cell hybrids are at an early stage of development. Concerns about fuel cell cost and weight and

low power density represent important market barriers that will have to be addressed before the use of

vehicle fuel cell systems is a viable option.

OTHER FACTORS THAT AFFECT

ENERGY USE

Environmental Concerns

Recent concerns about environmental problems

such as air pollution, ozone depletion, and the

greenhouse effect could influence how buildings use

energy and how buildings get energy. For example,

the recently signed international agreement, the

Montreal Protocol,118 set out a schedule for reducing

production and consumption of many chlorofluorocarbons (CFCs), the major source of ozone depletion. The Montreal Protocol requires participating

countries with high CFC use per capita (greater than

0.3 kilograms) to reduce production and consumption of the most common CFCS-CFC-11 and

 Advanced Battery Consortium Has “ Federal Lands, Mar. 11,1991, p. 10; and “DOE Increase in Commitment to Electric Vehicle Battery R&D,” Jan. 14, 1991, 

 Highlights, 

 To 14, p. 7.

 destroying stratospheric ozone, 47 reached on a set of 

measures in September 1987. A stronger version was adopted in June 1990.
Chapter 2—Technologies Affecting Demand ● 55

CFC-12-by 20 percent of 1986 levels in the next

3 years, and to achieve a 50-percent reduction by

1997, and a 100-percent phaseout by the year 2000.

CFCs are used primarily in refrigeration systems,

including automobile air conditioners, refrigerators,

and centrifugal chillers, and in building insulation

foams. In the United States, refrigeration accounts

for 80,000 tons of CFCs used per year, or about 22

percent of the total. A typical refrigerator contains

about 1/2 pound of CFC in its cooling systems and

21⁄2 pounds in its foam insulation.

119 CFCs a r e

released during the manufacturing process, servicing and disposal of air-conditioners and refrigerators. Some CFCs used in insulating foams are also

released during the manufacturing process, but most

remain in the foam and slowly leak out over time.

Therefore, a large reservoir of CFCs exist within

buildings.

Alternatives to CFC insulation and refrigerants

are available, and others are being developed. The

chemicals industry is developing manufacturing

processes for these products. In addition, alternative

building designs and construction techniques can

reduce the need for air-conditioning and supplemental insulation. Also, using air-conditioning technologies based on waste heat or solar energy can exploit

alternative ways to maintain comfortable temperatures in buildings.

In the transportation sector, concern about urban

smog and the greenhouse effect may have an impact

on vehicle energy efficiency. The new more stringent emission standards, especially for NOX will

force manufacturers to tradeoff cost, fuel efficiency,

and emissions. Historically, manufacturers have

pursued a variety of strategies to achieve previous

standards. For example, to meet the 1981 emissions

standards, many Japanese manufacturers chose to

use oxidation catalyst technology and accepted an

efficiency loss of 6 to 8 percent; General Motors met

the same standard with “closed loop” electronic

fuel control systems with three-way catalysts that

incurred no efficiency loss. The effect of the new

NO= standard (0.4 grams/mile) on fuel efficiency is

not clear-cut. One OTA contractor, Energy and

Environmental Analysis, Inc., estimated the potential fuel economy penalty (or gain foregone) to be

about 1 percent, with significant variation possible,

depending on how the manufacturers choose to trade

off efficiency and costs.120 Another OTA contractor,

Sierra Research, indicates that automakers need not

sacrifice efficiency if they are willing to add more

catalysts, at a cost of about $100.

Environmental and, most recently, energy security concerns have renewed an interest in alternative

transportation fuels as a way of reducing ozone

levels in urban areas and decreasing U.S. reliance on

foreign oil supplies. The oil crises of the 1970s

spurred a number of Federal initiatives to supplement or replace gasoline with alternative fuels

produced from domestic coal and oil shale. These

initiatives, which were generally not viewed as

successful, were largely abandoned in the early

1980s.

In September 1990, the California Air Resources

Board approved a smog control plan that is expected

to reduce hydrocarbon emissions by 28 percent,

nitrogen oxide by 18 percent, and carbon monoxide

by 8 percent by the year 2000. The plan phases in

progressively cleaner vehicles, which could include

compressed natural gas vehicles and ‘flexible-fuel’

cars, and requires the production of electric vehicles.

A number of other States are considering similar

standards, which are stricter than the recently passed

clean air standards.

Appliance Efficiency Standards

Appliance efficiency standards will also have an

impact on energy efficiency. The Federal Government and several States have enacted minimum

efficiency standards for residential appliances. Although NAECA does not set standards as high as can

be achieved by the best currently available technology, it does require that standards be reviewed and

allows for raising them. Standards for refrigerators,

freezers, and small gas furnaces have been promulgated. Standards for other appliances are being

developed.

In the 1970s, California took the lead by adopting

efficiency standards for a wide range of products,

including refrigerators, freezers, air conditioners,

and heat pumps. Even tougher standards were

adopted by the California Energy Commission in the

mid-1980s. In 1987, the National Appliance Energy

Conservation Act of 1987 (NAECA) set minimum

ll~oughton, op. cit., footnote 52.

IZ%.G. ~e~, r)ir~tor of Engineering at the Energy and Environmental Alldysis, rnc., pCXSOMl COIMllUlliCatiOn.
56 ● Energy Technology Choices: Shaping Our Future

Table 2-12-Cumulative Energy Impacts of the National Appliance Energy Conservation Amendments

of 1988, 1990 to 2015

Base case Savings Savings

Electricity All fuels Electricity All fuels Electricity all fuels

Department of Energy region (TWh) (quads) (TWh) (quads) (%) (%)

New England . . . . . . . . . . . . . . . . 1,261 18.1 13 0.1 1.0 0.7

New York/New Jersey . . . . . . . . . 1,833 28.6 27 0.3 1.5 1.0

Mid Atlantic . . . . . . . . . . . . . . . . . . 3,464 30.9 69 0.2 2.0 0.8

South Atlantic . . . . . . . . . . . . . . . . 9,112 21.8 320 0.1 3.5 0.4

Midwest . . . . . . . . . . . . . . . . . . . . . 5,234 63.1 110 0.5 2.1 0.8

Southwest . . . . . . . . . . . . . . . . . . . 4,022 23.1 135 0.2 3.4 0.8

Central . . . . . . . . . . . . . . . . . . . . . 1,584 14.3 38 0.1 2.4 0.7

North Central . . . . . . . . . . . . . . . . 1,312 13.3 20 0.1 1.5 0.7

West. . . . . . . . . . . . . . . . . . . . . . . 3,423 26.9 61 1.8

Northwest . . . . . . . . . . . . . . . . . . . 2,087 5.8 29 0.3/(0.0) 1.4 (0.3)

Total . . . . . . . . . . . . . . . . . . . . . 33,332 245.8 822 1.9 2 . 5 0.8

SOURCE: Lawrence Berkeley Laboratory, “The Regional and Economic Impacts of the National Appliance Energy Conservation Act of 1987,’’ Berkeley, CA,

June 1988.

efficiency (or maximum consumption) standards for

many appliances121 and will result in the least

efficient appliances being taken off the market. The

standards, which apply at the point of manufacture,

vary according to product type and size.

The initial Federal standards are relatively stringent. For example, of all classes of refrigerators,

refrigerator-freezers, and freezers, only 7 models out

of 2,114 listed in the Association of Home Appliance Manufacturers directory meet the 1993 standards. Most models will have to be improved or

redesigned over the next 2 years. Thus, the standards

could have a significant impact on residential energy

use in the future. The American Council for an

Energy Efficient Economy estimated that by 2000,

the standards will reduce U.S. residential energy use

by about 0.9 quads/year and peak summer demand

by 21,000 MW.122

LBL also estimated the impacts of the appliance

standards on energy use. Table 2-12 shows the

energy impacts by region by the year 2015. A

reduction in electricity use is the primary benefit of

the standards. According to LBL, the standards will

save 2.8 quads of electricity; the percentage savings

for all other fuels are relatively modest compared to

those for electricity. The largest absolute and

percentage electricity savings will occur in the South

Atlantic and Southwest regions. The large savings in

these regions can be attributed to the relatively

greater cooling loads found in these climates and

thus the prevalence of air conditioning.123

Other impacts of the standards include a slight

shift away from central air and heat pumps in favor

of room air conditioners. LBL notes that the

interaction of a number of factors, including equipment costs, climate, and consumer preferences, are

responsible for the shift. In addition, electric water

heaters sales are expected to increase at the expense

of other types of water heating equipment. The

projected increase in electric water heater sales

results from the higher cost of efficient nonelectric

water heaters, according to LBL. Both shifts are

small-about 1 to 3 percent. LBL notes that the

national appliance standards will produce a net

savings benefit of $25 billion.124

Building Energy Codes

Standardized building energy codes that define

thermal characteristics have the potential to improve

energy efficiency by preventing the least efficient

buildings from being constructed. Currently there is

little support from States and localities and the

construction industry. In the 1970s there was some

interest in a standardized code for new buildings.

121~~n product *S~e included: 1) refrigerators, refrigerator-freezers, and freezers; z) room air Condition_; 3) Centd air WnditiOn~ ~

central air conditioning heat pumps; 4) water heaters; 5) furnaces; 6) dishwashers; 7) clothes washers; 8) clothes &yrs; 9) direct heating equipment;

10) kitchen ranges and ovens; 11) pool heaters; 12) television sets; and 13) fluorescent lamp ballasts.

lz~~er, op. cit., footnote 13, p. 30.

l~Jos~hH. Eto et~., ti~ence Berkeley hhmtory, The RegionalEnergy andEconomichnpacts of the NationalAppIianceEnergy co~~ation

Act of 1987, June 1988, pp. 15, 16, and 19.

l~Ibid.
Chapter 2—Technologies Affecting Demand ● 57

Congress enacted legislation in 1976 requiring the

development of the Building Energy Performance

Standards, a mandatory national code based on

performance standards. However, before the building energy performance standards were finalized in

1983, the law was modified to be mandatory only for

Federal buildings.

The American Society of Heating, Refrigeration,

and Air-Conditioning Engineers (ASHRAE) also

promulgates standards. ASHRAE standards, which

typically require a 3-year payback period, are

regularly updated. Compliance is voluntary; most

States adopt but poorly enforce the ASHRAE

standards. The Federal buildings standards are

nearly identical to ASHRAE’s new Series-90, but

they, too, are seldom enforced.

ASHRAE previously released standards in 1975

and 1980. The 1980 standard was estimated to result

in energy reductions in commercial buildings of 12

to 29 percent compared to buildings constructed in

the late 1970s. Modifications to lighting contributed

about half of the total savings. The new ASHRAE

standard is expected to provide 20- to 25-percent

energy savings in commercial buildings over the

previous ASHRAE code. It is important to note,

however, that the average energy efficiency of new

buildings in most States exceeds the 1980 ASHRAE

standards.

Some States, especially on the west coast, require

tighter standards and enforce them. Other States are

considering novel approaches to encouraging energy

efficiency. For example, the State of Massachusetts

is considering hookup fees and rebates to encourage

energy efficiency in new commercial buildings.

Commercial buildings (50,000 square feet or larger)

that will use more electricity per square foot than

average would be charged a stiff utility hookup fee.

Buildings designed to use less electricity than

average will receive a rebate. The fees collected

from the owners of the less-energy efficient buildings are rebated to the energy efficient building

owners.i n

Standards are equally important for existing

buildings. Some cities in California have recently

enacted conservation ordinances for existing residential and commercial buildings. These ordinances

stipulate that a building must be upgraded to

minimum standards before the title is transferred.126

Corporate Average Fuel Efficient (CAFE)

Standards

The purpose of the CAFE standards is to boost

fuel efficiency beyond what the manufacturers

believe the market alone warrants. From 1973 to

1987, automobile fuel efficiency gains were impressive. The current CAFE standards establish a uniform efficiency target of 27.5 mpg that must be

achieved by all manufacturers regardless of the mix

of vehicles in their fleets. The efficiency target,

however, is subject to revision, pending ongoing

U.S. Department of Transportation rulemaking. The

current standard places a more difficult technological burden on companies that sell a mix of vehicle

sizes than on companies selling small vehicles only.

Automakers who focus on small cars will have more

flexibility than the “full line” manufacturers to

introduce features that are attractive to consumers

but are fuel inefficient. OTA indicates that a higher

fuel economy level could be achieved if all automakers were required to improve efficiency to the

maximum extent possible.

Electric Utility Programs—Demand-Side

Management

Demand-side management programs can result in

greater investments in energy efficient equipment

and building shell improvements. Utilities in all

regions of the country are using demand-side management programs to reduce load and to possibly

defer the need for future generating capacity additions. In addition, State public utility commissions

and energy offices have supported these programs.

EPRI forecasts that by the year 2000 demand-side

management programs could reduce summer peak

demand by 6.7 percent (45 GW) and annual electric

use by 3 percent.127

Demand-side management programs include activities undertaken by a utility or customer to

influence electricity use. Activities undertaken by

utilities include rate programs (time of use or time of

day), interruptible rates, real-time pricing, no de1~Bevington and Rosenfeld, op. Cit., foo~ote 35, pp. 85-86.

126~id.

127E1ec~c PowerReS=Ch~ti~te, “~pact of r)e~nd-side -gement on~u~e C@oma Elec~c@~~& An Update,” EPRI CU-6953,

September 1990, p. v.
58 ● Energy Technology Choices: Shaping Our Future

mand charge under certain conditions, and use of

“smart’ demand meters. The time of use rate is the

most frequently used.128

A growing number of utilities offer financial

incentives to commercial, industrial, and residential

building owners who invest in energy efficient

equipment, such as appliances, space conditioning

systems, lighting products, and motors. Rebates

were the most popular form of financial incentive.

Most utilities use minimum efficiency levels as the

unit of measure for the rebates.

A national survey completed in 1986-87 found

that about 35 to 50 percent of the Nation’s utilities

have some type of energy efficiency rebate program.

The most frequently stated purpose of the rebate

program was to promote energy efficiency, followed

by peak load reduction. According to the survey,

commercial and industrial rebate programs reduced,

on average, peak demand by 13.6 MW per year.

Residential rebate programs reported peak demand

savings, on average of 9.7 MW per year. The average

peak demand reduction for all programs was 21 MW

per year.

129

Another survey, conducted by ORNL, found that

many utilities increasingly recognize the commercial buildings sector as a significant source of

untapped savings in energy and corresponding peak

demand. Rebate programs for commercial buildings

are likely to expand and proliferate in the future

because of the potential cost and energy savings of

such initiatives, according to ORNL.

And, there are indications that utilities are willing

to go beyond financial incentives to encourage

investment in energy efficiency. For example, Pacific Gas and Electric (PG&E), with help from the

Natural Resources Defense Council (NRDC), developed a $2 billion, 10-year program aimed at

promoting energy efficiency. The program includes

a state-of-the-art facility for demonstrating and

developing energy efficient technologies, which is

expected to open in late 1991, a research study to

identify economical ways to improve energy efficiency, consumer education programs, and, of

course, financial incentives. PG&E’s goal is to cut

peak demand growth by 75 percent (2,500 MW) for

the 1990-2000 period.130

Under this innovative program, PG&E shareholders and customers are expected to benefit. After

efficiency measures are installed, dollar savings are

estimated. For every dollar saved, shareholders will

received 15 cents. Customers will receive 85 percent

of the savings through rate reductions. However,

customers will pay slightly higher rates in the short

term to cover the costs of the program.131

Oil Supply and Price Uncertainties132

Short-term or even long-term interruptions in the

availability of Middle Eastern crude oil always

remain a possibility. Oil supply interruptions and the

accompanying increases in oil prices weaken the

U.S. economy, increase inflation, and decrease

personal disposable income. After the Iraqi invasion

of Kuwait in early August 1990, crude oil prices

jumped from about $18/barrel to a high of more than

$40/barrel and then back down again. The initial

hike in oil prices contributed to the U.S. recession.

There was also some concern at the time that

escalating oil prices would trigger a global recession.

While the demand for petroleum is generally

sensitive to price, other factors can also influence

consumption. Existing plant and equipment and the

potential for sizable shifts in fuel preference can

limit the ability to save oil. Also, personal disposable income and demographic changes can also have

an impact on oil use. Thus, there is considerable

uncertainty about the rate of investment in energy

saving equipment during an oil disruption. In fact,

lmJ.O. Kolb and M.fj. Hubbar~ ‘CA Review of Utility Conservation programs for the commercial Building Sector,” ORNL/CON-zXl O*R.i@e

National Laboratory, Oak Ridge, TN, 1988, p. 26.

1294 ‘A ComPn&W of utility-SpOIISOd Energy Effkiency Rebate Programs,’ report prep=d by the CO nsumer Energy Council of American

Research Foundation and the American Council for an Energy Efficient Economy for the Electric Power Research Institute, EPRI EM-5579, Palo Alto,

@ December 1987.

130TeS~ony of ~eg M. Ru%m, Sefior Vice president and ~ne~ wger, Electric Supply, ~cflc GM and Ekchic, before the U.S. sate

Committee on Energy and Natural Resources, Regarding Titles III and IV of the National Energy Security Act of 1991, Concerning Energy Effkkmcy

and Renewable Energy, Feb. 26, 1991; and “PO&E Launches $2-Billion Energy Saving Prognuq” LosAngeles Times, Business Sectiom Mar. 14, 1991,

p. D1.

131rbido

13~orade~~ di5WSSion of U.S. ~~bili~ t. oil d~ptions, seeu.s. Congress, ~lce of Tec~ology Assessment, U.S. vuznerabizi~ to an Oil

Zmport Curtaibnent, OTA-B243 (WashingtorL DC: U.S. Government Printing Offlce, September 1984), and a forthcoming update.
Chapter 2—Technologies Affecting Demand .59

the strain of high oil prices on personal disposal

income may actually minimize investment in more

energy efficiency equipment. For example, residential and commercial oil users may be unable to invest

in new heating and hot water equipment at a time

when their heating bills are straining their finances.

Or, consumers may defer the purchase of new, more

efficient automobiles.

In any event, the increasing U.S. reliance on

foreign oil supplies, particularly the insecure sources

of supply in the Middle East, and the potential for

large increases in oil prices should be strong

incentives to evaluate the energy efficiency progress

that has been made to date and to continue to look for

energy-saving opportunities. During the Arab oil

embargo of 1973-74, crude oil prices quadrupled,

and more than doubled again during the Iranian

crisis of 1978-80. These disruptions and the resultant

increases in oil prices changed U.S. thinking about

the importance of energy. Historically, the U.S.

simply shifted from one supply source to another as

declining supplies or other concerns shifted consumer preferences. Little research attention and

policy concern were given to energy conservation

until after the 1973 oil embargo. However, rising oil

prices and the specter of insufficient supplies that

followed 1973 set in motion a flurry of research,

demonstration, and development programs, government initiatives, and private commitment to pay

attention to the cost of energy and to lower that cost

through improved efficiency in design and process.

Federal spending for conservation R&D, for example, increased from about $3 million in fiscal year

1974 to $406 million in fiscal year 1980 (1982

constant dollars),133 but has since declined. The

result of all of these efforts was that the U.S.

economy became considerably more energy efficient, across all sectors.

Fuel Switching

Fuel switching away from oil was another response to the oil disruptions of the 1970s. It became

an important way of restoring services formerly

supplied by oil and enhancing the reliability of fuel

supplies. Many energy users in the industrial and

utility sectors now have the capability to switch

between alternative fuel sources quickly-often

with only a twist of a knob-to take advantage of

relative differences in fuel prices and availability.

Today, there are more than 100,000 dual-fuel units

in the United States. About two-thirds can burn gas

continuously.

Typically, utilities switch from oil to gas when

gas prices are lower and vice versa. For example, in

1979 and 1987, utilities switched to natural gas

because prices were lower. And, in 1986 the reverse

was true.

Additions to fuel switching capability will depend

on a number of factors, including seasonal and

regional demand, availability of supplies, price

considerations, and technical constraints. Much fuel

switching capability has already been realized. Since

the mid-1970s, many oil-fired generating plants

have been converted to gas- or coal-fired units.

Those that have not been converted generally

include units that are too small to justify conversion,

or cannot be converted because of environmental or

financial constraints, or lack coal-burning handling

and storage capability. In addition, inadequate fuel

supplies or storage may preclude switching on an

immediate or continuous basis.

Given these considerations, DOE estimates that

natural gas could at a minimum replace about 85,000

barrels of oil per day immediately.134 The DOE

estimate could be higher when several new pipeline

projects come on line. The projects are being

developed to supply domestic and Canadian gas to

the northeast and California. Also, acid rain legislation will make natural gas a more attractive fuel

option for reducing sulfur emissions.

lssCo~essio~Res~ch Servim,Energy CoMervation: TechnicalEflciency andProgram Electiveness, IB85 130, UPtitiJ~. 10,1991, a~ched

tables.

l~u.S. ~er= ~o~tionAtistration, Department of Energy, Electric Power i140nthZy, “PetroleumF uel-Switching Capability in the Ekctric

Utility Industry,” September 1990.
Chapter 3

Technologies for

Energy Supply and Conversion
CONTENTS

Page

U.S. ENERGY SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

TECHNOLOGICAL OPPORTUNITIES FOR IMPROVING FOSSIL

FUEL SUPPLIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Petroleum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-FOSSIL FUEL ENERGY AND ADVANCED TECHNOLOGIES . . . . . . . . . . . . .

The Nuclear Power Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Future Electricity Supply Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Renewable Energy Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .

OTHER FACTORS AFFECTING SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Environmental Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Obstacles to a Nuclear Revival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Electric and Magnetic Fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Electricity Demand Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66

66

71

74

78

79

84

84

91

103

103

105

107

107

Figures

Figure Page

3-1. Production Platform Technologies for Frontier Areas . . . . . ., * . . * . * . * * . . . . . . . . . . 68

3-2. Location of Principal Tight Formation Basins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

3-3. Pressurized Water Reactor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

3-4. Boiling Water Reactor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

3-5. First Generation CAES Plant . . . . . . . ., . . . . . . *, . . . . . . . . . . . . * * * *, * * * * * *...*..., 88

3-6. DOE Energy R&D Budget: 1980-1991 Selected Budget Lines . . . * . *,, **.**.... 91

Tables

Table Pa&+

3-1. Major Technologies for Energy Supply and Conversion . . . . . . . . . . . . . . . . . . . . . . . . 64

3-2. Production of Energy by Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

3-3. Status of Alaska State Coastal Exploration, Development, and

Production Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * . * * * *, **..*... 69
Chapter 3

Technologies for Energy Supply and Conversion

Despite stable energy supplies and prices, recent

events in the Middle East and declining domestic oil

production have triggered concern over the longterm adequacy of U.S. energy supplies. In addition,

environmental considerations, e.g., global warming

and high ozone levels in urban areas, will continue

to have an impact on energy supply choices.

A variety of technologies (table 3-1) show promise for replacing and/or extending the Nation’s oil

and gas resources and providing other options.

Included are technologies for improving coal combustion, electric power generation, and nuclear and

renewable energy supply options. This chapter

begins with a brief summary of U.S. energy resources and ends with a discussion of nontechnical

factors that could affect U.S. supply options.

U.S. ENERGY SUPPLY

Fossil fuels continue to dominate the U.S. energy

market. Table 3-2 shows U.S. energy production by

source from 1970 to 1989. Coal accounts for the

largest share of domestic energy production today.

The U.S. Energy Information Administration (EIA)

indicates that there are enough coal reserves to

sustain current levels of production for more than

200 years. Most of the coal (62 percent) is mined east

of the Mississippi River, but Western coal has been

increasing its share since the mid- 1960s. The growth

in Western coal production is partly a result of

environmental concerns over Eastern high-sulfur

coal. Also, surface mining, which is more prevalent

in the West, has a higher productivity rate than

underground mining.1

Coal has been the United States’ major energy

export. Japan, Italy, and Canada are our leading

customers. Together they accounted for about 41

percent of total coal exports in 1989.2 In the United

States, electric utilities are the largest market for

coal.

The United States has used more than half of its

oil and gas, and estimates of undiscovered recoverable resources are inherently uncertain. Oil production in the contiguous States has been declining

since the mid-1970s, and in 1989 Alaskan production declined for the first time since 1981. The low

price of oil over the past 4 years has contributed to

this decline.

Exploration was also affected by the low price of

crude. According to the EIA, exploration indicators

showed a dramatic drop in the number of seismic

crews, operating rigs, and completed wells.3 More

oil will be discovered in the United States, but it is

very unlikely that new discoveries will reverse the

long-term decline.

This decline in production translates into a greater

dependence on oil imports. In 1989, petroleum net

imports reached 41 percent of total consumption.

Saudi Arabia, Canada, Venezuela, and Nigeria are

our biggest suppliers. These and other oil producing

countries have used less than 35 percent of their

resources. According to a recent resource assessment, the Middle East has the majority of the

identified reserves for the world, enough oil to

continue production for 124 years. It is likely that the

United States will continue to import Middle Eastern

oil for many decades.4

Since the early 1980s, domestic natural gas

production has been declining. New wells have been

added, but at a much slower pace than previously.

Texas, Louisiana, and Oklahoma produce more than

two-thirds of the U.S. total. Most of the natural gas

is from onshore and State offshore wells, but about

one-fourth is produced from leased Federal offshore

areas.

s

Recent estimates indicate that demand for natural

gas will continue to exceed growth in domestic

production. In 1989, natural gas imports accounted

Iu.s. Energy ~ormation Atitration, Department of Energy, Annual Energy Review 1989, DOE/EIA-0384(89), my 2x$, 1990. p. 177.

?Ibid., p. 178.

31bid., p. 1.

‘@.D. Masters et al., “World Resources of Crude Oil, Natural Gas, Natural Bitumem and Shale Oil,” paper presented at World Petroleum Congress,

Housto% TX, 1987; in Oak Ridge National Laboratory, Energy Technology R&D: What Could Make a Diference? “Supply Technology,”

ORNL-6541/V2/P2, vol. 2, Part 2, December 1989, pp. 2-4.

SU.S. Ene~ Mormation Administration, op. cit., footnote 1, p. 158.

--63–
64 ● Energy Technology Choices: Shaping Our Future

Table 3-l-Major Technologies for Energy Supply and Conversion

Technology Availability Comments

Oil

Deepwater/arctic technologies

Enhanced oil recovery techniques

—thermal recovery

-miscible flooding

-chemical flooding

Oil shale and tar sands

-Surface retorting

—Modified in situ

Natural gas

—Hydraulic fracturing

Coal

—Atmospheric fluidized-bed combustion (AFBC)

—Pressurized fluidized-bed combustion (PFBC)

—Integrated gasification combined cycle (IGCC)

—flue-gas desulfurization (FGD)

-Sorbent injection

-Staged combustion

Nuclear

—Advanced light water reactor

—Modular high-temperature gas reactor (MHTGR)

—Power Reactor Inherently Safe Module (PRISM)

Electricity

—Combined cycle (CC)

—Intercooling Steam Injected Gas Turbine (ISTIG)

—Fuel cells

—Magnetohydrodynamics (MHD)

—Advanced batteries

—Compressed air energy storage (CAES)

Biomass

—Thermal use

-Gasification

—Production of biofuels

Geothermal

—Dual flash

—Binary cycle

Solar thermal electric

-Central receiver

—Parabolic solar trough

—Parabolic dishes

Photovoltaic

-Concentrator system

—Flat-plate collector

Wind power

Ocean thermal energy conversion (OTEC)

C,R

C,R

C,N

c

N,R

N

c

C,N

R

c

N,R

R

c

N

R

R

R

c

c

c

C,R

N

R

c

N,R

R

c

R

Existing technologies that are promising for deepwater areas include

guyed and bouyant towers, tension leg platforms, and subsea

production units. Advances in material and structural design critical;

innovative maintenance and repair technologies important.

Widely adopted over the past two decades.

Uneconomic at present oil prices.

Very complex process; not well understood although successful for some

formations. Key to unlocking unconventional gas reserves.

Small-scale units commercial. Utility-scale AFBC in demonstration stage.

PFBC is less well developed; pilot-plant stage.

Demonstration stage. Primary advantages are its low emissions and high

fuel efficiency.

Mature technology; considerable environmental advantages.

Commercially available control technology. Can remove nitrogen oxides

up to 90 percent.

Has potential to remove up to 80 percent of nitrogen oxides.

Incorporates safety and reliability features that could solve past

problems; public acceptance uncertain.

Improvements to familiar technology; incorporates passive safety

features; design of modular reactor completed.

Conceptual designs expected to be completed this year.

Conventional CC is a mature technology; advanced CC is in

demonstration stage.

Pilot-plant stage.

Several types being developed. Fuels cells that use phosphoric acid as

electrolytes are in demonstration stage. Molten carbonate and solid

oxide are alternative electrolytes that are less developed. Late 1990s

availability, at the earliest.

Difficult technical problems remain, especially for coal-fired MHD

systems.

Research and development needed in utility-scale batteries to improve

Iifetime cycles, operations maintenance costs. Promising batteries are

advanced lead, zinc-chloride and high-temperature sodium-sulfur..

First U.S. plant (11O-MW) to begin operation in 1991; owned and

operated by Alabama Electric Cooperative, Inc.

Use of biomass by utilities is usually uneconomical and impractical.

Anaerobic digestion used commercially when biomass rests are low

enough. Methane production from biomass not yet competitive with

conventional natural gas unless other factors considered.

Research being done on wood-to-ethanol/methanol conversion

processes. Could be demonstrated by 2000.

Single-flash system used extensively. Little commercial experience with

dualflash. Binary cycle system may be availabfe in 40-to50-MWe range

by 1995.

Several plants built, including one in California; 30-MW plant in Jordan is

major project today.

Several commercial plants built in California; additional capacity planned

appears to be marketable.

Testing being conducted in new materials and engines such as

free-piston sterling engine.

Improvements needed to make photovoltaic cells economic in the bulk

power market advances in microelectronics and semiconductors can

make photovoltaics competitive with conventional power by 2010.

Renewable source closest to achieving economic competitiveness in the

bulk power market. Current average cost is 8 cents/kWh.

Research focused on closed and open cycle systems: no commercial

plants designed. May be competitive in 10 years for small islands

where direct-generation power is used. Use of OTEC domestically for

electric power is unlikely except for coastal areas around Gulf of Mexico

and Hawaii.

KEY: C = commeraal; N = nearly commercial; R - research and development needed.

SOURCE: Office of Technology Assessment, 1991.
Chapter 3-Technologies for Energy Supply and Conversion ● 65

Table 3-2--Production of Energy by Source (quadrillion Btu).

Natural Nuclear

Natural Crude gas plant Hydroelectric electric

Year Coal gas’ oilb

liquids power c power d Other Total

1970 . . . . . . . . . . . . . . . . . .

1971 . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . .

1973 . . . . . . . . . . . . . . . . . .

1974 . . . . . . . . . . . . . . . . . .

1975 . . . . . . . . . . . . . . . . . .

1976 . . . . . . . . . . . . . . . . . .

1977 . . . . . . . . . . . . . . . . . .

1978 . . . . . . . . . . . . . . . . . .

1979 . . . . . . . . . . . . . . . . . .

1980 . . . . . . . . . . . . . . . . . .

1981 . . . . . . . . . . . . . . . . . .

1982 . . . . . . . . . . . . . . . . . .

1983 . . . . . . . . . . . . . . . . . .

1984 . . . . . . . . . . . . . . . . . .

1985 . . . . . . . . . . . . . . . . . .

1986 . . . . . . . . . . . . . . . . . .

1987 . . . . . . . . . . . . . . . . . .

1988 . . . . . . . . . . . . . . . . . .

1989 . . . . . . . . . . . . . . . . . .

14.61

13.19

14.09

13.99

14.07

14.99

15.65

15.76

14.91

17.54

18.60

18.38

18.64

17.25

19.72

19.33

19.51

20.14

20.74

21.35

21.67

22.28

22.21

22.19

21.21

19.64

19.48

19.57

19.49

20.08

19.91

19.70

18.25

16.53

17.93

16.91

16.47

17.05

17.49

17.78

20.40

20.03

20.04

19.49

18.57

17.73

17.26

17.45

18.43

18.10

18.25

18.15

18.31

18.39

18.85

18.99

18.38

17.67

17.28

16.12

2.51

2.54

2.60

2.57

2.47

2.37

2.33

2.33

2.25

2.29

2.25

2.31

2.19

2.18

2.27

2.24

2.15

2.22

2.26

2.16

2.63

2.82

2.86

2.86

3.18

3.15

2.98

2.33

2.94

2.93

2.90

2.76

3.27

3.53

3.35

2.94

3.02

2.59

2.31

2.77

0.24

0.41

0.58

0.91

1.27

1.90

2.11

2.70

3.02

2.78

2.74

3.01

3.13

3.20

3.55

4.15

4.47

4.91

5.66

5.68

0.01

0.01

0.03

0.05

0.06

0.07

0.08

0.08

0.07

0.09

0.11

0.13

0.11

0.13

0.17

0.21

0.23

0.24

0.24

0.22

62.07

61.29

62.42

62.06

60.84

59.86

59.89

60.22

61.10

63.80

64.76

64.42

63.90

61.21

65.85

64.77

64.23

64.82

65.97

66.07

a Dry natural gas.

b

lncludes lease condensate.

cElectric utility and industrial generation of hydroelectric power.

dGenerated by electric utilities 

eOther is electricity generated for distribution from wood, waste,geothermal,wind, photovoltaic, and solar thermal energy.

NOTE: Sumofcomponents maynotequal total duetoindependent rounding.

SOURCE: U.S. Energylnformation Administration, Armua/Energy/?etiew 1989, DOWElA-0364(89), May24, 1990; and Month/yf%ergyReviewApti/ 1991,

DOE/EIA-0035(91/04), Apr.26, 1991, p.19.

for almost 7 percent of total gas consumption and are

expected to increase in the near term. Canada is our

major supplier with Algeria providing smaller

amounts. The United States also exports small

amounts of gas to Japan.6

Electricity has steadily increased its share of the

total U.S. energy market from 24.4 percent in 1970

to about 36 percent in 1989. In the past 15 years, the

electric utility industry has had financial problems

due to excess capacity, as powerplants ordered in the

1970s came online and demand growth fell below

industry’s expectations. Excess capacity is disappearing as demand grows and local shortages may

occur, but overall, resources appear to remain

adequate. In fact, according to the North American

Electric Reliability Council, most regions have more

than enough capacity to meet their increasing needs

for several years. This projection rests on two

assumptions: 1) that electricity use increases at

projected rates, and 2) that existing and planned

capacity is available as projected.

Since the mid- 1970s, coal- and nuclear-powered

generation have displaced substantial quantities of

petroleum and natural gas. Growth in oil and gas use

began to slow in the 1970s, and consumption

decreased during the first half of the 1980s. In 1989,

coal accounted for 56 percent of electric utility

consumption, compared to 9 percent for natural gas

and 6 percent for petroleum.7

Nuclear power accounted for about 19 percent of

electricity generation in 1989,8 and preliminary U.S.

Department of Energy (DOE) estimates indicate that

nuclear power’s share increased by 1 percent in

1990. 9 Nuclear power’s contribution to electric

power generation has increased steadily since the

mid- 1960s. The number of operable nuclear generating units reached an all-time high (1 12) in 1989, but

only a few of the planned new units remain under

‘%id.

mid., p. 203.

81bid., p. 219.

%J.S. Energy Information Administration, Electic Power Monthly March 1991, DOE/EIA-U226(91/03), March 1991, p. 23.
66 ● Energy Technology Choices: Shaping Our Future

construction, and no additional units are planned.10

Uncertainty about electricity demand, increases in

construction costs and rising interest rates, and

questions about nuclear safety and waste disposal

have contributed to the decline of nuclear power as

a supply option.

Renewable energy resources account for a small

share of total energy supplies today. Hydroelectric

power is by far the greatest contributor, accounting

for about 2.7 quads (quadrillion British thermal

units) in 1989.11 However, concerns about the

environment and our dependence on imported oil

have renewed interest in alternative sources of

energy. The conversion of solar energy to electricity,

using either photovoltaics or thermal-electric technologies, offers an exciting but not yet competitive

resource under traditional economic terms. Continued improvements in performance and cost of

electric power from wind turbines and geothermal

technologies are also expected.

TECHNOLOGICAL

OPPORTUNITIES FOR

IMPROVING FOSSIL FUEL

SUPPLIES

Oil, natural gas, and coal are the primary energy

sources in the United States because they are

convenient and economical. They are expected to

remain so in the foreseeable future. Technologies

that can extend the production of oil and gas or

replace them with equivalent fuels from coal are the

focus of this section. In addition, new technologies

for improving the combustion of coal are examined.

Petroleum

Conventional Production Technology

Primary conventional techniques utilize natural

forces to coax the oil to the surface. Pressurized

water can be used to displace oil, or oil can be

drained downward from a high elevation in a

reservoir to wells at lower elevations. However,

most of the reservoir’s oil remains in place. Techniques can be used to augment natural forces. These

include injecting fluids (commonly, natural gas) into

an oil reservoir. This is commonly known as

secondary recovery. Conventional primary and secondary recovery technologies can recover about

one-third of the oil in place.

Drilling techniques also can be used to improve

recovery. Geologically targeted infill drilling, for

example, involves drilling reservoirs at closer than

normal intervals. Each reservoir has to be geologically targeted in order for this recovery method to be

economical. The Oak Ridge National Laboratory

(ORNL) estimated that the geologically targeted

infill-drilling technique will recover an additional 8

percent of the original oil in place.12

In addition, the use of horizontal drilling in

offshore production is rapidly expanding. The advantages of using horizontal drilling are improved

recovery, better drainage, and the ability to drill and

complete several wells from one offshore production

platform. 13

Deepwater Technologies14

Most of the undiscovered oil and gas reserves in

the United States are expected to be found offshore

or onshore Alaska. The Alaska Outer Continental

Shelf (OCS) region includes about 1,300 million

acres. The U.S. Department of the Interior has leased

8.2 million acres since 1976.15

The technologies to explore and produce the oil

and gas in these remote locations have developed,

and will probably continue to develop, in an

evolutionary fashion. The oil and gas industry

moved its onshore technology offshore-frost onto

piers, then onto seabed-bound platforms, and finally

onto floating vessels as it ventured into deeper water.

Technological advances continue to be made as new

deepwater fields are discovered. From the mid1960s to mid-1980s, technological developments

improved deepwater exploratory drilling from a

maximum depth of 632 to 6,952 feet.

1~.s. En~gy ~o~tion Admi.nismtioq op. cit., footnote 1, p. 219.

lllbid., p. 7.

l@A Mdge National Laboratory, op. cit., footnote 4, p. 12.

lqrbid.

ldMo~t of ~discu~~ion ~ b~~ on tie OTA ~epofi oil and Gas Technologies for the Arctic and~eep~ater, OTA-0-270 ~aShk@OQ ~: U.S.

Government Printing Oflke, May 1985). The reader is referred to this report for a more indepth discussion of the technological, economic, and

environmental factors that affect exploration and development of energy resources in the Arctic regions.

15u.s0 ~p~ent of tie ~te~or, ~m~s -g=ent SeNice, Alas~ update: septe&er ]$l&Jan~q 1990, MMS90-(1012,” 1990, p. 1.
Chapter 3--Technologies for Energy Supply and Conversion ● 67

Thus far, nearly all offshore fields have been

developed using freed-leg production platforms.

These platforms can probably be designed for water

depths of 1,575 feet or more. However, as depths

increase, structures become larger, more substantial,

and thus more expensive. The cost and size of these

platforms may limit their application to greater

depths.

Existing technologies that are promising for

deepwater areas include guyed and buoyant towers,

tension leg platforms, and subsea production units.

(See figure 3-l.) All but the subsea units are flexible

structures that ‘‘give way” under wind, wave, and

current forces. Current technologies can be extended

to depths of about 8,000 feet without the need for

major breakthroughs.

The guyed tower is a tall, slender structure that

requires less steel than a freed-leg platform. Guy

lines or anchor lines are used to resist lateral forces

and to hold the structure in a nearly vertical position.

Exxon installed the first guyed tower in the Gulf of

Mexico. The buoyant tower is also a tall, slender

structure. Large buoyancy tanks, rather than guy

lines, maintain the tower’s vertical position.

A tension leg platform is a floating platform that

is freed by vertical tension legs to foundation

templates on the ocean floor. Buoyancy is provided

by pontoons. Bouyancy in excess of the platform

weight maintains tension on the legs. This technology can be used economically in deep water. Its

primary disadvantages are the operational complexity relative to fixed platforms and its limited deck

load capacity. The first tension leg platform was

installed in 1984 by Conoco in the North Sea.

Subsea production systems are also used to

develop deepwater fields. Wells are drilled from a

floating rig and completed on the seafloor. There are

two types of subsea production systems: wet or dry.

The wet system is relatively insensitive to water

depth and can be installed in deep water in much the

same manner as in shallow water. It is limited by the

depth capability of the floating drilling unit. In the

dry system, the well head is housed in a dry,

atmospheric chamber on the sea floor. Flowline

connection and maintenance work can be done by

workers inside the chamber. Personnel are transported to and from the chamber in a diving bell. Most

subsea production systems are single well. The oil is

produced through a flowline to shore or to a freed or

floating platform. One of the limitations of this

system is the need to have surface facilities to

process and transport the oil.

A number of production-related technologies are

crucial to the development of deepwater areas.

Advances in materials and structural design and

foundation engineering are critical. Innovative techniques for the installation, maintenance, and repair

of platforms and pipelines are also important.

Deepwater pipeline systems will involve adaption

from conventional pipelaying techniques, but new

approaches will have to be developed to overcome

problems, e.g., buckling by long unsupported span

lengths, higher strain levels, and severe seas. Support operations, e.g., diving and navigation, will be

increasingly important. Because human diving capability is limited, manned vehicles and remotecontrolled unmanned vehicles will be increasingly

used for these purposes.

Arctic Production16

Offshore exploration of the Arctic region began in

the mid- 1970s. Since then, the pace of activity and

technological advances have increased significantly.

See table 3-3 for the status of North Slope exploration and production projects.

Because of the severe environment, oil and gas

development in the Arctic region is a major technological challenge. Production systems must withstand exposure to severe and corrosive conditions

for the life of the oil fields, which is usually 20 years

or more. Ice conditions, including duration, thickness, and movement, are perhaps the most critical of

the environmental considerations.

The type of exploratory drilling rig and the

technology needed for field development are determined by site and environmental conditions. Most

offshore exploratory drilling has been done from

manmade (gravel) islands. However, gravel islands

could be prohibitively expensive in water deeper

than 50 to 60 feet. The alternatives are steel and

concrete structures built as caissons or complete

bottom-mounted units. There are many designs for

these structures, including conical shapes to reduce

ice forces.

Additional research is needed on ice properties,

movements, and forces under a range of conditions

IG~ctic is defimed as me Beatio~ Chtichi, and Bering Seas north of the Aleutian Islands.
68 ● Energy Technology Choices: Shaping Our Future

Figure 3-1—Production Platform Technologies for Frontier Areas

Statfjord 8 Magnus

Concrete Gravity Base Platform Steel Template- Hutton

(Norway) Jacket Platform Tension-Leg Platform Block 2280 Troll

(1982) (U. K.) (U. K.) Guyed Tower (U. S.) Concrete Gravity-Base

\ a (1982) (1984) (1984) Platform

To anchor (1 ,350 feet) Sea floor 1,122 feet

SOURCE: U.S. Congress, Office of Technology Assessment, Oil and Gas Technologies for the Arctic and Deepwater, OTA-O-270 (Washington, DC: U.S.

Government Printing Office, May 1985), figure 3-3.

that are likely to be encountered. Increased surveillance from satellites and aircraft is needed to provide

real-time data. These data are important for structural design purposes, logistics, and tanker transportation design and planning. In addition, more information is needed on oceanographic and meteorological processes and seismicity.

Exploration Technology

Many experts believe that

States’ low-cost oil has been

most of the United

discovered and produced. Increasingly, new production must come

from oil finds in hostile, expensive frontier areas or

from high-technology, high-cost oil recovery operations. Improvements in technologies that measure

gravity and magnetism and record seismic informaion are critical to selecting favorable drill sites.

Seismography, which was originally developed to

record earthquakes, is now used as a prospecting

tool. A seismograph provides the only direct way of

acquiring subsurface structural information without

drilling wells. The petroleum industry has recently

developed new recording instruments called seismometer group recorders.

Another improvement, the borehole gravimeter,

can measure rock densities as far as several hundred

feet away from the borehole. The borehole gravimeter can also be used to indicate rock content—

whether it is oil, dry gas, or water. This information

is key to understanding structural conditions.

Continual advances in computers and electronic

equipment have made it possible to analyze larger

geographical areas more easily and interpret data

more accurately.

Enhanced Oil Recovery

As noted earlier, conventional recovery techniques recover on average about 34 percent of the oil

in place. Improvements can be made by using

enhanced oil recovery techniques. The techniques

most commonly used are thermal recovery, miscible flooding, and chemical flooding. They have

been widely adopted over the past two decades. The
Table 3-3-Status of Alaska State Coastal Exploration, Development, and Production Projects

Desig- ExploraUnit/field/ nated Lease Sale Reserves Reserves tory Delin- Devel- Primary Secondary Tertiary Status as of

prospect operator sale date in place recoverable drilling eation opment production production production December 1989

Colville Delta Texaco N/A N/A

(Texaco)

Duck Island Unit BP Joint Federal- 09/10/69 1,000 MMBO 0,8 Tcf

(Endicott) Exxon State lease 12112179 375 MMBO

Sale

Gwydyr Bay Unit ARCO State Sale 23 09/10/69 30-60

MMBO

Kaktovik Prospect Chevron Negotiated with 11/83 N/A

(KIC well) Arctic Slope

Regional Corp.

Kuparuk Unit ARCO State sale 14 07/14/65 4,400 MMBO

N/A

070

MMBO

Lisburne Field ARCO State sale 14 01/24/67 3,000 MMBO 165 MMBO

Mine Point Unit Conoco State sale 14 07/14/65

Niakuk Prospect BP State sales 14 07115165 145 MMBO

and 18 01/24167 88 Bcf

North Star Amerada N/A

Hess

Pt. McIntyre ARCO State sale 14 07114165 N/A

Point Thomson Exxon State sale 18 01/24/67

Unit

Prudhoe Bay Unit ARCO/BP State sale 13, 12/09/64 23.5 BBO

sale 14, sale 18 07/14/65

01/24/67

UGNU Field in ARCO State sale 13, 12/09/64 6-11 BBO

Kuparuk/ sale 14, sale 18 07/14/65

Prudhoe/Mine 01/24/67

West Sak Field ARCO BF(SM) 12/12/79 15-25

BBO

60 MMBO

58 MMBO

35 Bcf

150 MMBO

300 MMBO

350 MMBO

5 Tcf

9.4 BBO

29 Tcf

o

750 MMBO

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

No activity.

x Maintain production at 100,000 bpd.

Total of 12 wells. Renewed interest in

prospect by Vaughn Petroleum (et

al.) in 1987. Drilled two wells both

P&A. Reduced reserve estimates

and wait for higher oil price. Conoco

resigns as operator.

Tight hole.

x x x Steady production at 260,000 bpd; 39

percent oil field depleted.

x x Recoverable reserve estimates

reduced 50 percent.

x Shutdown since January 1987; Conoco

received drilling permits. Plans to

begin production again.

Army Corps of Engineers rescinded

earlier causeway denial. BP must

submit additional data on causeway,

Initial stages of development; proposed

unit agreement.

Drilled three wells in 1988 and 1989

with approved drilling permits for

three more.

Will drill another delineation wellspring

1990.

x x x Enhanced recovery techniques and

sale good reservoir management will

keep production at 1.5 MMbpd

through 1969 with slower production

decline now anticipated. Eileen West

End Field started producing in June

1988. Peak production will be 60,000

to 70,000 bpd in 1990 from 76 wells.

Drilled production test well April 1989.

Loose sandstone reservoir and low

American Petroleum Institute gravity

present major technological hurdles.

ARCO filed application with ACOE to

build gravel pads. Subsequently,

delayed citing economic impact.

KEY: ACOE = Army Corps of Engineers; BBO = billion barrels of oil; Bcf = billion cubic feet; bpd = barrels per day; MMBO = million barrels of oil; Tcf - trillion cubic feet.

SOURCE: U.S. Department of the Interior, Minerals Management Service Alaska Update, September 1988-January 1990, MMS90-0012,1990, p. 33.
70 ● Energy Technology Choices: Shaping Our Future

use of enhanced recovery methods is dependent on

the characteristics and location of the field.

Thermal Recovery Process—The viscosity of

crude oil varies considerably. Some crudes flow like

road tar, others as readily as water. High viscosity

makes oil difficult to recover with primary or

secondary production techniques. Viscosity of most

oils decreases as the temperature increases. The

purpose of thermal oil recovery processes is to heat

the oil to make it flow more easily. The oil can be

heated by injecting hot water, steam, or hot gases

into a well.

More than 90 percent of thermal recovery projects

in the United States are in California, where heavy

crudes are common. According to ORNL, total oil

recovery using primary pumping and thermal recovery can exceed 50 percent of the available oil in the

field. The cost of the thermal process can range from

$3 to $18 per barrel.17

Miscible Gas Flooding—Another common approach to enhanced oil recovery is miscible gas

flooding. Miscible gas, which is usually either a

hydrocarbon mixture (natural gas) or carbon dioxide

(CO2), is injected into a well. Inert gases, such as

nitrogen, can also be used for gas flooding. The

gases act as solvents, forming a single oil-like liquid

that can flow through a reservoir to other wells more

easily than the original crude. Hydrocarbon gas

flooding is economical when there is a large supply

of available natural gas. For example, hydrocarbon

flooding accounts for about 10 percent of oil

production in Alberta, Canada, where there is a large

supply of natural gas associated with the production

of oil. Also, unused natural gas can be injected back

into the field to increase oil yield. This is being done

in the Alaskan North Slope fields.18

In the contiguous United States, the use of

hydrocarbon flooding is less common because of the

lower availability of and greater demand for natural

gas. COZ flooding is more common. COZ is injected

under such high pressure that it becomes like a liquid

which is miscible with oil. More than 60 percent of

gas flooding projects in the United States use carbon

dioxide. The cost of COZ flooding ranges from about

$10 to $23 per barrel.19

Chemical Flooding—A number of other processes involve injecting chemicals (e.g., surfactants

and polymers) into the water-flooded field to alter

the properties of the liquids. Polymers are added to

the field to increase the viscosity of water. Surfactants are used to alter the surface properties of the

oil-water and permit the removal of oil from

capillary regions of a field. Chemical flooding

processes are not yet well developed. Moreover, oil

yields from these processes are difficult to predict.

The cost of polymer flooding can be low but so too

can the yield of additional oil. One estimate of the

cost of surfactant flooding is between $15 and $30

per barrel. In addition, the degradation of chemicals

can be a problem.20

Microbial enhanced oil recovery is a variation of

chemical flooding. Microorganisms, which are introduced into a reservoir, produce detergent-like

materials that would perform much the same function as polymers and surfactants. This technology is

not well developed and a number of uncertainties

remain. For example, any bacteria developed would

need to be monitored for potential environmental

impacts.

Although enhanced oil recovery is a particularly

attractive technology for extending known oil supplies, it is hampered by a number of uncertainties.

These include the inability to predict the amount of

oil that can be recovered and the difficulty in

characterizing the field. These uncertainties may

limit the use of enhanced recovery techniques to

those projects where improvements in recovered oil

are sufficient enough to take the risk. Current

research and development (R&D) programs are

focusing on understanding the physical processes

taking place in an enhanced recovery operation and

quantitatively examining the structure and flow

patterns of the field.

Oil Shale and Tar Sands

Production Technologies

Oil shale is the second most abundant fossil

energy resource in the United States. North American oil shale resources in place are estimated at

5,600 billion barrels. How much is recoverable is not

170* ~dge National Laboratory, op. cit., footnote 4, pp. 12-13.

181bid., p. 13.

l%id.

%id.
Chapter 3-Technologies for Energy Supply and Conversion . 71

known. 21 At present oil prices, recovery of these

resources is uneconomic.

Oil shale consists of a porous sandstone that is

embedded with a heavy hydrocarbon known as

kerogen. Because the kerogen already contains

hydrogen, a liquid shale oil can be produced from the

oil shale simply by heating the shale to break the

kerogen down into smaller molecules. This can be

accomplished by a surface retort process, a modified

in situ process, or a so-called true in situ process.

Liquid shale oil can be upgraded relatively easily to

crude oil.

In the surface retort method, oil shale is mined and

placed in a metal reactor where it is heated to

produce the oil. This method is best suited to thick

shale seams near the surface. In the modified in situ

process, an underground cavern is excavated and an

explosive charge detonated to fill the cavern with

broken shale rubble. Part of the shale is ignited to

produce the heat needed to crack the kerogen. Liquid

shale oil flows to the bottom of the cavern and is

pumped to the surface. The modified in situ method

is used in thick shale seams deep underground. In the

true in situ process, holes are bored into the shale and

explosive charges are ignited in a particular sequence to break up the shale. The rubble is then

ignited underground, producing the heat needed to

convert the kerogens to shale oil. The true in situ

method is best suited to thin shale seams near the

surface.

The surface retort method requires the mining and

disposal of larger volumes of shale than the modified

in situ method. The true in situ method requires very

little mining. However, high oil yields of relatively

uniform quality are difficult to achieve using the

modified and true in situ methods. This is due to

difficulties in controlling underground combustion

and ensuring that the heat is efficiently transferred to

the shale.

Since 1980, Unocal has constructed a commercial-size oil shale project in Colorado. The underground mine produces 13,500 tons of crushed ore per

day, and the retorting complex is designed to

produce 10,000 barrels of oil per day. In 1988, the

complex operated for several months at 5,000 to

6,000 barrels per day at a cost of $45/barrel.22

Tar sands resources in North America are estimated at315 billion barrels, most located in Canada.

Oil from tar sands is being commercially produced

at the huge Athabasca deposit in Alberta, Canada. In

the United States and Canada, much of the resource

is not minable at the surface and will have to be

produced using in situ extraction technologies. R&D

efforts have focused on the chemical and physical

properties of tar sands and the physics of mobilizing

and extracting the bitumen constituents.23

Natural Gas24

Conventional Gas Production

The way in which gas is produced depends on the

properties of the reservoir rock and whether the gas

occurs by itself or in association with oil. Hydrocarbons in the reservoir rock migrate to the producing

well because of the pressure differential between the

reservoir and the well. How readily this migration

occurs is a function of the pressure of the reservoir

and the permeability of the reservoir rock. When the

reservoir rock is of low permeability, the rock may

be artificially fractured to form pathways to the

wellbore. This is accomplished either with explosives or by hydraulic means, pumping a pressurized

fluid into the well.

Production can continue as long as there is

adequate pressure in the reservoir to propel the

hydrocarbons toward the producing well. If gas is

the only propellant, the reservoir pressure decreases

as the gas is extracted and is eventually no longer

sufficient to force the hydrocarbons toward the well.

In a water-driven reservoir, water displaces the

hydrocarbons from the pores of the reservoir rock,

maintaining reservoir pressure during production

and improving the recoverability of the hydrocarbons. In most reservoirs, gas recovery is high

compared to oil recovery. A recovery value of 80

percent is typical.

z%id., p. 9.

‘Ibid., pp. 18-19.

~Ibid.

~Muchof tie infomtionin this s=tion is @wfrom the OTA report U.S. NaturaZGasAvaiZabiZi~: Gas Supply Through the Year20@l, OW-E-245

(Washington, DC: U.S. Government Printing Office, February 1985). The reader is referred to this report for a more indepth analysis of conventional

and unconventional gas supplies.
72 ● Energy Technology Choices: Shaping Our Future

When gas occurs in association with oil, it can be

reinfected into the reservoir to maintain pressure for

maximum oil recovery. Gas is also reinfected when

there are no pipeline facilities available to transport

it to market.

Enhanced Gas Recovery

At some reservoirs, recovery efficiencies are

much lower than 80 percent. For example, recovery

rates for water-driven reservoirs found along the

Texas and Louisiana Gulf Coast are known to be 50

percent or less. These poor recovery rates result from

water encroachment and the subsequent trapping of

gas in water-driven reservoirs and from uncertainties

about the characteristics of the reservoir. A better

understanding of gas field characteristics and improvements in drilling and production technologies

would increase recovery efficiencies.25

Unconventional Gas Production

Unconventional @s includes tight sands, Devonian shale, methane from coal, and geopressured

brine. The Devonian shales and methane from coal

are the best understood of the unconventional

resources and appear to have the most near-term

potential for contributing to supply. Estimates of

total recoverable unconventional gas resources are

600 trillion cubic feet (Tcf) for tight sands, 400 Tcf

for Devonian shale, and 400 Tcf for coal seams.2G If

natural gas is to play a significant role in reducing

C02 emissions, it will be important to find ways of

recovering ‘‘unconventional’ gas resources.

Tight gas is natural gas that is found in formations

of sandstone, siltstone, silty shale, and limestone.

These formations are characterized by their very low

permeability. There are two distinct types of tight

formations: blanket formations, which extend laterally over large areas, and lenticular formations,

which consist of many small discrete reservoirs,

often shaped like lenses. Figure 3-2 shows the main

tight gas-bearing basins in the contiguous United

States.

Over the past several decades, rising gas prices,

tax policies, and improvements in production technology have encouraged gas producers to exploit

more lower permeability formations. Because of

poor flow characteristics of reservoir rock in tight

formations, economically recoverable gas can be

achieved only by increasing permeability by fracturing the rock surrounding the wellbore. This fracturing is most commonly hydraulic, which involves

pumping a fluid under high pressure into the well

until the rock breaks down. Sand or other materials

are added to the fluid to serve as wedges to prevent

the fractures from closing.

The fracturing process in tight formations is very

complex and not well understood. It is difficult to

tell what a fracture will do or what it has done even

after the well is producing or proved unproductive.

Despite these uncertainties, fracturing has been

successful, at least for the blanket formations.

Large-scale fracturing of lenticular formations has

not been very successful. Lenticular formation

developers have tended to use shorter, less expensive fracturing treatments, which may imply lower

gas recovery.

Devonian shale gas is produced from shales

formed about 350 million years ago--during the

Devonian period. Devonian shales occur primarily

in the Appalachian region, Illinois, and Michigan.

The shale gas occurs as free gas in the fractures and

pores of the shale and also as gas physically bound

to the shale (adsorbed gas).

As with tight sands, Devonian shale production

depends on well stimulation to overcome the naturally low permeability of the reservoir and open up

pathways for the gas to flow to the wellbore. Unlike

tight sands, however, successful Devonian gas

production depends on the well intersecting a natural

fracture network, either directly or through an

induced fracture.

Stimulation by the use of explosives has been

prevalent in production history, and more sophisticated explosive techniques may be promising for

future development. Also, new fracturing fluids that

avoid formation damage have been used for Devonian shale development. These include gas-inwater emulsions, nitrogen, and liquid carbon dioxide. The gas-in-water emulsions have been popular,

but nitrogen has also grown in use for shallow wells

because it does not cause formation damage.

Methane from coal is a byproduct of the coal

formation process that is trapped in the coal seams.

Methane is found in all coal seams, although its

~o~ Ridge National Laboratory, op. Cit., footnOte 4, P. 17.

%Jhid., p. 8.
Figure 3-2—Location of Principal Tight Formation Basins

Snake River

Cownyarp

\

Greater Green

River Basin Northern

[

Big Horn Great Plains

Basin Province

\ ~ . . l \

1 F----#l\,

San Juan /Denver

Basin Basin “M Cotton BlacK Warrior \

Valley Basin

Trend

Ft. “Worth

Basin

Anadarko

Basin

SOURCE: U.S. Office of Technology U.S. Natural Gas OTA-E-245 (Washington, DC: U.S. Government Printing Office,

February 19S5), figure 26.

amount per unit volume or weight of coal tends to be

proportional to the carbon content of the coal.

Anthracite and bituminous coal have high carbon

content and higher gas content. Methane content

also increases with depth.

Because coal in itself is essentially impermeable,

methane production depends on intersecting the

natural fracture network to provide pathways for the

gas to flow to the well. A second condition of

economic production of methane is to promote the

resorption of the gas from the coal into the fracture

system by reducing the pressure in the fractures.

Many coal seams contain water and thus the

reservoir pressure is partially a hydrostatic pressure

caused by groundwater. Reducing pressure usually

involves pumping water out of the seam. The water

removal also increases the relative permeability of

the gas in the fracture network, allowing more gas to

flow to the wellbore. The effective recovery of

methane may require drilling wells on relatively

close spacing and pumping water from them rapidly

and simultaneously in order to maximize the pressure drop. This practice of close spacing is in sharp
74 ● Energy Technology Choices: Shaping Our Future

contrast to the wide spacing used in conventional

gasfields.

A variety of methods can be used to enable wells

to intersect the naturally vertical fracture network.

Horizontal wells may be drilled from within a

working mine or a specially drilled shaft. The latter

method is expensive. Vertically drilled wells maybe

slanted toward the horizontal, so as to run parallel to

and within the coal seam. Hydraulic fractures can

also be used to connect the wellbore to the fracture

system.

Other unconventional gas sources include geopressured brines and gas hydrates. Geopressured

brines are found deep within the Earth under high

pressures and temperatures. They are found primarily in the Gulf Coast region of the United States. In

order to produce the gas, the brines are pumped to

the surface, the gas is removed, and the brines are

disposed. Gas hydrates are an icelike mixture of gas

and water, called a clathrate, which forms under

certain temperature and pressure conditions often

found in water depths greater than 100 feet and under

permafrost. The resource is potentially huge and

may be augmented by free gas trapped under the

impermeable hydrate. It should be noted, however,

that gas hydrates are unstable. If they warm just a bit,

natural gas is released, contributing to global warming.

Future efforts to recover tight gas, Devonian shale

gas and methane from coal will depend on advances

in well stimulation technologies and improvements

in drilling patterns. Also, additional research is

required to understand gas production mechanisms

and develop an exploration rationale for identifying

attractive drilling sites.

Coal

Coal is burned to produce heat, which in turn is

used to generate steam for process heat or the

production of electricity. The heat may be used

directly in industrial processes or space heating.

Coal also can be used to effect chemical reactions

such as the reduction of iron ore or the production of

lime, or indirectly as a source for the production of

synthetic gaseous or liquid fuels.

Direct Combustion

Three major factors influence the way coal is

burned: 1) the size of the facility, 2) the environmental standards the facility is required to meet, and

3) the characteristics of the coal to be burned. Most

coal is still burned in pulverized coal-fired boiler

furnaces. Raw crushed coal is pulverized and blown

with air into large furnace cavities, where the cloud

of coal dust burns much like a fuel gas. The heat is

transferred to water, which boils to generate steam.

Over the years, improvements in combustion technology have resulted in larger plants that can operate

at higher temperatures and pressures, and therefore

higher efficiency. Further efficiency gains are likely

to be incremental. In recent years, much of the

attention has been focused on reducing emissions.

Conventional technology can meet existing emission standards, especially in large facilities. Emerging technologies are likely to be necessary to meet

stricter standards, especially in small- and mediumsize facilities. They also may permit substantial

gains in efficiency.

Fluidized-bed combustion (FBC) technology27

offers an emerging alternative. Its basic principle

involves the feeding of crushed coal for combustion

into a bed of inert ash mixed with limestone or

dolomite. The bed is fluidized, or held in suspension,

by injecting air through the bottom of the bed at a

controlled rate great enough to cause the bed to be

agitated much like a boiling fluid. The coal burns

within the bed, and the sulfur oxides (SOx

) formed

during combustion react with the limestone or

dolomite to form a dry calcium sulfate. This

capability to capture sulfur in situ reduces or

eliminates the need for expensive add-on sulfur

removal equipment. According to the National Acid

Precipitation Assessment Program (NAPAP) report,

the FBC system can remove up to 95 percent of

sulfur dioxide (S02

) and up to 80 percent of the

nitrogen oxide (NOX

) emissions.28

There are two basic types of fluidized combustors:

the atmospheric fluidized-bed combustor (AFBC)

and the pressurized fluidized-bed combustor

(PFBC). The AFBC operates at atmospheric pressure. Small-scale AFBCs already are used commer27Mu~h of this ~ection is ~W from tie OTA r~~fi New Elecm”~ power Technologies: problem ad prospects for the 1990$, OZ4-E-246

(Washington, DC: U.S. Government Printing Offke, July 1985).

28~atio~ ~i~ ~wipi~tion A~~~~e~t ~o~N~~ Report 25, Technologies ad Other MeaSUreSfOr Controiiing Enu”ssions: perjor?nance,

Costs and Applicability, Wa.shingtoU DC, 1990, p. 6-36.
Chapter 3--Technologies for Energy Supply and Conversion . 75

cially around the world for process heat, space heat,

various other industrial applications, and electrical

generation.

The PFBC operates at high pressures and therefore can be more compact than the AFBC. It can run

exhaust heat through the turbines as well as the

steam cycle. The PFBC also may produce more

electricity for a given amount of fuel. Despite these

potential advantages, the PFBC has more serious

technical obstacles to overcome and is less well

developed than the AFBC. For example, the corrosion of gas turbine blades is a primary concern for

combined cycle PFBCs. In addition, fuel and sorbent

feed control may be difficult. The first PFBC/

combined cycle plant began testing in March 1991.

The test is expected to last 3 years. The demonstration plant is one of the flagship projects in DOE’s

Clean Coal Demonstration Program.29 It is unlikely

that more than a few PFBC commercial units could

be completed and operating before the end of the

century, although the PFBC’s longer-term potential

is quite promising.

The primary types of AFBCs are bubbling bed and

circulating bed. The bubbling-bed AFBC is characterized by low gas velocities through the bed. The

result is a bed from which only the smaller particles

are entrained with the gas. Conversely, the gas flow

velocities through the circulating bed are rapid.

Neither technology has been built to produce electricity on a scale (100 to 200 megawatts (MW)) that

is attractive to utilities. The bubbling-bed technology is the older of the two and thus greater operating

experience in the United States. Also, the bubblingbed combustor can be readily retrofitted to some

conventional boilers. The disadvantages include

fuel-feed problems, which are encountered in larger

units. With the circulating-bed combustor, the fuelfeed problem may be less serious. However, there is

less experience operating circulating-bed AFBCs.

More than 1,000 MW of existing coal-fired

capacity are being converted to the AFBC technology. And, about 100 smaller AFBC systems for

nonutility applications are either generating power

or on order.30 It is expected that larger utility-scale

AFBC units will be ready for use by the mid- 1990s.

OTA estimated that the capital cost of a large AFBC

is comparable to conventional coal-freed plants

equipped with scrubbers—$ 1,260 to $1,580/

kilowatts of electric power output (kWe).

OE has selected two AFBC projects to promote

utility use. One project, a circulating fluidized-bed

system replaces three small coal-fried boilers with

110 MW of capacity. The second project involves

repowering a 250-MW Southwestern Public Service

Co. facility. Also, DOE has selected two projects to

demonstrate the PFBC technology. The capital cost

of a 500-MW PFBC is estimated to be about $1,350

or $1 ,750/kWe for a 200-MW plant.31

The integrated gasification combined cycle

(IGCC) technology is another alternative to conventional coal-fired plants. In the IGCC process, coal is

mixed with air and steam at high temperatures,

which causes the coal to gasify to a mixture of

hydrogen, carbon monoxide, and hydrogen sulfide,

called syngas. The ash is separated and disposed of

or used. The sulfur in the coal is converted into

hydrogen sulfide, which eventually can be converted

to elemental sulfur or some solid waste material. The

cleaned gas is burned in a combustion turbine. The

hot exhaust gases that exit the combustion turbine

generate steam, which can then drive a steam turbine

to produce electricity. The name “combined cycle”

refers to the use of both gas-fueled combustion and

steam turbines in the system.

An IGCC system’s major advantages are its very

low rate of emissions and its fuel efficiency. It also

requires less water than a conventional coal-fired

steam plant, and because of the modular design,

construction time is shorter. One of the areas where

additional research is needed is in fuel gas treatment.

Hot gas cleanup systems remove sulfur and

nitrogen compounds and particulate from the fuel

gas without cooling and then reheating the gas.

These compounds are very abrasive and must be

removed to prevent turbine blade and component

failure. Existing gas cleanup technology must operate at relatively cool temperatures. Switching from

a cold- to hot-gas cleanup system could increase

efficiency by 3.6 percent,32 but many difficult

technological problems must be overcome.

29’ CPFBC and a New Era for cod Arise From Mothballed Plant” Power, VO1. 135, No. Q, APril 1991, p. 10S.

~Enviro~ntaland Energy Study Conference Special Repon, “Clean Coal Technologies: A Key Clean Air Issue,” Oct. 31, 1989, p. 7.

qlNatio~ Acid Precipitation Assessment Repom op. cit., footnote 28.

s@~ Ridge National Laboratory, op. cit., footnote 4, p. 30.
76 ● Energy Technology Choices: Shaping Our Future

One of the biggest IGCC demonstration projects

is the 1OO-MW Cool Water Plant located in Daggett,

California. It has been operating successfully since

1984 and has demonstrated the ability to meet

stringent California pollution standards using both

low-sulfur Western coal and high-sulfur Eastern

coal.

In the Cool Water process, a coal-water mixture is

injected into a pressurized, oxygen-fed gasifier. A

medium grade fuel is produced. The sulfur in the

coal is converted mostly into hydrogen sulfide, and

the nitrogen oxide is converted into molecular

nitrogen. The hot gases heat the tubes of water,

creating steam. The steam is used to drive turbines

to produce electricity. The gas and slag are then

separated. A sorbent is used to remove 97 to 99

percent of the sulfur from the gas produced from

coal.33 The cleaned gas is burned in a turbine at a low

temperature, which reduces NOX production.

Capital costs for an IGCC system could range

from $1,200 to $2,350/kWe (net). For smaller units

(250-MW range), costs are expected to be higher,

about $1,600 per kWe. The Electric Power Research

Institute (EPRI) estimates a plant cost of $1,630/

kWe for a 500-MW IGCC. The gas production and

purification facilities will account for about 40

percent of total costs. Operating and maintenance

costs could range from 6 to 12 mills/kilowatt hour

(kWh).34

Technologies for Controlling Emissions35

Typically, emissions are reduced by four methods: 1) cleaning coal to reduce sulfur content, 2)

switching to low-sulfur coal, 3) using wet flue-gas

and 4) using combustion controls for NOX emissions.

According to NAPAP, almost all high-sulfur Eastern

coal is cleaned before being burned. Physical coal

cleaning reduces SO2 by 10 to 30 percent, but

reductions of 50 percent can be achieved.

New advanced coal cleaning technologies can

remove up to 65 percent of the sulfur content in coal.

These technologies include advanced froth (multistage) flotation, electrostatic separation, and oil

agglomeration. The costs of removing S02 using the

multistage flotation process are estimated to range

from $131 to $268/metric ton removed, depending

on the sulfur content of the feed coal. The costs for

the oil agglomeration process ranges from $221 to

$472/metric ton removed. These technologies are

expected to be commercial by the mid-1990s, but

none will be adequate to meet New Source Performance Standards by themselves.

The removal of S02 from stack gases is termed

flue-gas desulfurization (FGD). Devices commonly referred to as scrubbers are used in this

process. The function of the scrubber is to bring the

flue gases, which contain SO2, into contact with a

chemical absorbent, such as lime, limestone, magnesium oxide, etc. FGD technologies are characterized

as wet or dry, depending on the state of the reagent

as it leaves the absorber.

There are two FGD processes: nonregenerable

(throwaway) or regenerable. In the throwaway

process, the absorbent and the SO2 react to form a

product which is disposed of as sludge or solid. The

regenerative process recovers the absorbent in a

separate unit for reuse in the scrubber and generally

produces a product with market value, such as

elemental sulfur or sulfuric acid. A great majority of

the FGD processes employed by the utility industry

are wet, nonregenerable systems that use limestone

or lime.

Wet scrubbing for new plants can remove up to 95

percent of S02. The technology does not remove

NOX, but this can be accomplished by incorporating

1ow-NOX burners into the design of a new plant.

Capital and operating and maintenance costs of the

wet limestone FGD technology are dependent on the

type of coal burned and the amount of sulfur

removed. For example, the capital cost of a 500-MW

plant that burns coal with a 0.5-percent sulfur

content and removes 70 percent of the sulfur is

estimated to be $140/kilowatt (kW). The capital cost

is $200/kW for a 200-MW plant that burns 4-percent

sulfur coal and is required to remove 90 percent of

S02 emissions.

Another promising technology for reducing SO2

emissions is sorbent injection. This technology has

the potential to reduce sulfur dioxide emissions by

up to 70 percent. There are two types of sorbent

injection: the furnace sorbent injection process and

the low-temperature sorbent injection. Both procBBEnvironmental and Energy Study Conference Report, Op. Cit., fOOmOte 30.

~u.s, CO-S, Office of Technology Assessment, op. cit., fOOtnOte 27.

35~s s=tion is &am from tie Natio~l Acid Preo”pitafion Assessment program Report 25, op. tit., footnote 28.
Chapter 3--Technologies for Energy Supply and Conversion ● 77

esses should be available in the mid-1990s. The

furnace sorbent injection process sprays a calciumbased sorbent material, such as limestone or calcium

hydroxide, into the furnace. The heat decomposes

the sorbent into lime which captures the SO2 and

forms calcium sulfate. The calcium sulfate and fly

ash are separated. The low-temperature, or postcombustion, sorbent injection process introduces a

calcium-based sorbent into the flue gas, but farther

downstream from the combustion zone. Postcombustion sorbent injection is potentially cheaper than

furnace sorbent injection and wet flue-gas scrubbing. Sorbent injection retrofits are estimated to cost

from $48 to $99/kW, depending on the size and the

difficulty of retrofitting the plant. In the United

States, several commercial-scale utility projects are

now demonstrating furnace sorbent injection.

Currently, NOX emissions are reduced by modifying the design or operating conditions of combustion

equipment. Common techniques include lowering

excess combustion air, recirculating the flue gas, and

injecting steam or water into the firebox. Reducing

excess air reduces the quantity of atmospheric

nitrogen available for NOX formation. Flue-gas

recirculation and steam or water injection reduce

flame temperature, which is an important factor in

decreasing NOX production. Some of these techniques may reduce energy efficiency because they

lower combustion temperatures.

Low NOX burners are standard features on almost

all recently built utility boilers. According to the

NAPAP report, low NOX burners can reduce NOX by

up to 80 percent. The lOW-NOX burner technology

restricts airflow into the combustion chamber, which

lowers combustion temperatures and NOX formation. In the United States very few retrofits have

been performed. Thus, costs are difficult to determine. NAPAP indicated that retrofit capital costs

could range from $8 to $34/kW.

Other advanced technologies such as gas reburning and staged combustion could be commercially available in the United States by the mid1990s. Gas reburning has been used in Japan as a

retrofit to oil- and gas-freed plants. In this process,

the primary fuel is burned in a secondary combustion

zone, which destroys the NOX produced in the

primary combustion zone. Gas reburning has the

potential to reduce NOx, emissions by 40 to 75

percent. Several commercial projects have demonstrated fuel reburning using natural gas and coal as

the reburning fuel.

Another advanced technology is selective catalytic reduction (SCR). The SCR process is the only

commercial control technology that can reduce

nitrogen oxides up to 90 percent. SCR is a flue-gas

treatment process that reduces NO= to molecular

nitrogen and water by reacting ammonia with NOX

in the presence of a catalyst at temperatures between

300 and 400 degrees Celsius. The catalyst is the

primary capital and operating cost component of this

technology. SCR can be used in a wide variety of

applications, including new and retrofit coal-, oil-,

and gas-fired facilities.

Japan and Germany have considerable experience

with SCR. U.S. experience with this technology is

more recent but expanding. SCR has been used on

several gas-freed combustion turbines in California

and New Jersey, but has not been applied commercially on boilers that burn high-sulfur and highalkaline ash content coals. Many boilers in the

United States use these types of coal. Before SCR is

widely used in this country, concerns about catalyst

life, performance, and costs must be addressed.

Gasification

Gaseous fuels can be synthesized by combining

coal with varying amounts of hydrogen and oxygen.

Gasification technologies can be used to produce

substitute natural gas (SNG); synthesis gas, which

can be converted to liquid fuels or used to manufacture chemicals; and to generate electricity in gasification combined cycle systems.

In the 1970s, there was a great deal of interest in

coal gasification because of concerns about the

adequacy of natural gas supplies. More than 100 coal

gasification projects were under consideration.

Many have since been discontinued because of the

changing energy picture. R&D continues on a few

processes, such as, ash agglomerating, fluidized-bed

process, British Gas/Lurgi gasifiers, and the Rheinbraun direct fludizied-bed hydrogasification process.

36

The Gas Research Institute (GRI) is finding R&D

on the direct methanation process, which converts

hydrogen and carbon monoxide to methane and

carbon dioxide. The process can be used to treat raw

360A ~dge Nation~ Laboratory, op. cit., footnote 4, P. 23.
78 ● Energy Technology Choices: Shaping Our Future

gas from a gasifier with little or no pretreatment.

Direct methanation requires no steam. GRI hopes

that direct methanation will improve the economics

of converting coal to SNG.37

Also, advances in acid gas removal could improve

the economics of SNG production from coal. One of

the critical elements in producing SNG is the

removal of unwanted gases, such as C02 and

hydrogen sulfide, from the product stream. There are

a number of commercial technologies that remove

acid gases. However, only a limited R&D effort is

directed at improving acid gas removal.38

Following the 1973-74 oil embargo, coal gasification became a valuable source of synthesis gas,

which can be converted to chemicals and feedstocks.

The CO2 produced by the gasification process has a

number of applications. For example, CO2 is used in

enhanced oil recovery operations, in the synthesis of

urea (ammonia and fertilizers) and in the carbonation of beverages. Several plants use coal gasification to produce synthesis gas. A plant in Tennessee

has been operating since 1983 and produces acetic

anhydride, acetic acid, and methanol.39

Liquefaction

Liquid fuels can also be synthesized by chemically combining coal with varying amounts of

hydrogen and oxygen. Coal liquefaction processes

are generally categorized according to whether

liquids are produced from the products of coal

gasification (indirect processes) or by reacting

hydrogen with solid coal (direct processes).

The first step in the indirect liquefaction process

is to produce a synthesis gas consisting of carbon

monoxide and hydrogen and smaller quantities of

various other compounds by reacting coal with

oxygen and steam in a gasifier. The liquid fuels are

produced by cleaning the gas, adjusting the ratio of

carbon monoxide to hydrogen in the gas, and

pressurizing it in the presence of a catalyst. Depending on the catalyst, the principal product can be

methanol or gasoline.

A number of large-scale gasifiers required for the

indirect liquefaction process have been commercially proven. These include the Lurgi, Westinghouse, Texaco, and Shell processes. For the liquefaction component of the indirect process, the

Fischer-Tropsch process has proven effective. This

process has been demonstrated and proven effective

in South Africa for converting synthesis gas to a

variety of products, including propanes and butanes,

diesel, fuel oil, and methane.

The direct liquefaction process produces a

liquid hydrocarbon by reacting hydrogen directly

with coal, rather than from a coal-derived synthesis

gas. A variety of direct liquefaction processes have

been developed. These include pyrolysis, solvent

extraction, and catalytic liquefaction. Much attention has been given to a process that dissolves and

hydrogenates the coal at high temperatures (800 to

850 degrees Fahrenheit) and pressure (1,500 to

3,000 pounds per square inch (psi)), with or without

catalysts .40

In the United States, direct liquefaction is the

most advanced of all the potential processes for

producing liquid fuels from coal. Between 1972 and

1982, four pilot plants demonstrated the feasibility

of direct liquefaction. One of the plants, the Wilsonville, Alabama Advanced Coal Liquefaction Research and Development facility, is still operating.

Since 1983, improvements have been made in the

quantity and quality of the liquid fuels produced

(distillate fuel oil, kerosene, and gasoline). The

increases in quantity and quality have improved the

economics of liquefaction. According to ORNL, the

current liquefaction process would be cost-effective

at a crude oil price of $35 per barrel.41

Further advances are possible. DOE efforts have

focused on improving catalysts that will allow

efficient liquefaction using lower pressure and

temperatures.

NON-FOSSIL FUEL ENERGY AND

ADVANCED TECHNOLOGIES

Nuclear and renewable energy technologies provide less that 15 percent of our energy needs.

However, many of the key decisions that will be

371bid.

381bid., p. 24.

3?Ibid., pp. 24-25.

%id., p. 33.

al~id., pp. 33-34. “
Chapter 3--Technologies for Energy Supply and Conversion ● 79

considered are related to these technologies. Furthermore, they can contribute significantly to energy

security and environmental quality, especially reduced CO2 emissions.

The Nuclear Power Option

Nuclear power has come to an impasse for a

variety of reasons. If there is to be a revival, many

improvements are likely to be required to reactor

technology and its management. In addition, progress on waste disposal must be sufficient to demonstrate convincingly that technology and sites for

safe, permanent disposal will be available. Also,

nuclear power is unlikely to be widely acceptable if

it contributes, or has a significant potential to

contribute, to the spread of nuclear weapons. Depending on how well these problems are met,

nuclear power will either gradually wither away or

resume its growth as a substantial contributor to our

future energy needs.

Some observers doubt the viability of nuclear

power. Construction costs are high, and overruns are

common; catastrophic accidents are possible; and

the problems and costs of waste disposal and plant

decommissioning have not been resolved. In addition, foregoing nuclear power would enhance the

moral leverage of nations seeking to stem the

proliferation of nuclear weapons. The advantages to

phasing out nuclear power, therefore, seem great.

Nevertheless, there are still strong national policy

arguments for maintaining the option. An improved

nuclear reactor may well be competitive with coal

and much cheaper than oil or gas for electricity

generation. Coal prices could also rise sharply with

oil and gas if nuclear is not available as a competitor.

Also, nuclear power is the only non-CO2 option that

can now be expanded rapidly.

The lack of nuclear plant orders since the mid1970s raises questions of whether the industry will

be able to respond adequately if new orders materialize. Specialized knowledge and facilities will be lost

as the industry contracts. However, there is no

“point of no return. ” Utilities are increasingly

purchasing components for operating plants from

foreign companies, and new orders could be supplied the same way, at least until the domestic

industry rebuilds. Even entire reactors and major

nuclear systems could be imported without great

impact on the utility, its customers, or the national

balance of payments. However, the situation is

unlikely to get so extreme over the next few years.

The major reactor vendors will probably be able to

keep current, especially if it appears probable that a

revival will occur, but many of the companies that

produce minor but necessary components are dropping their certification. This suggests that the longer

the hiatus before the next order, the slower the

revival. Not only will design and manufacturing

capabilities have to be rebuilt, but so will nuclear

engineering departments at universities.

Nuclear Powerplant Technology42

The technology has largely, though not completely, matured. If a utility were to order another

nuclear plant now, it could start construction with an

essentially complete design, and the final product

should not differ markedly from this design. In

addition, the advanced designs now being readied by

several of the reactor manufacturers are incorporating safety and reliability features that should go a

long way to solving many of the past problems.

However, reliability and safety concerns have

been so pernicious that even the most experienced

utilities would not consider nuclear to be a viable

option at present. The hostility, negative expectations, and encumbrances that were created by all the

problems have left a legacy that will not be

dissipated simply by showing that most of the

problems have been alleviated.

If it is deemed desirable to preserve the nuclear

option, there are two basic approaches to overcoming the problems discussed above. The present light

water reactor (LWR) technology can be improved

sufficiently that utilities would feel secure ordering

anew plant. Standardized designs would be licensed

after exhaustive safety analysis. Each applicant

would use a preapproved design not subject to

generic safety issues, so utilities would not face

continual changes during construction. Only sitespecific features would require custom design and

licensing. Issuance of the operating permit would

depend only on showing that the construction met

standards. These designs would improve on current

designs by simplifying operations and increasing

safety. The advanced LWRs are a major step in this

42~s ~Sc.Sion iS @w ~m tie OTA ~Wo~ N~C/ear Power in anAge o~Uncertain~, C)TE.E-ZIG (w~~to~ Dc: U.S. GoveIIWrIent fit@

Offke, February 1984).
80 ● Energy Technology Choices: Shaping Our Future

direction. This approach relies on the expertise that

has been gained with several hundred LWRs in the

world and the evolving maturity of a familiar

technology.

Alternatively, an entirely different technology

could be tried that should be so demonstrably safe

that problems of changing regulation, public acceptance, and investor uncertainty should not be major

factors. The high-temperature gas reactor

(HTGR) and the liquid metal reactor (LMR) are

alternative concepts that can incorporate passive

safety features to the point where it is essentially

impossible for an accident to occur that could result

in off-site releases of radioactivity. However, both

these concepts present uncertainties of operability

and economics because of their unfamiliarity.

Both approaches (improved, familiar technology

and radically different technology) have advantages

and disadvantages. It should also be noted that it is

entirely possible that neither will work, i.e., that the

legacy of problems is so great that no reactor will

prove acceptable.

No matter which approach is tried, standardization will be important. No nuclear plant will be

cheap, and no utility is going to start construction

without assurances that the plant will be both

licensable and well designed to be operable and

efficient. No reactor vendor or architect/engineer is

likely to go to the trouble and expense of designing

a plant and licensing the design unless it can

apportion these costs among many sales. Standardization is the only way to meet these constraints.

Customized plants can be just as safe and, under

some conditions, just as economic, but for the next

round of orders, standardization offers practical

assurances of licensing and construction that are

probably essential.

It is also noteworthy that any new plants in the

United States are likely to be smaller than those from

the early days of nuclear power. Due to uncertainties

of future load growth and rate regulatory treatment,

utilities are avoiding large plants of any type. All

parties will want to limit their financial risk, and

small plants cost much less though somewhat more

per kilowatt of capacity. It should be much easier to

demonstrate compliance with regulations and cost

projections of a small plant since it would be more

practical to build a full-scale demonstration model.

The ideal may well be modular units that can be

largely factory manufactured and delivered rapidly

as needed. Reactors are unlikely ever to be as simple

to install as combustion turbines, but recent experience suggests (not unambiguously) that large plants

are more subject to delays and cost escalation than

small plants. Manufacturers are likely to find innovative ways to package small reactors that further

reduce costs. Thus the economies of scale of large

plants are probably not as great as has been thought

in the industry and may be outweighed by other

advantages of small units. Small, modular reactors

are particularly appropriate for standardization as

they will be assembled from components that can be

serially manufactured. As the number of reactors

ordered increases, costs should drop.

Advanced Light Water Reactor—Two different

reactor designs have been developed for the LWR:

the pressurized water reactor (PWR) and the boiling

water reactor (BWR) (see figures 3-3 and 3-4). The

PWR maintains its primary coolant under pressure

so that it will not boil. The heat from the primary

system is transferred to a secondary circuit through

a steam generator, and the steam produced there is

used to drive a turbine. In the United States, about

two-thirds of the nuclear reactors are pressurized

water reactors.

The BWR eliminates the secondary coolant circuit found in a PWR. In the BWR, the heat in the core

boils the coolant directly, and the steam produced in

the core drives the turbine. There is no need for a

heat exchanger, such as a steam generator, or for two

coolant loops. In addition, since more energy is

carried in steam than in water, the BWR requires less

circulation than the PWR.

LWRs have been operating in the United States

for more than 25 years. They have had good safety

records. There has never been an accident involving

a major release of radioactivity to the environment.

Their operating performance, while not as good as

expected initially, has been comparable to that of

coal-fired powerplants.

Improvements could be made to LWRs by redesigning the plants to address safety and operability

concerns. Advanced LWR designs have been developed by Westinghouse Electric Corp. and General

Electric Co. Efforts have been directed at reducing

risks and improving reliability. For example, the

new BWR design enhances natural circulation of the

primary coolant, which increases the ability of the
Chapter 3-Technologies for Energy Supply and Conversion . 81

Figure 3-3-Pressurized Water Reactor

SOURCE: U.S. Congress, Office of Technology Assessment, NuclearPowerinan Age of Uncertaintv. OTA-E-216 (Washington. DC: U.S. Government Printing

Office, February 1964), figure 20.-

coolant to remove decay heat in the event the main

circulation system fails. In the new PWR design,

coolant piping has been reconfigured and the

amount of water in the core has been increased to

reduce the possibility that a pipe break could drain

the primary coolant enough to uncover the core.

Inherently Safe Advanced Reactor Concepts—

Incentives for developing a more forgiving reactor

arise from several sources. LWR designs have

evolved in a patchwork fashion, and there are still a

number of unresolved safety and reliability issues.

Also, the Three Mile Island accident heightened

concerns about the susceptibility of LWRs to serious

mishaps arising from human error. A more forgiving

reactor design became desirable in terms of investment protection as well as public health and safety.

The modular high-temperature gas-cooled reactor (MHTGR) is an example of an effort to develop

an inherently safe reactor. The MHTGR is cooled by

helium and moderated by graphite, and the entire

core is housed in a prestressed concrete reactor

. . -. .

vessel. The reactor uses enriched uranium along

with thorium, which is similar to nonfissionable

uranium in that it can be transformed into useful fuel

when it is irradiated. The fuel particles are coated

with multiple layers of ceramic material and carbon.

The ceramic coating can withstand extremely high

temperatures (up to 1,600 degrees Celsius) without

damage.

Because helium is used instead of water as a

coolant, the MHTGR can operate at a higher

temperature and a lower pressure than an LWR. This

results in a higher thermal efficiency for electricity

generation than can be achieved with other reactor

designs. It also makes the MHTGR particularly

suited for the cogeneration of electricity and process

heat.

The gas-cooled reactor has several inherent safety

characteristics that reduce its reliance on engineered

devices for safe reactor operation. First the use of

helium as a primary coolant offers some advantages.

Because helium is noncorrosive in the operating
82 ● Energy Technology Choices: Shaping Our Future

Figure 3-4-Boiling Water Reactor

Containment vessel

SOURCE: U.S. Congress, Office of Technology Assessment, Nuclear Power inan Age of Uncertainty OTA-E-216 (Washington, DC: U.S. Government Printing

Office, February 1984), figure 20.

temperature range of the reactor, it causes little

damage to components. Furthermore, it is transparent to neutrons and remains nonradioactive as it

carries heat from the core. Also, the design of the

fuel and core structure for the gas-cooled reactor has

inherent safety features. The fuel can withstand very

high temperatures, and the large thermal capacitance

of the graphite in the core and support structures

would slow the temperature rise even if the flow of

coolant was interrupted. Operators would have a

great deal of time to diagnose and correct a situation

before the core is damaged. Even if all measures fail,

heat transfer out of the core should always be high

enough to prevent damage to the fuel pellets and

resultant catastrophic release of radioactivity.

The high-temperature gas-cooled reactor was

successfully demonstrated in 1967. The plant, Peach

Bottom 1, operated at an average availability of 88

percent. A much larger plant that was to have been

the prototype for commercial plants was built at Fort

St. Vrain, Colorado. This reactor, now closed,

suffered from many problems though the nuclear

part worked well. These problems are partly responsible for a change in direction to smaller, modular

gas reactors.

Preliminary conceptual design of a modular

reactor has been completed. The simplification of

plant design using passive features and factory

fabrication should overcome the economic disadvantages of smaller size. Because of its modest size

and passive safety features, the MHTGR technology

is well suited to export markets. A number of

countries have expressed interest in the MHTGR.

They include the U. S.S.R., Italy, Israel, and China.

In addition to the MHTGR reactor, a small,

passively safe liquid metal reactor (LMR) is being

developed-the power reactor inherently safe module (PRISM). The PRISM technology uses liquid

sodium to cool the reactor core. The reactor vessel is

housed in an outer “guard” vessel. The purpose of

the outer vessel is to catch any leaking sodium.

There is a 5-inch gap between the two vessels, which

is filled with argon to prevent the reaction of sodium

with air. Both vessels are placed in an underground

concrete silo. Air is allowed to circulate freely

between the silo wall and the “guard” vessel to
Chapter 3--Technologies for Energy Supply and Conversion ● 83

Photo credit: Princeton Plasma Physics Laboratory

The Tokamak Fusion Test Reactor at Princeton Plasma Physics Laboratory, where the first ever experiments on deuterium-tritium

plasmas are scheduled to occur in 1993.

remove residual heat passively to the outside. DOE

is funding PRISM research, and conceptual designs

are expected to be completed in 1991.43

Resource Extension

The technologies for fuel reprocessing and breeding are well developed. Over the last three decades

the United States has spent about $16 billion on

breeder reactor technology. The liquid metal sodium-cooled fast breeder reactor (LMFBR) is the

system of choice for breeding.44

The LMFBR is conceptually similar to the LMR.

However, the LMFBR has a higher breeding ratio.

The LMFBR can convert uranium-238 into fissile

plutonium at a rate faster than its consumption of

fissile fuel.

The reactor fuel rods contain a mixture of

plutonium dioxide and depleted uranium dioxide. A

blanket of rod containing depleted uranium dioxide

surrounds the core. The initial loading could use

either plutonium recovered from spent light water

reactor fuel or enriched uranium. Subsequent loadings would use plutonium bred in the LMFBR.

The most serious risks from reprocessing are

increased opportunities for the proliferation of

weapons and the possibility of nuclear terrorism.

Little economic justification exists now for reprocessing but, as the number of reactors grows, uranium

prices will eventually rise. So will the value of the

plutonium, leading to economic incentive to recover

and recycle.

 Interest in Passive Reactor Designs, “ vol. 14, No. 3, 1989, pp. 10-12.

 National Laboratory, op. cit., 4, 58.
84 ● Energy Technology Choices: Shaping Our Future

Fusion

Over the past 35 years, there has been great

progress in nuclear fusion research, but there remain

many scientific and technological issues that need

resolution before fusion reactors can be designed

and built. According to OTA, 30 years of additional

R&D are required before a prototype commercial

fusion reactor can be demonstrated. If successfully

developed, fusion has the potential to provide

society with an essentially unlimited source of

electricity. It may also offer significant environmental and safety advantages over other energy

technologies. Fusion technology is beyond the

timeframe of this report, but it is one of only three

long-term options. R&D must continue on fusion if

the United States is to have the technology by the

mid-21st century.

Nuclear fusion is the process by which the nuclei

of two light atoms combine or fuse together. The

total mass of the final products is slightly less than

the total mass of the original nuclei, and the

difference-less than 1 percent of the original

mass-is released as energy.

Hydrogen, which is the lightest atom, is the

easiest to use for fusion. Two of its three isotopes,

deuterium and tritium, in combination work best in

fusion reactions. When deuterium and tritium react,

kinetic energy is released. This energy is converted

to heat, which then can be used to make steam to

drive turbines.

However, certain conditions must be met before

hydrogen nuclei fuse together. The nuclei must be

heated to about 100 million degrees Celsius. At

these temperatures, matter exists as plasma, a state

in which atoms are broken down into electrons and

nuclei. Keeping a plasma hot enough for a long

enough period of time, and effectively confining it

are crucial for generating fusion power.

The behavior of plasmas, and the characteristics,

advantages, and disadvantages of various confinement concepts need further study. At this stage, it is

not known which confinement concept can form the

basis of an attractive fusion reactor. The tokamak,

which is a magnetic confinement concept, is the

most developed, attaining plasma conditions closest

to those required in a fusion reactor. Its principal

confining magnetic field is generated by external

magnets that run in toroidal direction. The tokamak

also contains a poloidal magnetic field that is

generated by electric currents running within the

plasma.

Research on alternatives to the tokamak continues

because it is not clear that the tokamak will result in

the most attractive or acceptable fusion reactor. For

an indepth discussion of fusion R&D, the reader is

referred to the OTA report Star Power: The U.S. and

the International Quest for Fusion Energy.

Future Electricity Supply Options

The U.S. electric power industry experienced

tremendous change during the 1970s and 1980s,

leading to considerable uncertainty. Because of this

uncertainty, utilities now consider a broader range of

options to accommodate future demand. In addition

to its reliance on conventional technologies, utilities

employ less capital-intensive and nontraditional

options to ensure supply adequacy. These include

load management and conservation programs, life

extension of existing facilities, smaller-scale power

production, and increased purchases from other

utilities and nonutility generators. These options

offer utilities more flexibility in responding to

demand fluctuations.

Utilities are using demand management programs

to reduce system peak demand and to defer the need

for future generating capacity additions. Demand

management programs include activities undertaken

by a utility or customer to influence electricity use.

Some utilities are just initiating demand management programs while others have been heavily

involved for years and very dependent on these

programs to meet system electricity needs. Demand

management programs are discussed in chapter 2.

Life extension or plant improvement options are

receiving more attention as a way of deferring the

need for new capacity. Many of the older (30 or more

years) plants have attractive unit sizes (100 MW or

larger) and performance characteristics (heat rates

close to 10,000 British thermal unit/kilowatt hour

(Btu/kWh)). And, in many cases, plant improvement

can also increase efficiency up to 5 to 10 percent

and/or upgrade capacity. Refurbishments are underway at a number of utilities. For more detailed

information about plant improvement opportunities,

see OTA’s assessment New Electric Power Technologies: Problems and Prospects for the 1990s.

Purchasing power from other utilities and nonutility generators is yet another option to ensure supply
Chapter 3--Technologies for Energy Supply and Conversion ● 85

adequacy. The development of sophisticated communications equipment and control technologies

and cost differentials have fostered an increasingly

active market in bulk power transactions among

utilities. Bulk power transfers constitute a significant share of total U.S. electricity sales. Canadian

power imports are also increasing.

This section focuses on a number of new promising technologies for electric power generation.

These include the intercooled steam injected gas

turbines, combined cycle conversion, and fuel cells.

Advanced Turbines

Turbines fueled by oil or gas have provided

electric power for five decades. They were used

primarily to meet peak loads because of their

relatively low efficiency. Recently, they have attracted renewed attention because of their low

capital cost and improved fuel efficiency. New

turbine technologies and advanced materials have

allowed for hotter combustion temperatures. Many

of the advances in design and high-temperature

materials for turbines result from military R&D for

improved jet engines.

The steam injected gas turbine (STIG) has far

greater power and electrical efficiency than older

designs, as discussed in the cogeneration section of

chapter 2. The addition of intercooling to the STIG

(ISTIG) should further increase power and efficiency improving their value for central power

station applications. Part of the incoming compressed air used for combustion is passed through

the turbine blades for cooling. This permits higher

combustion temperatures. General Electric is conducting design work and indicates that this technology will be able to reach an average efficiency of

48.3 percent at an installed capital cost of $400/

kW.45

Adding a steam turbine to a combustion turbine is

another relatively new approach, called the combined cycle. A combined cycle powerplant is highly

fuel efficient (up to 47 percent).46 The steam turbine

portion of a combined cycle plant can be added long

after the combustion turbine has been in service,

allowing greater planning flexibility. A key technological development allowing for widespread acceptance of combined cycle plants has been improving

the reliability of the combustion turbines.

It may also be economically feasible to convert a

combined cycle plant to run on gas derived from

coal, as in an IGCC system. The turbine initially can

be freed by natural gas, delaying construction of the

coal gasifier until fuel prices and other economic

conditions warrant. The IGCC is discussed in the

coal section of this chapter.

Fuel Cells

Fuel cells produce electricity by an electrochemical reaction between hydrogen and oxygen, which,

at least in theory, can produce electricity much more

efficiently than current technology for burning fuel.

The hydrogen can be supplied by a hydrocarbon

fuel. A typical fuel-cell powerplant consists of three

major components: fuel processor, fuel-cell power

section, and power conditioner. The fuel processor

extracts hydrogen from the fuel. The hydrogen is

then fed into the fuel-cell power section. The fuel

cells are joined in a series of stacks which form the

powerplant. The electrical power that flows from the

stacks is direct current (DC). With some voltage

regulation, the DC power can be used if the load is

capable of operating with DC. Otherwise a power

conditioner is required to transform the DC into

alternating current (AC). Neither combustion nor

moving parts is required in the production of power.

A single fuel cell produces about 1 volt.

There are several types of fuel cells being

developed. They are categorized according to the

type of electrolyte used in the conversion process.

Fuel cells that use phosphoric-acid as the electrolyte

are the most developed, but concerns about performance and costs persist. The phosphoric-acid fuel cell

is likely to account for most of the fuel cells

deployed in the 1990s. Other fuel cells employ

alternative electrolytes such as molten carbonate and

solid oxide. Molten carbonate and solid oxide fuel

cells reform hydrocarbon fuels directly in the cell.

These fuels cells, which operate at high temperatures, produce waste heat that can be used for

cogeneration applications. The molten carbonate

and solid oxide fuel cells are not expected to be

deployed until the late 1990s at the earliest.

45Ro~fi H. Williams and WC D. -n, “Expanding Roles for Gas Ibrbines in power Generation,” reprinted from Elecm”ci~jicientEn& Use

and New Generation Technologies, and Their Planning Implication (no date), p. 531.

a“Utility ‘lkrbopower for the 1990s,” EPRKJournal, AprWMay 1988, pp. 5-13.
86 ● Energy Technology Choices: Shaping Our Future

Fuel cells are expected to produce electricity with

modest environmental impacts relative to those of

combustion technologies. Efficiency is estimated to

be between 36 to 40 percent for smaller units and 40

to 44 percent for larger ones, and future technology

may realize efficiency rates well over 50 percent.

Another advantage is the short leadtime (2 to 5

years) required to build a fuel-cell powerplant.

Because fuel cell systems are modular, they can be

built at a factory and assembled at the site. Installation can be accomplished in many locations, including areas where both available space and water are

limited. Other advantages include fuel flexibility

and responsiveness to changes in demand.47

The installed capital costs of prototype fuel-cell

powerplants are about $3,000/kWe. The fuel cell

power section will account for about 40 percent of

the costs. Operating and maintenance costs are

estimated to range from 4.3 to 13.9 mills/kWh.

Replacing cell stacks will account for the largest

share of operation and maintenance costs. Fuel costs

are expected to be about 27 to 33 mills/kWh.48

Magnetohydrodynamics

In magnetohydrodynamic (MHD) generators, a

stream of very hot gas from a furnace (about 5,000

degrees Fahrenheit) flows through a magnetic field

at high velocity. Because the gas is an electrical

conductor, current is produced through electrodes

mounted on the sides of the gas duct. Used in

conjunction with conventional power technology,

MHD might raise plant efficiency by 10 percent.

However, many difficult technical problems remain

unsolved, especially for coal-freed MHD systems.

Perhaps the strongest argument for continuing a high

level of R&D activity is the promise of being able to

extract more useful energy from coal if concerns

over CO2 emissions prove accurate.

Storage 49

Electricity storage is of enormous benefit to

utilities. Storage reduces the amount of generating

capacity that is required to meet peak loads and

spinning and transmission reserves. Utility customers also can use storage devices to avoid the high

price of electricity during peak periods.

Advanced batteries, compressed air energy storage (CAES), and pumped hydro are storage technologies that are well developed and could, under

certain circumstances, be used in the 1990s.

Advanced Batteries-Batteries are more efficient

and flexible than mechanical energy storage systems. In addition, they are modular and thus require

short leadtimes to construct. Capacity can be added

as needed and sited near the intended load. A

battery’s ability to react in a matter of seconds makes

it valuable for optimizing a utility’s operations.

Three types of utility-scale batteries are promising: advanced lead, zinc-chloride, and sodium sulfide (NaS) batteries. Lead batteries are widely used

today, mostly in cars.

Lead-acid batteries consist of a negative lead

electrode and a positive lead dioxide electrode

immersed in an electrolyte of sulfuric acid. As the

battery discharges, the electrodes are dissolved by

the acid and replaced by lead sulfate, while the

electrolyte becomes water. When the battery is

recharged, lead is deposited back on the negative

electrode, lead peroxide is deposited back on the

positive electrode, and the concentration of acid in

the electrolyte increases.

Over the years, research has continually improved

lifetime cycles of the lead-acid battery. It is possible

to buy a load-leveling lead-acid battery with a

guaranteed lifetime of 1,500 cycles (about 6 years).

Refinements could further improve the lifetime up to

3,000 to 4,000 cycles.

One of the disadvantages of lead-acid batteries is

capital cost. Operation and maintenance costs are

dependent on the durability of various battery

components in a corrosive environment and how the

battery is used. According to OTA, the largest

component of operation and maintenance costs will

most likely stem from the periodic replacement of

battery stacks.

Zinc-chloride batteries have been under development since the early 1970s. During charging, zinc

is removed from the zinc-chloride electrolyte and

deposited onto the negative graphite electrode in the

470ak Mdge NatiO@ Ialxratqj Energy Technology R&D: What Could Make a Difference? vol. 2, Part 1, “End-Use Technology,”

ORNL-65441/V2/Pl, December 1989, p. 138.

~u.s. Conmss, office of Technolom Assessment, op. cit., footnote 27.

4~~ess ~~ewise not~, mo5t of ~5 Swtion is b~~ on he OTA r~ortNewElectn”c power Technologies: Problems and Prospects for the ~990s,

op. cit., footnote 27. For more information on this topic the reader is referred to this report.
Chapter 3--Technologies for Energy Supply and Conversion ● 87

battery stack. Chlorine gas is formed at the positive

electrode. The gas is pumped into the battery pump,

where it reacts with water at 10 degrees Celsius to

form chlorine hydrate, an easily manageable slush.

During discharge, the chlorine hydrate is heated to

extract the chlorine gas, which is pumped back into

the stack, where it absorbs the zinc and releases the

stored electrical energy. The zinc-chloride technology is complex and is sometimes described as being

more like a chemical plant than a battery.

Cost estimates for the zinc-chloride battery are

about $500/kWe, less expensive than the lead-acid

type because of the inexpensive materials that go

into its manufacture. The operation and maintenance

costs are uncertain. However, the expected longer

lifetimes and less expensive replacement costs for

the stacks and sumps could levelize replacement

operation and maintenance costs in the 3- to 9-mills/

kWh range.

A major safety concern is associated with the

accidental release of chlorine. Because chlorine is

stored in a solid form, sumps must be sufficiently

insulated so that in the event of a refrigeration

system malfunction the chlorine will stay frozen.

Interest in commercializing the NaS battery is

strong, and funding has reached about $140 million

annually. 50 The NaS battery system requires an

operating temperature of 350 degrees Celsius. At

this temperature, both the sodium and sulfur are

liquid. During discharge, sodium is oxidized at one

electrode and travels through the electrolyte where

it is reduced at the second electrode to form sodium

polysulfide. The major advantages of the NaS

battery are its high overall efficiency (88 percent)

and its high energy density compared with that for

the lead-acid battery. One of the primary concerns

over this technology is maintainingg the high operating temperature during both charging and discharging. Fluctuations in temperature will result in

electrolyte cracking.51

Compressed Air Energy Storage—A CAES plant

is a central storage station where off-peak power is

used to pressurize an underground storage cavern

with air. The compressed air is later released to drive

a gas turbine. The frost U.S. CAES project was

scheduled to begin commercial operation in March

1991. Alabama Electric Cooperative, Inc. owns the

11O-MW plant.52

In a conventional plant, the turbine must power its

own compressor, which leaves only about one-third

of the turbine’s power available to produce electricity. The compressed air from a CAES is used in a

turbine which, freed from its compressor, can drive

an electric generator up to three times as large. The

gases discharged from the turbine pass through a

‘‘recuperator,’ where they discharge some of their

heat to the incoming air from the cavern, increasing

the overall efficiency of the plant. (See figure 3-5.)

Three types of caverns may be used to store air:

salt reservoirs, hard rock reservoirs, or aquifers. The

salt reservoirs are found in Louisiana and eastern

Texas. Salt caverns are mined by pumping a

water-based solution into the deposit and having it

dissolve a cavern. Salt caverns are air tight.

Rock caverns are located throughout the United

States. They are excavated with underground mining

equipment. A compensation reservoir on the surface

maintains a constant pressure in the cavern as the

compressed air is injected and withdrawn. Aquifer

reservoirs are naturally occurring geological formations, occurring in much of the Midwest, the

Four-Corners region, eastern Pennsylvania, and

New York. They consist of porous, permeable rock

with dome-shaped, nonporous, impermeable cap

rock overlying them. The force of the surrounding

water confines the compressed air and maintains it

at a constant pressure as it is injected and withdrawn

from the rock.

Compared to batteries, CAES plants are in a more

advanced stage of development and are likely to be

less expensive than batteries on a dollar per kilowatthour basis. However, CAES plants require longer

leadtimes to construct, probably from 4 to 8 years,

depending on size.

Pumped Hydro--There are numerous pumped

hydro plants in the United States. Some plants

require a large, above-ground reservoir while others

store water underground. Above-ground reservoirs

have become difficult to site, and underground

storage is only economical in very large units.

m@& Wdge Nation~ hboratory, “End-Use Technolo~, ” Op. Cit., fOOtJ.10te XT, p. 163.

‘lIbid.

52’’ Compressed M Used To Produce Economical Pedc power, ” Power, vol. 134, No. 6, June 1990, p. 77.
88 ● Energy Technology Choices: Shaping Our Future

After

cooler

(Cools air

before it

enters cavern

Figure 3-5-First Generation CAES Plant

Exhaust

— \\ Transformer

Generator/ i

‘ I ?“’er l ‘otor =

Compressed

(The intercoolers cool the air after it emerges

from one compressor and before it enters the

next compressor. This increases compressor

efficiency.)

I Cornpressed air

air

Cornpressed air

A Compressed Air Energy Storage (CAES) plant is a modification of a conventional gas turbine cycle. Its principal components are combustion turbines, compressors, a generator/motor, and an underground storage cavern. The system stores energy by using electricity from the grid

to run the compressor and charge the cavern with compressed air. This energy is discharged by releasing the compressed air to the combustion

turbine where it is mixed with natural gas or oil and burned to produce the power which drives the generator. In a conventional gas turbine plant

the turbine drives its own compressor simultaneously with the generator so that only a third of the turbine’s total power is available to produce

electricity. Thus, a CAES plant stores the energy in off-peak electricity to make a gas turbine three times as fuel efficient.

A Compressed Air Energy Storage (CAES) plant is a modification of a conventional gas turbine cycle. Its principal components are

combustion turbines, compressors, a generator/motor, and an underground storage cavern. The system stores energy by using electricity

from the grid to run the compressor and charge the cavern with compressed air. This energy is discharged by releasing the compressed

air to the combustion turbine where it is mixed with natural gas or oil and burned to produce the power which drives the generator. In a

conventional gas turbine plant, the turbine drives its own compressor simultaneously with the generator so that only a third of the turbine’s

total power is available to produce electricity. Thus, a CAES plant stores the energy in off-peak electricity to make a gas turbine three times

as fuel efficient.

SOURCE: U.S. Congress, Office of Technology Assessment, New Electric Power Technologies: Problerns and Pmspecfe for the 19Ws, OTA-E-2~

(Washington, DC: U.S. Government Printing Office, July 19S5), figure 4-27.

A pumped storage plant recycles the water that the upper reservoir occurs during off-peak hours

flows through its turbine, sending it through a using the utility’s least costly resources.

reversible turbine from a lower to an upper reservoir

for reuse. Although pumped storage facilities use Expanded use of pumped storage facilities could

more energy for pumping than they generate for improve overall efficiency. Currently, U.S. pumped

power, they assist in peak power production, when storage capacity is only 3 percent of the country’s

electricity is most costly to produce. Replenishing total capacity. Foreign studies suggest that increas-

 et al., Potential of Renewable Energy, an White Paper, of

Energy CO: Energy Research March 1990), p. A-3.
Chapter 3-Technologies for Energy Supply and Conversion . 89

ing the share to 20 percent might benefit the U.S.

power grid.53

Other storage technologies are flywheels, and

superconducting magnet energy storage. These technologies are not likely to be commercial before the

year 2000.

Transmission and Distribution

Transmission and distribution lines carry electric

energy from the powerplant to the user. Most

transmission in the United States consists of overhead AC lines operated at 69 kilovolt (kV) or above.

Distribution systems operate at lower voltages,

typically under 35 kV, to transport smaller amounts

of electricity relatively short distances.

Transmission systems are extraordinarily complex. They must be developed in concert with

generating plants, but utilities are experiencing

increasing difficulty in siting lines. Few important

lines have been stopped, but that may not be true in

the future. One of the major issues is the health

effects of electric and magnetic fields, discussed

later in this chapter. The technical options discussed

here may help alleviate some of the concerns.

In recent years, long-distance transmission has

increased significantly. Transmission capacity in

some regions is already strained by the high usage.

Improvements in transmission and distribution technologies can improve performance and reliability.

Options for increasing transmission capability include improving control of reactive power and

voltages on a network and increasing the thermal or

voltage capacity of an individual existing line,

improving control of power flows on a network,

decreasing the response time of generators and

transmission line switching, and adding new lines.

Developments that may have significant longterm effects on transfer capability are high-power

semiconductors, advances in computer and data

processing, and in the very long term, possibly even

superconductivity. High-power semiconductors are

now being used on high voltage direct current

(HVDC) powerlines to convert AC power to HVDC

and back again. The high-power semiconductors
90 ● Energy Technology Choices: Shaping Our Future

(thyristors) used in this application are expensive

enough that HVDC powerlines are only practical in

long lines or as interconnections between asynchronous systems. Lower cost and high-capacity semiconductors will make shorter DC lines economically

practicable and allow multiterminal HVDC lines,

instead of the two terminals now used. Because the

conversion voltages at both ends of the line can be

controlled, HVDC transmission allows complete

control of network flow.

Advances in communication and data processing

should improve reliability and economy. The current

transmission and distribution system is largely

mechanically controlled. The development of more

flexible transmission controls and distribution automation will allow more efficient operation, but at the

price of complexity.

Superconductors will have a number of possible

applications in the utility industry. These include: 1)

magnetic energy storage, 2) superconducting generators, and 3) transmission lines.

Electricity storage may be the most likely early

use of superconductors. The concept is less developed than the storage technologies discussed earlier,

but superconducting magnets could be more economical and easily sited. The difficulties of this

application include cost, refrigeration, and the

enormous magnetic stress on brittle ceramic superconductors.

Another possible application is superconducting

generators. preliminary designs and testing have

been done using lower temperature metal superconductors. Even small reductions of losses can be

important because of the high-power flow involved.

Superconducting transmission lines are another

possible application, but not as attractive as they

might first appear. Although superconducting cables

would have no resistance, this would have to be

balanced against cooling losses and the cost of the

cable and burial. HVDC circuits would benefit much

more from superconducting lines. The cost of

AC/DC conversion equipment will limit the use of

superconducting lines until the price of high-power

semiconductors declines. For more information

about superconductivity, please see the OTA report

High-Temperature Superconductivity in Perspective.

Hydrogen

Many technologies such as nuclear power and

emerging options such as photovoltaics and wind are

most suitable for the production of electricity.

Insofar as the electricity can be loaded onto the

power network and delivered to customers, that is

the most efficient method. However, electricity has

some significant disadvantages as an energy carrier.

At present it cannot be stored economically, and it is

expensive to transport long distances although, as

discussed above, new technologies may change

these conclusions.

A potential alternative is to produce hydrogen,

most probably by electrolyzing water, and delivering it via pipelines, much like natural gas. Hydrogen

provides inherent storage, as does natural gas; it is

less expensive to ship long distances than electricity;

and it can be consumed almost as cleanly—the

combustion product being water vapor (a small

amount of NOX may also result).

However, hydrogen also involves several disadvantages. Costs would be high unless the electricity

is extremely inexpensive (in which case the losses of

long-distance transmission and storage of electricity

would not be very important). Losses in the electrolysis process and in compressing and delivering the

hydrogen would be substantial. Pipelines built for

natural gas could be unsuitable because hydrogen

can embrittle steel pipes, shortening their lifetimes,

and because the energy density is lower than natural

gas, limiting the amount that can be delivered. Thus

new and expensive pipelines could be required.

The easiest displacement would be of natural gas,

but demand for gas is greatest for heating in the

winter, when most renewable energy technologies

have relatively low output. Thus, annual storage

would be required if hydrogen were to become a

significant part of the energy system. Hydrogen

would be more valuable as a replacement for

gasoline, but storage in small quantities in automobiles would be almost as difficult as storing electricity in batteries.

Hydrogen may play an important role eventually

because of its natural partnership with intermittent

solar technologies, but first the cost of those

technologies must drop to very competitive levels.

Lowering the costs of producing and storing hydrogen is the focus of DOE R&D efforts. Much R&D
Chapter 3--Technologies for Energy Supply and Conversion . 91

effort is still needed to bring hydrogen concepts to

the demonstration stage.

Renewable Energy Technologies

Renewable energy sources can supply space and

process heat as well as electrical power. Some

sources can be converted to feedstocks, for producing chemicals, or to fuel, for transportation. In

general, the resource bases are inexhaustible and

widely but irregularly distributed in both space and

time, making storage very important. And, although

the potential of each resource seems enormous, only

a small amount of the resource is economically

recoverable at present. As a group, renewable energy

technologies are relatively clean and provide needed

protection against a disruption in oil supplies. New

energy technologies will enhance U.S. competitiveness and help reduce the trade deficit.

Continued R&D are needed to improve the

efficiencies of promising renewable technologies, to

reduce the risk of new technologies, and to help

integrate renewable into existing energy systems.

Yet, Federal funding for renewable R&D has

declined over the last decade (see figure 3-6).

Several recent studies have suggested that for a

comparatively small increase in investment, the

Federal Government could significantly hasten the

development and deployment of renewable technologies. The Solar Energy Research Institute (SERI)

and ORNL have concluded that the Federal budget

for renewable R&D was only about half of what

could be technologically justified.54

Hydroelectricity

Hydroelectric facilities use the kinetic energy in

flowing water to generate electricity. Most hydropower facilities capture and store water via dams and

reservoirs. Others operate in a run-of-river mode

whereby water flow is not altered. Hydropowergenerating capacity is affected by the volume flow

of water and the difference in elevation of the water

as it passes through the plant.

In 1989, hydroelectric power contributed about

2.7 quads to total U.S. energy supplies.55 HydroFigure 3-6-DOE Energy R&D Budget: 1980-1991

Selected Budget Lines

Billions of dollars (1982), appropriated

5

1

2

1

0 !

m Fusion

m Fossi l

= Nuclea r

m Efficiency

= Renewabl e

80818283848586878889909 1

SOURCE: Congressional Research Serviee, Energy Conservation: T~-

dca/Etiiu”encyan dProgram Effectiveness, 1885130, Updated

Apr. 2,1991, table 2.

power represents about 12 percent of installed

electric generating capacity. Although the overall

capacity of hydropower has doubled since 1960, the

growth rate has slowed. The 88 gigawatts (GW) of

present capacity include 64 GW of conventional

hydro, 17 GW of pumped hydro, and 7 GW of

small-scale (30 MW or less) hydro.56

According to SERI, only about half of the

Nation’s hydropower capability has been developed.57 As of January 1, 1988, the United States has

76.1 GW of conventional hydropower and 19.1 GW

of pumped storage capability still untapped. Of this

amount, DOE estimates that for conventional hydropower it is economical to develop only 30 percent,

or 22 GW, given current economic and regulatory

constraints. By the year 2030, a net increase of

8-GW conventional and 5-GW pumped storage is

projected, a growth of less than 0.5 percent per

year.

58

Hydropower is an attractive energy source because it is clean, it takes advantage of a large

domestic resource base, and it responds quickly to

utility load swings. Its availability (95 percent on

average) is greater than that of thermal generating

54u.s. cowe~~, ~lce of T~~~l~~ ~=~=en~ Chnging ByDegrees: Steps To Reduce &een~~e Gases, OTL1-()-482 (wSShkl@OQ DC: U.S.

Government Printing Office, February 1991), p. 105.

55u.s. mm= ~o~tion Administration op. cit., footnote 1, p. 9.

~Soli,U lilnergy Re~ch Institute, op. cit., footnote 53, p. A-1.

sTIbid., p A-3.

~~id., pp. A-3, A-4.
92 ● Energy Technology Choices: Shaping Our Future

plants. Hydropower facilities are characterized by

low annual operating costs, long service lives, and

low emissions of pollutants. Hydropower facilities

can also aid flood control and provide recreation.

On the other hand, hydropower entails high initial

capital costs, potentially serious environmental issues (e.g., aquatic life considerations and the loss of

farmlands, wetlands, and scenic areas), dam safety

concerns, and keen competition by other interests for

use of the water base.

Technical Opportunities-Several areas of research promise to improve the economics of hydropower development and reduce its environmental

drawbacks. For example, research on hydroturbines has resulted in technologies that may prove

quite beneficial to hydropower development. A

variable-speed, constant-frequency generator has

been designed to alter the turbine speed in response

to changes in the hydraulic head, allowing the

turbine to operate at maximum efficiency.

New ultralow-head turbines, designed for use at

sites with elevation differentials of less than 10 feet,

could provide nearly 4,000 MW of additional

capacity .59

Large-scale deployment of free-flow turbines for

use in flowing rivers could help develop an additional 12.5 GW of capacity.60 Use of such turbines

would entail very little civil work, no impoundment

of water, little disruption of flow, and no costly

upgrade of dam structures.

The development of cross-flow turbines that

optimize air injection and suction head in the draft

tube and the design of replacement turbine runners

with improved efficiency and air ingestion capabilities offer additional savings.

Further research is needed to identify and mitigate

the environmental impacts of hydropower. Of particular interest are technologies to: 1) allow fish

migrating downstream to bypass dams (upstream

bypasses are reliable technologies), 2) specify insteam flow requirement for aquatic life, and 3)

quantify the cumulative impacts of multiple-site

development of a river basin.

Biomass61

Biomass already is a significant source of renewable energy. It is the only nonfossil liquid fuel for

transportation applications. The industrial sector

uses 2 quads of energy from biomass, almost all of

it in the pulp, paper and lumber industries. Many of

these industries use biomass in the cogeneration of

heat and electricity. Furniture manufacturers and

food processors are other significant users. The

residential sector uses nearly 1 quad of firewood,

mostly for space heating and cooking.62

Biomass Resources—The energy potential of

biomass is enormous. DOE estimates a total energy

potential of at least 55 quads in 2000, under certain

conditions. Present capacity, excluding cultivated

energy crops and wood and grain not used for

biomass, is estimated to be 14 quads.63

Energy Crops—hardwood trees and herbaceous

crops dedicated as energy resources-are the greatest potential source of biomass. The goal of providing a year-round, abundant supply of biomass is

being supported by genetic engineering efforts and

breeding research to increase yields and reduce costs

of plants such as corn, sorghum, ‘energy’ cane, and

short-rotation hardwoods. DOE reports that during

the next 25 years, average annual crop yields are

expected to be 5 to 11 dry tons per acre. At 9 dry tons

per acre, the use of 192 million acres of potential

cropland could generate a gross biomass energy

capacity of 26 quads. It is not known at this time how

many acres could be devoted to energy crop

production without having a major impact on other”

crops and forest production. Currently, about 900

million acres are classified as cropland or commercial forestland. Of that total, about 10 percent is

withheld from production to either reduce crop

productivity or for soil conservation purposes. An

average of 328 million acres are planted annually.64

590A Ridge Natio~ Laboratory, op. cit., footnote 4, p. 80.

%id.

61 Bioms refers t. ~ten~5 from biologic~ so-es that can be converted to fuel or feedstock: wood and WOOd wastes, residues from PromSs@l

food and wood products, agricultural wastes, sewage and municipal solid wastes, aquatic plants and algae, and “energy crops” grown speciilctdly to

provide fuel or feedstock.

szso~ Energy Resemch Institute, op. cit., footnote 5$ p. B-8.

631bid., p. B-17.

Wbid., pp. B-5, 6.
Chapter 3--Technologies for Energy Supply and Conversion . 93

Other sources of biomass are described below:

●

●

●

●

Conventional wood resources, includes wood

not used by the forest products industry in the

thinning out of commercial forests. SERI

estimates that conventional wood resources, if

managed properly, could supply 6.5 quads of

energy annually.65

Agricultural and forestry wastes include primary and secondary residues. Primary residues

are the stalks, limbs, bark, and leaves left on the

land after harvesting. Expensive to collect, they

are often left to enrich the soil. Secondary

wastes emanate from processing (e.g., rice

hulls, black liquor from pulping) and can often

be used as fuel at little or no cost.

Agricultural oil seed crops that produce vegetable oil offer an interesting but not yet

commercial source of energy. Soybeans, which

dominate this market, produce oil that is almost

totally usable as fuel, yet soybean products are

valued more highly for other uses. Rapeseed oil

is a promising energy source.

Certain aquatic energy crops produce oil that

with upgrading could substitute for jet and

diesel fuel. These plants include microalgae

and macroalgae (e.g., kelp, cattails, water

hyacinths, and spartina).

Biomass offers many environmental benefits.

Carbon dioxide produced during combustion is

balanced by reabsorption by the growing plants.

Emissions of SOX and other air pollutants are

negligible or at least as easily controlled as those

from fossil fuels.

Although abundant, biomass resources are thinly

dispersed. Collecting and transporting biomass to

conversion centers can be costly, considering its

relatively low ratio of energy content to weight. If

biomass is to become a major source of economical

energy, additional crops will have to be grown that

are more productive, less costly, and sited closer to

conversion centers. Gearing up energy crop production will entail greater land and water use, with

various impacts according to locale. Recent advances in biotechnology can improve plant productivity and develop new plants. For example, productivity can now be increased 5 to 10 times over the

natural growth rate of trees.66 However, the increase

in biotechnology and genetic engineering efforts

will have to satisfy concerns of public and environmental safety.

Converting Biomass to Energy—Biomass can be

used directly as fuel or converted to other forms for

use as fuel or feedstock. Ultimately, biomass will be

more useful if converted to gaseous or liquid fuels,

but the conversion process can cost as much as the

collection of biomass and feedstock production.

Thermal Use of Biomass—The principal energy

use of biomass is the production of heat, via direct

combustion in air, for use in process heating, space

heating, and cogeneration systems. About 64 percent of this energy is used by the lumber, pulp, and

paper industries. Homeowners and commercial entities use the rest.

Electricity is produced primarily through the

direct combustion of wood, wood wastes, and wood

byproducts. Most users of biomass for power

generation are nonutility generators (NUGs) that

have ready access to wastes or byproducts at little or

no cost. Many utilities, however, purchase power

from cogenerators who use biomass as fuel. In 1989,

biomass-fueled capacity accounted for about 20

percent of total NUG capacity (40,267 MW). Biomass capacity included agricultural waste, municipal solid waste, and wood.67 Utilities now operate

wood-fired powerplants in California, Maine, Michigan, Oregon, Vermont, Washington, and Wisconsin. About 5,200 MW of total utility capacity is

wood-fired.68

The use of biomass by utilities is usually uneconomical and impractical. Biomass has a lower

energy content than coal, and delivery costs are

higher because of the dispersed nature of the

resource. Generally, biomass must be procured

within a 50-mile radius of the powerplant to be

economical. EPRI estimates that the costs of producing electricity from a wood-fired plant is 11 cents/

kWh compared to 7 cents/kWh for coal-freed

plants.69

‘Ibid., B-5.

@()& Ridge National Laboratory, op. cit., footnote 4, p. 84.

GvEdison Electric ksti~te, 1989 capacity and Generation of Non-Utility Sources of Energy, Apti 1991, P. 9.

68ElW~c power ReScuch ~ti~te, Technical Brief, “Wood-~erica’s Renewable Fuel,” RP2612-12, 1990.

@Ibid.
94 ● Energy Technology Choices: Shaping Our Future

Gasification of Biomass-The production of

methane (essentially natural gas) from biomass for

supply to a natural gas system is accomplished by

biological anaerobic digestion. Anaerobic digestion

is particularly well-suited for very wet feedstocks

and has been used commercially when biomass costs

are low enough. Given a feedstock cost of $2.00/

MBtu, methane can be produced for $4.50/MBtu, a

cost not yet competitive with conventional natural

gas unless other factors such as disposal costs are

considered.70

Methane production from landfills, sewage treatment, and farm wastes will continue to increase but

will be important only for specific locales. Biomass

can also be converted by partial oxidation to syngas,

which can be used as a fuel or as a feedstock for

methanol production.

Production of Biofuels71—A variety of liquid

fuels and blending components can be produced

from biomass for use primarily in transportation.

These biofuels include alcohol fuels (ethanol and

methanol), as well as synthetic gasoline, jet, and

diesel fuel.

Each year nearly 1 billion gallons of ethanol are

added to U.S. gasoline stocks to create gasohol, a

90-percent gasoline/10-percent ethanol blend. The

use of ethanol has gained support because of its

potential contribution to the U.S. agricultural economy. The Federal Government and about one-third

of the States subsidize ethanol use by partly exempting gasohol from gasoline taxes. Without these

subsidies, ethanol would not be competitive with

gasoline. OTA estimates that the full cost of

producing ethanol ranges from $0.85 to $1.50/

gallon, compared to wholesale gasoline prices of

about $0.55/gallon.

Corn is the least expensive agricultural feedstock

for ethanol production, especially when the byproduct of the production process can be sold. Wood and

plant wastes are less expensive feedstocks, but the

costs of available conversion processes are higher so

that the net cost of producing ethanol from wood and

plant wastes is more expensive than ethanol from

corn. SERI is working on improving wood-toethanol processes and indicates that economic competitiveness can be reached by the year 2000.

Methanol can also be made from wood and other

biomass materials, but the costs of production are

uncertain. The National Research Council estimated

that the crude oil equivalent price of methanol

produced from wood, using demonstrated (not yet

commercial) technology, is over $70/barrel. For

biomass-based methanol to be competitive with

coal-based methanol, improvements are needed in

conversion technology and all aspects of growing

and harvesting of biomass feedstocks. SERI expects

the wood-to-methanol process to be ready for

demonstration on a commercial scale by 2000 at the

current R&D pace.

The production of diesel and jet fuel from

microalgae is not as promising for the near term.

Organisms with high growth rates that produce high

oil content must first be developed. In addition,

demonstration ponds must be built and operated on

a large scale to make this process economical.

Converting biomass to synthetic hydrocarbon

fuels through pyrolysis (thermal decomposition in

the absence of air) of the biomass and catalytic

upgrading of the biocrude to gasoline has been

demonstrated in pilot plants but not developed for

commercial use. Research results suggest a current

cost estimate of the pyrolysis process to be $1.60/

gallon for gasoline. A target of 85 cents/gallon is

expected by 2005 if improvements are made in

catalytic conversion and if feedstock costs are

$2.00/MBtu. 72

Commercial production of synthetic gasoline

from biomass depends on improvements in the

efficiency of the fast pyrolysis process. Specific

needs include an increase in the yield and quality of

the hydrocarbons produced. SERI expects that by

2020, fast pyrolysis technology should be commercially feasible at current levels of R&D.73

Geothermal Energy

Resources of natural heat below the Earth’s

surface can be used directly for space and process

heat or converted to electricity. Although the actual

~fjo~ Ener~ Re~ch Institute, op. cit., fOO~Ote 53, p. B-7.

71 For a mom ~depth ~~ussion of ~te~tive fuels, see the OTA reportlteplacing GasolinAZternutive Fue/sjiirL”ght-Duty Vehicles, Ow-E-q64

(Washington, DC: U.S. Government Printing Off@ September 1990).

v2so~ her~ Resemch Institute, op. cit., footnote 53, p. B-7.

731bid., p. B-16.
Chapter 3-Technologies for Energy Supply and Conversion ● 95

resource is enormous-potentially 10 million

quads74 in the United States alone-the amount that

can be recovered economically is small. Nevertheless, using available technology, about 23,000 MW

of capacity from geothermal resources could be

tapped over the next 30 years, according to the U.S.

Geological Survey. 75 In 1989, the U.S. geothermal

industry produced 2.8 billion kWh.76 Modest technical advances could dramatically increase the use of

this resource.

Geothermal resources take several forms: steam,

hot water, volcanic magma, hot dry rock, and

geopressured brines. Except for brines located along

the Gulf Coast, most of these resources underlie the

western third of the country.

The Resource Base—The geothermal resource

base includes usable heat contained within the Earth

to a depth of about 3,000 feet.77 Only 3.8 percent of

this resource comes from hydrothermal reservoirs,

naturally occurring hot water or steam at temperatures of 90 degree C. or more to a depth of 900 feet.78

Only a small portion of the hydrothermal resource

is composed of the very hot (150 degree Celsius and

more) vapor-dominated reservoirs used to generate

electricity. Two-thirds of identified hydrothermal

resources are in the moderate range of 70 to 121

degrees Celsius.79 These resources and those that are

of lower temperature show promise of recovery

using available improved hydrothermal technologies.

The largest part of the geothermal resource base

is found in: 1) magma, accessible regions of molten

rock at temperatures of 850 degrees Celsius and

higher; and 2) hot dry rock (HDR)--deep, hot

regions of rock that can potentially be fractured by

fluid pressure to create manmade reservoirs. No

commercial recovery of either resource yet occurs.

Likewise, energy from the geopressured-geothermal

resource-zones of hot brine containing dissolved

methane-that occurs mainly along the Gulf Coast

has yet to be recovered.

Converting Geothermal Energy-Converting

geothermal resources to energy entails bringing the

resource to the Earth’s surface via a production well

and then converting geothermal energy to useful

energy.

The technology for converting hydrothermal resources is well established. Dry natural steam can be

converted to electric power by conventional turbine

generators. Flash and binary cycle conversion technologies must be used to convert other geothermal

resources. Flash steam technology is used with

high-temperature liquids (less than 200 degrees

Celsius) to produce steam to drive a turbinegenerator. Binary cycle systems use the heat of a

geothermal liquid to vaporize a second, working

fluid. These systems are used when liquids are not

hot enough (below 200 degrees Celsius) for flash

steam approaches.

Although there has been little commercial experience with this technology, the dual-flash system is

expected to be more efficient than the single-flash

system now in extensive use. Dual-flash units are

projected to be about 40 to 50 MWe in size by

1995.80

The binary cycle system is more complicated and

costly because it uses a secondary working fluid,

thus entailing special turbines and heat exchangers.

Binary systems have an advantage in that the

working fluid can have thermodynamic characteristics superior to steam, resulting in a more efficient

cycle. Moreover, binary cycles operate efficiently at

a wide range of plant sizes.

These same conversion systems used for hydrothermal resources can be adapted for recovering

energy from geopressured zones, hot dry rock, and

magma. Geopressured-geothermal resources can

produce electricity at projected power costs of 7.5 to

16 cents/kWh, not counting the value of the natural

gas byproduct.81

740ff1ce of Tech.uoIo~ Assessment, op. cit., footnote 27, P. 96.

7SSOIW En~gy Research Institute, op. cit., footnote 53, p. c-l.

76u.s. En~~ ~omtion Administmtioq op. cit., footnote 1, pp. 201-239.

~Ibid.

TsOfflce of Technology Assessment, op. cit., fOOtUOte 27, P. 96.

T%id.

%id., p. 98.

slsol~ Enm~ Research Jnstitute, op. cit., fOOtnOte 53, P. C-s.
96 ● Energy Technology Choices: Shaping Our Future

Hot dry rock technologies offer great promise for

commercially developing the large geothermal resource potential. The rock is fractured to create

reservoirs into which water is pumped. Once heated,

the water is brought back to the surface, where its

heat can be used directly or converted to electricity.

With the needed technology developed, this method

is projected to generate power at 5 cents/kWh.82

The heat from magma is recovered by pumping

water into the subsurface to extract heat. Field

experiments to confirm drilling techniques, reservoir dynamics, and other parameters are needed

before this technology can become commercial.

Magma energy costs are estimated to be 4.5 to 8

cents/kWh.83

The costs of identifying and developing geothermal resources are high. Improved technology for

resource exploration and reservoir conflation

could reduce costs as much as 25 to 40 percent for

advanced concepts.84 Moreover, predictions of reservoir performance must be enhanced.

Substantial cost reductions could also be made in

drilling, completing, and operating geothermal

wells. Accelerated research is needed on hightemperature equipment and corrosion-resistant materials. Savings of 15 to 20 percent for hydrothermal

technology and 25 to 40 percent for advanced

concepts could result. However, environmental issues, such as wildlife management and scenic

considerations could restrict the development of

some geothermal sites. SERI points out that the

‘‘not-in-my-backyard’ syndrome is just as true for

geothermal projects as it is for other energy facilities. 85

Solar Thermal Electricity

Solar thermal electric plants use mirrors or lenses

to concentrate sunlight, heating a fluid which is then

used to produce electricity. Solar thermal systems

operating with storage or with another fuel system

offer significant potential for meeting peak or

intermediate utility needs. Solar thermal electric

plants produce 0.01 quad per year.86

Much progress has been made in the technology

in the last decade. Several different solar thermal

systems can produce electricity for about 12 to 15

cents/kWh. The DOE program goal is to produce

electricity for 5 cents/kWh.87

Three technologies could be deployed competitively in the next 20 years: central receivers; and

two distributed, or modular concepts, parabolic

troughs and parabolic dishes.

Distributed systems have been more successful

than central receivers. Since each unit is independent, it is easier to install. Each central receiver,

however, must be designed for a specific number of

heliostats (the concentrators). Heliostats must be

individually focused on the central receiver and

must follow a unique tracking system. However, it

is not yet clear which concept will be superior in the

long term.

Central Receivers—The central receiver is a

freed receiver mounted on a tower. At its base a large

field of mirrors, known as heliostats, tracks the sun,

reflecting solar energy onto the receiver. The mirrors

must move both vertically and horizontally on a

precisely determined path. Liquid or air inside the

receiver transports the thermal energy to a steamdriven turbine for generating electricity. In the

1970s, several solar thermal electric plants were

built, including the 1O-MW Solar One Plant located

in Dagett, California. The 30-MW Phoebus project

in Jordan is the major central receiver project

today .88

The most dramatic advances for central receivers

have been in heliostat design and in the fluids used

in the receiver. The most promise is seen in replacing

the glass and metal mirrors in heliostats with

stretched membranes of aluminum or steel sheets

that are silvered on one face and curved to reflect

solar energy at the right angle. Stressed membranes

are about 20 percent of the weight of glass/metal

821bid.

831bid.

‘Ibid., p. C-5.

8sIbid.

8%id, p. E-3.

6To& ~dge Natio~ Laboratory, op. cit., fOOtMe 4, P. 105.

88&l J. Wetiberg and Ro~fi H. W7fi~s, “Energy From the s~” Scientific A~rican, -h1990, VO1. 263, No. 3, p. 149.
mirrors, which reduces the cost of the heliostat as

well as the foundation and control system.

Research is also focused on replacing the steam/

water in central receivers with molten nitrate salt.

Molten salt can be maintained at lower pressures

than steam (reducing pipe costs), and it stores heat

well (reducing the need for heat exchangers or

secondary systems). Storing several hours’ worth of

full power would allow complete load following in

the summer when air conditioning peaks in the late

afternoon.

Recent utility studies project annual central receiver system efficiencies of 14 to 15 percent, with

costs of 8 to 12 cents/kWh for a next-generation

plant using advanced receiver and heliostat technologies. 89 -

Parabolic Dishes—A parabolic dish is a dishshaped collector with a receiver mounted at its focal

point near the center. Each module includes a

two-axis tracking device. Several dishes are usually

arrayed on a field, forming a distributed system. The

concentrated heat may be used directly by a heat

engine placed at the focal point, or may be transported by a fluid or air for remote use. Some designs

use an array of mirrors, like a minicentral receiver.

New materials are being sought to replace traditional reflecting surfaces on the dishes. Of most

interest is a stretched membrane of polymer. Other

materials include large metal mirrors, mirrors incorporating structural support, and Fresnel lenses.

The most efficient system tested incorporates a

free-piston Stirling engine at the focal point. About

30 percent of insolation can be converted to electricity by such a system, which is higher than any other

 Research Institute, op. cit., 53, p. 
98 ● Energy Technology Choices: Shaping Our Future

solar electric technology.90 The Stirling engine

could be very reliable because of its mechanical

simplicity, but it will need further development to

improve its efficiency and cost.

Power costs from a system of stretched membrane

dishes and a Stirling engine are projected to be 5

cents/kWh when commercially available.91

Parabolic Solar Troughs-Collectively, parabolic solar trough systems account for more than 90

percent of the world’s solar electric capacity. A

parabolic trough tracks the Sun vertically, which is

simpler than the vertical and horizontal tracking

required from heliostats and parabolic dishes. The

trough concentrates sunlight onto a tube fried with

fluid, usually very hot oil, at its focal line. The fluid

circulates between troughs, finally transferring its

heat through a heat exchanger to water or steam

destined for a turbine generator.

Standing alone, solar troughs are best used for

industrial applications. For electric power generation, supplemental gas-fired superheaters are used to

create steam hot enough to drive a turbine.

From 1984 to 1988 several commercial solar

trough plants, totaling 275 MWe, were built by the

LUZ Corp. in California. LUZ is presently constructing 80 MWe of capacity, and is planning for

300-MWe additional capacity by 1994. These parabolic trough electric plants operate in the hybrid

mode, using natural gas. Improvements in engineering, manufacturing, and construction techniques

have reduced electric costs from 23 cents/kWh in

early plants92 to 8 cents/kWh in 1990. These are

average costs, including the contribution of natural

gas, which is cheaper than the solar portion.93

Company officials at Southern California Edison

project further system cost reductions of 30 percent, 94 which would make solar trough systems

competitive in a wider range of markets.

Industry Outlook-solar thermal energy will not

likely be a competitive baseload energy source

unless oil and gas prices rise significantly.95 Although no major breakthroughs are envisioned that

would lower costs below current projections, these

reductions may be enough to make solar thermal a

valuable source of supplemental energy. One market

for which it maybe uniquely qualified is toxic waste

neutralization, where photochemical effects maybe

more effective than simple heat.

For the near term, the solar trough/natural gas

hybrid system appears to be the most marketable.

Utility studies suggest that in the long term central

receiver and parabolic dish technologies offer the

most cost-competitive generation if cost-effective

storage technologies can be developed. The U.S.

budget for solar thermal research, however, has

steadily declined in the last 10 years, and the United

States has lost its leadership to European countries

in marketing solar thermal technology to foreign

markets. Besides its environmental benefits, developing solar thermal energy technologies offers a

potential multibillion-dollar domestic and international industry.

Photovoltaic Energy

Photovoltaic (PV) cells, which directly convert

sunlight to electric current, have been used for years

in calculators, watches, and space satellites. Other

niche markets such as remote sites are also developing. These applications have sustained the PV

industry while the technology has developed for

using PV cells economically in the bulk power

market. Although PV energy is more expensive than

conventional energy for most uses, costs continue to

drop. The present cost is now 20 to 30 cents/kWh—

about five times the cost of conventional electricity.96 With further advances in microelectronics and

semiconductors, photovoltaics can become competitive with conventional power sources by 2010,

maybe earlier. Some PV cells have already reached

efficiencies of nearly 30 percent.

To capture solar energy, PV cells are grouped

together in modules that are then linked in arrays on

a large panel oriented toward the Sun. PV systems

are used with battery storage in locations far from

~oak Ridge National Laboratory, op. cit., footnote 4, p. 105.

%30LM 13ner~ Research Institute, op. cit., foonote 53, p. E-2.

nweinberg and Will-, op. cit., footnote 88, p. 149.

gssok En~~ Research Institute, op. Cit., footnote 53, p. El.

Wweinberg ad Wti, op. cit., footnote 88, p. 149.

950* Ridge Natio~ ~oratoly, op. cit., footnote 4, p. 105.

%Wein~rg and Williams, op. cit., foOtf.10te 88, p. 149.
Chapter 3-Technologies for Energy Supply and Conversion . 99

Photo credit:ARCO Solar, k

Photovoltaic central station,

existing powerlines. The direct current electricity

produced can be converted to alternating current and

fed into the electric grid, but this is not yet

cost-effective.

Technology advances have been focused on two

types of PV module systems: the concentrator

system and the flat-plate collector. Each system

uses a variety of materials and configurations.

Concentrator Systems—In a concentrator system, lenses focus sunlight onto PV cells so that the

equivalent of 50 to 1,000 Suns are focused on each

PV cell. Such a system requires direct sunlight and

uses expensive, though highly efficient, cells along

with an inexpensive concentrator. A fairly complex,

two-axis tracking system maximizes Sun exposure.

At very high Sun concentrations, active cooling with

circulating fluids is necessary.

The concentrator module could be the technology

of choice for central station use in the near term

because this option involves fewer materials possibilities. Moreover, the most promising advances for

this system have been improvements in solar cell

efficiency.

Technical Opportunities—Two semiconductor

materials are being considered for near-term concentrator systems: silicon (Si) and gallium arsenide

(GaAs). Silicon is the most mature PV technology.

Improvements in silicon cells will involve incremental advances and improved mass production

rather than basic technical advances.

Unlike silicon, GaAs does not degrade much at

high temperatures, a significant consideration for

use at 500 to 1,000 Suns, where active cooling can

be necessary. Furthermore, only a few microns of
100 ● Energy Technology Choices: Shaping Our Future

GaAs are enough to absorb all the solar radiation,

whereas a few hundred microns of single crystal

silicon (c-Si) are needed for the same job. However,

growing thin films of GaAs in the quantity and

quality needed is not yet feasible.

Concentrators that keep optical losses small and

maintain focused radiation on cells throughout wind

stress, thermal cycling, and tracking are the central

focus of R&D programs. In the near term, 20-percent

efficient concentrator modules can be achieved.97

Flat-Plate Collectors—This type of PV module

system exposes a large surface area of interconnected arrays of PV cell modules to the Sun. This

system uses cells cheaper but less efficient than

those in the concentrator system. Unlike the concentrator system, flat-plate collectors can operate in

diffuse sunlight, and no cooling system is required.

Very little maintenance is required.

Flat-plate systems entail a large number of

interconnections between a large number of cells.

The integrity of these connections, and their protection against hostile elements in the environment, are

more important than the protection of the cells

themselves. Making cells as large as possible

reduces the number of interconnections.

Technical Opportunities—Minimizing cell cost

is critical for flat-plate modules. The complex design

and manufacturing process for highly efficient

concentrator cells may always be prohibitively

expensive for one-Sun use. Focusing R&D efforts

on improving automated high-yield processing of

one-Sun cells may be more fruitful than changing

cell design itself. Improvements in the quality of

solar cell grade Si may also be possible.

A variety of cells can be used in flat-plate systems.

They include single crystal, polycrystalline and

ribbon silicon, and amorphous silicon.

Single Crystal Cells—The expense of growing

and slicing single-crystal cells makes it unlikely that

such cells will be used extensively in flat-plate

technology. Other forms of silicon and new processing technologies are the best hope for improving

flat-plate technology .98

Polycrystalline and Ribbon Silicon-Casting

processes yielding large-grained polycrystalline silicon and techniques for making continuously pulled

ribbon silicon may yield acceptable efficiencies at

significantly reduced cost.

Thin-film Technology--The cheapest approach to

PV energy conversion is the deposition of thin

semiconductor films on low-cost substrates. Thin

films are amenable to mass production and use only

a small amount of active material. Materials used

include copper iridium diselenide, cadmium telluride (with small-area laboratory cell efficiencies of

19 percent), and amorphous silicon.99 To be effective, deposition techniques must be developed to

ensure high-quality and defect-he material within

individual grains. If the thin film is polycrystalline,

grain boundary effects must be minimized.

Amorphous silicon (a-Si) is interesting because

only a thin film of inexpensive material is needed for

high absorption and because large-area films of a-Si

and multifunction a-Si cells can be made easily.

However, efficiency is low and degrades over time.

Research is focusing on improving efficiency by

measures such as stacking cells (multifunction

cells).

Wind Power

Wind power is the solar energy technology closest

to being economically competitive in the bulk power

market. In 1989, wind powerplants generated over

2 billion kWh of electricity, 100 at an average of

8 cents/kWh. At the best sites the cost was only

5 cents/kWh.101

Wind turbines convert the energy of the wind to

rotating shaft power, which is converted to electrical

energy. Horizontal axis wind turbines capture wind

via propellerlike blades attached to a rotor mounted

on a tower, similar in appearance to windmills of

old. Vertical axis wind turbines look like giant

eggbeaters: their two or three long, curved blades are

attached to a vertical shaft at both ends. These

turbines require no orientation to catch the flow of

wind from any direction.

~@& Ridge National Laboratory, op. cit., fOO~Ote 4, p. 121.

‘Ibid., p. 117.

%id., p. 118.

loosok ~er~ Res~ch Institute, op. cit., footnote 53, p. 8.

1°IJeanine Anderson, “New Third,” Public Power, vol. 8, No. 3, May-June 1990, p. 23.
Chapter 3--Technologies for Energy Supply and Conversion ● 101

Wind is an intermittent resource that varies from

region to region. Sites with small differences in wind

velocity have great differences in energy output,

because power output increases with the cube of the

wind speed. Thus, an average wind speed of 19 miles

per hour (mph) will produce 212 percent more

available energy than will an average speed of 13

mph. 102

Technical Opportunities-Although the costs of

wind-derived energy have dropped dramatically

since 1981, few of these reductions stemmed from

technological improvements. Most of the savings

resulted from standardization of procedures, mass

production techniques, improvements in siting, and

the scheduling of maintenance for periods of low

wind.103 New turbines are now able to remain in

operation almost 95 percent of the time.104 In

addition, the lifetime of critical components for wind

turbines has doubled in the last 10 years.105

DOE and industry analysts agree that within the

next 20 years expected improvements in wind power

system design will yield electric power at 3.5

cents/kWh for sites with only moderate wind resources.106 Some Midwestern States, with average

wind speeds of 14 to 16 mph, would be likely

beneficiaries of such technology.

Additional improvements will derive from more

sophisticated turbines that can adapt to the changing

speed and direction of the wind, thereby helping

provide more constant frequency power to a utility.

Pacific Gas and Electric and EPRI are engaged in a

5-year project to develop, build, and test prototypes

of a 300-kW variable-speed, wind turbine whose

blades and electronic controls allow the rotor to turn

an optimum speed under a variety of wind conditions. Advances in electronic controls that are

sensitive to changing wind characteristics, and

advanced materials that yield lighter, stronger components are expected to further improve wind energy

competitiveness.

Wind power sites must have adequate wind,

suitable topography, accessibility to both utility and

transportation systems, and acceptability from enviPhoto credit: U.S. Wn@ower, Ed Linton, photographer

Small wind turbines.

ronmental, regulatory, and public perception perspectives. Characterizing a site has proven costly

and time-consuming, because techniques for extrapolating data from one site to another are not yet

refined. Extensive, customized wind measurements

are necessary at most sites to estimate and maximize

their full potential. There is a need to establish a

coordinated program for integrating, documenting,

and disseminating wind measurements on a constant, long-term basis.

In the past decade, U.S. funding for wind energy

research dropped to $9 million per year, a tenth of

what it was at its peak.107 Technical improvements

will be necessary if wind turbines, particularly small

turbines, can compete without subsidies. More

detailed information is also needed about wind

 Institute, Op. cit., 53, p. 

 op. cit., footnote 88, 147-148.

 Research Institute, op. cit., footnote 53, p. 8.

 cit., footnote 

 op. cit., footnote 88, p. 

 op. cit., footnote 101, p. 26.
102 . Energy Technology Choices: Shaping Our Future

resources, cost, and performance. Many industry

observers recommend establishing minimum performance standard levels for turbine certification.

In general, improvements in wind energy are

expected to continue, and the cost of electric power

from wind turbines in high-wind regions may

become considerably lower than power from other

sources. The rate of improvement will be heavily

influenced by future trends in the avoided costs or

“buy-back rates” offered by utilities to nonutility

energy producers. If these costs are low or uncertain,

technological development and application will be

slowed. Conversely, high avoided costs, stimulated

perhaps by rising oil and gas prices or shrinking

reserve margins of generating capacity, might considerably accelerate the contribution of wind power.

Ocean Energy Systems

The ocean—with its waves, tides, temperature

gradations, marine biomass, and other dynamic

characteristics-contains an enormous amount of

energy. Exploiting this resource has proved difficult.

ocean thermal energy conversion (OTEC) exploits the difference between temperatures of surface water and water as deep as 1,000 m108 to

generate electricity. Differences as small as 20

degree Celsius can produce usable energy. Tapping

this vast resource, particularly in tropical oceans,

would produce an estimated 10 million megawatts

of baseload power, according to SERI.109

Research has focused mainly on the closed-cycle

and open-cycle OTEC systems for generating electricity. The closed-cycle system recirculates a working fluid, like ammonia, to power a vapor turbine for

electricity generation. Warm seawater is used to

vaporize the ammonia via a heat exchanger (evaporator). The expansion of the vapor runs the turbine.

Cold, deep-sea water than condenses the vapor via

another heat exchanger (condenser).

An open-cycle system uses warm seawater that is

flashed into steam in a partial vacuum chamber as

the working fluid to power a low-pressure steam

turbine. The steam exiting the turbine is condensed

by cold seawater. If a surface condenser is used, the

condensed steam stays separate from the seawater,

providing desalinated water. Effluents from either

open- or closed-cycle systems can be converted to

freshwater through a second stage evaporator/

condenser system.

No commercial OTEC plants have been tested,

but under some conditions, OTEC-derived electricity may be competitive in the next 5 to 10 years for

small islands where power from diesel generators is

very expensive. Use of OTEC domestically for

electric power is unlikely except for coastal areas

around the Gulf of Mexico and Hawaii.

It should also be noted that the basic OTEC

technology-the conversion of large quantities of

heat at low temperature differences to electric

power--can also be used to exploit waste heat at

industrial and commercial facilities. Many refineries, steel plants, chemical processing plants, etc.

dump heat at much higher temperatures than are

available in the ocean. Exploiting this energy would

be much easier than building and operating an

OTEC and would supply power right at a load center

instead of out in the ocean. Similarly, thermal

powerplants exhaust a huge amount of energy (60 to

70 percent of all energy input to the plant), though

at lower temperature differences. A bottoming cycle

using OTEC-type cycles could make an asset out of

an environmental problem, and feed the power

directly into the grid. Both these applications are

likely to be economical long before OTEC.

Other ocean energy technologies that convert

wave energy and tidal power receive much less

attention than OTEC. The U.S. Government does no

major wave R&D, but Norway, Britain, and Japan

do. The greatest U.S. wave energy potential, with an

estimated mean incident energy of 40 to 50 kW/m,

is found on the West Coast. Wave energy during

winter storms can reach over 200 kW/m, causing

safety and design problems. Major technical challenges requiring engineering evaluations and development involve offshore siting (waves dissipate

closer to shore), structural difficulties, the mooring,

and the power transmission cable. Estimates for

wave power for the Pacific Northwest are a yearly

average power level of 1.64 MW, but a peak power

of more than 3.3 MW during Winter.110

lo8~e me-e m is the differen~ btween high and low tides, which creates a hydrostatic head like that in hydropower.

IWSO~ fier~ Research Institute, op. cit., footnote S3, p. D-1.

1 IOIbid., p. D-9.

lll~id.
Chapter 3-Technologies for Energy Supply and Conversion . 103

The total U.S. tide potential has been estimated at

18,300 GW.111 Only three coastal areas, however,

are promising: one in Maine and two in Alaska. a

minimum tidal range of 5 m is needed for tidal power

to be considered practical. Research in microhydro

technology may make tidal systems feasible at lesser

tidal levels.

Municipal Solid Wastes (MSW)

About two-thirds of the solid waste generated by

households and by commercial, industrial, and

institutional operations is burnable and can be

converted to energy.

Conversion Technologies—MSW can be converted to electricity and process heat by either mass

combustion or refuse-derived fuel combustion. In

mass combustion, MSW is burned with or without

pretreatment or sorting of the inherent waste products. In refuse-derived fuel combustion, recyclable

materials and noncombustible materials are frost

removed from the MSW. The remaining material is

made into pellets.

Waste-to-energy facilities function much like a

fossil fuel steamplant. The fuel is burned to heat

water, and the steam drives a turbine to generate

electricity. The steam can also be used in district

heating/cooling systems. SERI estimates that current use of MSW for electricity totals 0.11 quads.

Under current programs, that amount is expected to

rise to 0.45 quads by 2010 and 0.57 quads if R&D is

increased. 112 Most waste-fired capacity is owned by

nonutility generators.

Another energy product, methane, can be recovered from MSW for use in natural gas systems via

the anaerobic digestion of MSW’s digestible components. If the cost of MSW disposal exceeds

$40/ton, the net cost of MSW-derived methane may

be as low as $3.50/MBtu, making it nearly competitive with the cost of delivering natural gas to the

cities. 113

A less economic recovery of methane is possible

from the natural decomposition of MSW in landfills.

Currently, 0.01 quad of landfill methane is recovered.114 For safety reasons, other methane is collected from landfills and flared, because the volume

is too low to be economical.

Several problems exist with present MSW approaches. MSW plants have higher capital and

operating expenses than those of wood- or fossilfired plants, mainly due to feedstock processing

costs and to later emissions and solid waste disposal.

Some of these costs are balanced by credits for

avoiding MSW disposal. Thus, overall costs of

power generation average 7 cents/kWh but could

alter depending on the economics of particular

locales.115

A variety of technology improvements are being

sought for reducing the costs of electric power

generation and emission control, increasing the

attractiveness of MSW as a fuel for electric powerplants. New ways are needed to dispose of dioxins,

nitrogen oxides, chlorinated gases, solid residues,

and ash. Automatic trash sorting to remove glass,

plastics, and other recyclable would improve combustion and reduce disposal problems.

For methane production by anaerobic digestion of

MSW, improvements are needed in solids loading

rates and digestion efficiency. Also needed are

improvements in the stability and control of digester

operation. An accelerated program with industry

involvement and cost-sharing could reach performance goals if tipping fees for MSW exceed the $25

to $50/ton range.116

Extensive commercial use of gasification of

MSW may be economical already in areas where

disposal costs are high (where tipping fees are above

$100/ton at lanfills).

OTHER FACTORS AFFECTING

SUPPLY

Environmental Concerns

Perhaps of greatest concern is the greenhouse

effect produced by gases emitted during fossil fuel

combustion. These greenhouse gases, which include

C02

, methane, NOX, and chlorofluorocarbons, trap

heat in the atmosphere preventing its radiation into

l%id., p. B-20.

l%id., p. B-7.

IWbid., p. B-8.

1151bid., p. B-6.

11’%id., p. B-11.
104 ● Energy Technology Choices: Shaping Our Future

space. Global temperatures could increase by 2 to 9

degrees Fahrenheit over the next century if current

emission trends continue. The anticipated rise in

temperature could lead to devastating changes in

climate, agriculture and forestry, and population

shifts.

The United States is a major contributor to

greenhouse gas emissions. U.S. carbon emissions

from energy use account for 25 percent of the world

total. Coal accounts for 35 percent of U.S. carbon

emissions; petroleum, about 45 percent; and natural

gas, about 18 percent.

A recent OTA report, Changing by Degrees: Steps

To Reduce Greenhouse Gases, concluded that the

United States can reduce CO2 emissions by 20 to 35

percent from 1987 levels over the next 25 years but

only with great difficulty. There are significant

opportunities for reducing CO2emissions in all

sectors. To achieve this reduction, a serious commitment and the implementation of a variety of technical options and policy measures will be required.

Emissions reductions may be costly, but no major

technological breakthroughs are needed.

The implementation of C02 reduction measures

will have far-reaching effects on the U.S. economy

and energy supply picture. The switch to low or

noncarbon fuels may revitalize the nuclear option,

increase demand for natural gas, accelerate the

growth of renewable, and limit production and

consumption of coal. Attempts to limit coal use will

result in significant social and economic impacts. At

the very least, marginal, inefficient mines and

coal-fired powerplants will probably close. Unemployment in the coal industry will rise. This will

exacerbate economic problems that already beset

some coal mining regions, especially Appalachia.

Nevertheless, if we are serious about reducing CO2

emissions, coal is the place to start.

The increased use of natural gas can deplete U.S.

reserves and strain the distribution system. Prices

could rise to very high levels. Also, the increased use

of natural gas carries with it the risk of increased

methane leakages.

These reduction measures will also result in

ancillary environmental benefits that include reducing acid rain, urban smog, ozone depletion, groundwater contamination, and waste disposal. All of

these environmental concerns can be addressed or

are being addressed by regulations, so the advantages may be marginal. For an indepth analysis of

technical and policy opportunities for reducing

greenhouse gas emissions over the next 25 years, the

reader is referred to the recent OTA report Changing

By Degrees: Steps To Reduce Greenhouse Gases.

Another environmental concern is acid rain. The

combustion of fossil fuels also produces sulfur

dioxide and nitrogen oxide. As these pollutants are

carried away from their sources, they can be

transformed through complex chemical processes

into secondary pollutants: sulfates and nitrates.

These pollutants combine with water to form acid

and fall as rain or other precipitation. Numerous

chemical reactions-not all of which are completely

understood-and prevailing weather patterns affect

the overall distribution of acid deposition.

The best documented and understood effects of

acid deposition are to aquatic ecosystems. The

sensitivity of a lake or stream to acid deposition

depends largely on the ability of the soil and bedrock

in the surrounding watershed to neutralize acid.

When the waters of a lake or stream become more

acidic than about pH 5, many species of fish die and

the ecosystem changes dramatically. In addition to

the acidification of aquatic ecosystems, transported

air pollutants have been linked to harmful effects to

terrestrial ecosystems. Broad forested areas subjected to elevated levels of acid deposition, ozone,

or both have been marked by declining productivity

and dying trees, although it is uncertain how much

of this is due to airborne pollutants. For an indepth

discussion of acid rain, the reader is referred to the

OTA report Acid Rain and Transported Air Pollutants: Implications for Public Policy.

The new Clean Air Act of 1990 caps utility

emissions of SO2 by the year 2000 at 8.9 million tons

per year, a 10-million-ton reduction from 1980

levels. The new law also requires annual reductions

of nitrogen oxides. Midwestern utilities and those

located in Appalachia will be hardest hit by the cap.

Most of the heaviest polluters are located in these

regions. The biggest cuts in the first 5 years will be

made by the heavy polluters. In addition, the law

provides for a pollution credits trading system,

which helps polluting utilities pay for acid rain

cleanup. Utilities can reduce SO2 emissions below

their required limit-receive credits. These credits can

be sold to other utilities and the cash used to defray

costs of emissions control technologies. Credits are
Chapter 3-Technologies for Energy Supply and Conversion ● 105

also given to “clean” utilities to grow beyond the

cap.

The mandated emissions reductions will likely

result in increased electricity costs to consumers,

particularly in the Midwest, and may financially

strain certain vulnerable utilities. Markets may be

disrupted by an increase in the demand for lowsulfur coal at the expense of high-sulfur coals. This

change in demand will result in increased unemployment in regions where high-sulfur coal is mined. The

extent to which utility and industrial users would

shift to low-sulfur coal depends on the relative cost

advantage of fuel switching as opposed to removing

sulfur dioxide by technological means (scrubbers).

It is hoped that by providing financial incentives

(pollution credits) to defray the costs of pollution

control equipment, utilities will not switch to

low-sulfur coal and thus save some high-sulfur

coal-mining jobs.

Obstacles to a Nuclear Revival

Public Acceptance of Nuclear Power

Over the years, public concerns about reactor

safety, costs, and waste disposal have had an impact

on nuclear power will affect energy supply options

in the future. The accidents at Three Mile Island and

Chernobyl dramatized the hazards of nuclear power.

Poor operations at some plants, especially when

mishaps or small radioactive releases occur, serve as

reminders. Nuclear reactors present risks to the

public that are statistically much lower than other

commonly accepted facilities such as dams, but the

public will not find that credible until safety is no

longer a controversial issue. Critics are unlikely to

let the controversy die down as long as major

accidents cannot be incontrovertibly proved to be of

vanishingly small probability. Under present conditions, the public sees little reason to accept a

potential risk for uncertain gains.

Utilities are very concerned over public acceptance of nuclear power. Recent public opinion polls

have shown a resurgence in the fraction of people

believing that nuclear energy will be essential.

However, these polls do not tell the whole story

since they ask questions only about general approval

or disapproval. If a specific site were proposed for a

nuclear powerplant, it is likely that the majority of

people in the region would be opposed. Furthermore,

public support would have to be widespread and

with only minor opposition before utilities could be

confident that there would be no reversal during

construction and the operating lifetime of the plant.

There are many ways in which the public can

make its opposition felt. Most directly, referenda

have been held to shut down nuclear plants. One has

passed on the Rancho Seco Plant in California,

though that seems to have been more related to the

economics of a poorly operated plant than to

concerns over safety. Indirectly, the public also

exerts pressure in courts, on local governments that

must issue permits, and on state governments which

must regulate rates of return on the investment and

approve emergency evacuation plans.

At this point it is simply not possible to say with

any assurance whether there will be a nuclear revival

or what it would take to initiate one. If there is one,

it will occur primarily because new plants are safer

and cheaper than has been the recent norm and

because alternatives are proving inadequate. However, neither safety nor cost will be easy to establish.

If costs and safety of nuclear power can be

convincingly made favorable relative to other

choices, a revival is quite possible, though by no

means assured. This will not happen within the next

few years, but by the mid-1990s demand growth is

likely to mandate considerable new construction,

and the industry will have had time to replace the

memories of the present failures with a period of

reliable operation and declining costs. Under such

conditions, having the option of an economical

reactor that has been thoroughly reviewed to minimize the risk of cost escalation or operating problems could prove attractive.

Financial Risks

The investment community provides another

important disincentive for nuclear power. Investors

generally believe nuclear to be much riskier than

other options, based on the tribulations of utilities

such as Public Service of New Hampshire, Long

Island Lighting, the Washington Public Power

Supply System, and General Public Utilities. Traditionally, regulated utilities provided limited profits,

but also low risks. Some utilities have found their

massive investments to be useless when they could

not finish a plant because it proved to be unnecessary

or too expensive, or failed to get a license, or were

shut down for safety inadequacies. Some investors

now refuse to buy stock or bonds in a utility building
106 . Energy Technology Choices: Shaping Our Future

a nuclear plant, while others demand a large risk

premium.

Very few people involved in operating nuclear

powerplants believe that nuclear plants represent a

significant hazard to the public, but failed construction projects and plants damaged by moderately

serious accidents, e.g., Three Mile Island, pose

important financial risks for the utility.

Capital Costs—A recent industry study predicted

that a new nuclear plant would cost $1,400/kWe

compared to $1,220 for a coal plant and $520 for a

gas combined cycle plant. The levelized costs for the

power would be 4.3 cents/kWh for nuclear, 4.8 for

coal, and 6.1 for gas. 117 These figures are not

verifiable because no plant has been started recently

or under the conditions assumed in the analysis. In

addition, industry has been generally optimistic on

cost estimation, sometimes spectacularly so. Nevertheless, it suggests that nuclear power can still be

competitive if the problems of the past can be

avoided.

Nuclear Waste Disposal

Concerns about nuclear waste disposal also will

have an effect on energy supply adequacy. The lack

of proven technology and a known site for safely

sequestering nuclear wastes has been one of the

major factors behind opposition to nuclear power.

To many people, it seems irresponsible to build

reactors before we could be sure that waste products

would never be a threat. The period required before

the radioactivity of spent fuel decays to completely

innocuous levels118 is many times longer than

recorded history, and no one can envision all the

problems that might arise so far in the future. The

many false starts, delays, and problems that have

been encountered in the program to develop a

nuclear waste disposal facility underscore the uncertainty of success.

Nuclear proponents point out that the need for

waste disposal has always been recognized, and that

the technical problems are not as formidable as they

appear. Nuclear wastes are difficult to contain

because they generate heat. The short- and mid-term

components that produce almost all the heat largely

decay within 200 years. After 1,000 years, virtually

no radioactive material is left but plutonium and

traces of a few other long-lived components. The

waste can be stored in geological formations that

have been stable for many millions of years, and

even if conditions change, any leakage will be very

slow (the long-lived wastes are largely insoluble in

water and too heavy to be easily windblown). Such

leakage should pose essentially no threat to people

or the environment, especially in comparison to

chemical wastes and other risks. In any case, the

problem must be solved whether we build more

reactors or not, because of all the waste that has been

produced already in the commercial and weapons

programs.

Yucca Mountain, part of the Nevada Test Site for

nuclear weapons, has been selected as the site for the

first Federal high-level waste repository. The climate is extremely dry, and the water table is about

1,000 feet below the proposed waste storage level,

limiting the likelihood of leaching. The area is very

thinly unpopulated, minimizing the number of

people who could be at risk. Extensive testing and

detailed analyses necessary to validate this selection

are underway.

In addition to the natural protection of deep burial

in a stable formation with little groundwater seeping

down through the site, various manmade barriers

will be applied to ensure protection, especially

during the earlier, rapid decay rate stages. Waste can

be blended into material, e.g., borosilicate glass,

which hardens into a very stable mass. Vitrified

wastes (or spent fuel) can also be encased in casks

made of materials impervious to any plausible

chemical or mechanical agent.

Other sites and different geological formations are

probably also feasible. Yucca Mountain was chosen

as much for political reasons as for technical.119

Proposed nuclear waste disposal sites engender

intense opposition (though sometimes also local

support for the considerable economic benefits they

can offer) which may be out of proportion to the risk

entailed but can be just as difficult to overcome.

Most experts are confident that nuclear waste can be

safely contained, but a great many people are unwilling

117u.s. CO~Cil for Energy Awareness, “Advanced Design Nuclear Energy Plants: Competitive, Economical Electricity,” January 1991.

118plutofi~ ~s a ~.life of about 24,)()() ~~, and about ei@t )lalf-lives or 20Q~ yeas me r~~~ to reduce the radioactivity to the level Of

the original ore.

ll~u~m J. Ctier, ~U&arZmPemtiveS and Public Trust (Washingto~ DC: R~OWCeS for the FUtLU& 1987).
Chapter 3-Technologies for Energy Supply and Conversion ● 107

to accept these assurances. The risks to the local

population are small, but they are not zero. Careless

practices in the past that resulted in releases of

radioactivity, and false starts such as the proposed

site at Lyons, Kansas, ensure that the public will not

blindly rely on the experts. Siting will be much

easier if the program can establish a reputation for

fairness and responsiveness to local needs. More

high-level disposal sites will be needed, especially

if nuclear power is to grow.

Disposal of intermediate and low-level radioactive wastes may prove to be more troublesome in the

long run because the volumes of materials are very

much larger and the number of disposal facilities to

be licensed and monitored is much greater. However, much of this material comes from research or

medical purposes, not nuclear powerplants. Thus it

is imperative to solve the problem whether or not

nuclear power resumes growth.

Electric and Magnetic Fields

If electric and magnetic fields do prove to pose a

risk to human health, the implications for the electric

power industry will be great. Already, health effects

are one of the most prominent concerns raised by

people living near existing or proposed transmission

lines. Several States have experienced increasing

pressure to take regulatory action to protect citizens

from the possible hazards posed by power frequency

fields. By January 1989, seven States (Montana,

Minnesota, New Jersey, New York, North Dakota,

Oregon, and Florida) had already set limits on the

intensity of electric fields around powerlines. Florida is the only State to adopt standards to limit the

amount of both electric and magnetic fields.

Most of what we know today about the effects of

exposure to these fields comes from three types of

studies or experiments: Cell-level experiments,

whole animal experiments, and epidemiological

studies. Until relatively recently, there was little or

no scientific evidence that electric and magnetic

power frequency fields could pose a threat to human

health. However, laboratory studies have now demonstrated that fields have effects on living cells and

systems. Scientists are still investigating whether

these effects have public health implications. In

addition, several recent epidemiologic studies have

suggested an association between exposure to power

frequency fields and cancer. While these epidemiologic studies are controversial and incomplete, they

do provide a basis for concern about the effects from

exposure.

The research results to date are complex and

inconclusive. Many experiments have found no

differences in biological systems that have been

exposed to fields and those that have not. It still is

not possible to demonstrate that such risks exist, and

they may not. However, the emerging evidence no

longer allows one to conclude that there are no risks.

It is important to remember that exposure from

transmission lines is one perhaps minor source.

Exposure to local electric distribution lines, appliances, lighting fixtures, and wall wiring are more

common and could play a more significant role in

any public health risks. The OTA background paper

Biological Effects of Power Frequency Electric and

Magnetic Fields provides an indepth review of

existing scientific evidence on biological effects and

discusses policy responses to risk management.

Electricity Demand Uncertainty

Major shifts in electric power usage patterns have

bedeviled utility planners and energy forecasters

since events of the 1970s and 1980s made previous

assumptions about inflation, consumer behavior,

and economic growth obsolete. Throughout the past

decade, the electric power industry has been saddled

with expensive excess capacity as powerplants

ordered in the 1970s came on line and demand

growth fell below expectations. In the 1990s, the

industry’s problems with excess capacity appear to

be receding, and in some regions of the country,

reserve margins are tightening to the point that some

industry analysts are warning of shortages.

overall reserve margins are expected to decrease

over the next 10 years. One of the results of lower

capacity margins is that some utilities will have less

flexibility in dealing with more severe situations.

Another result could be greater reliance on older

units, which in turn will increase maintenance

requirements and result in more outage time. A

number of factors could easily change supply

adequacy or excess capacity into a shortage situation. Among the most important of these are delayed

capacity additions and higher than predicted growth

rates.

Among the analysts that have examined these

prospects, there is some disagreement about when

and where additional generation is needed. The
108 ● Energy Technology Choices: Shaping Our Future

disagreements are rooted in uncertainty over future

growth in demand and the cost and performance of

existing and planned capacity. In the face of the

considerable uncertainties, conflicting views about

which risks to take and who must bear those risks are

inevitable. In recent years, few utilities have been

willing to commit to construction of new baseload

capacity, in spite of the continued aging of the

existing generating plant stock and predictions from

some industry and government planners that the

country faces possible shortages in the early to

mid- 1990s. Meanwhile, the flow of new plant

additions by utilities entering service as a result of

orders placed in the 1970s is slowing to a trickle,

although capacity additions by nonutility generators

are increasing.

Nonutility Generation

Increases in nonutility generating capacity have

been significant in recent years. The growth in

cogeneration and small power production facilities

has, to some extent, offset the slowing of utility

construction of new capacity. According to the

Edison Electric Institute, electricity sales to utilities

from nonutility sources increased sixfold from 1979

to 1986 and 33 percent in 1988 and 1989.120 Almost

all of the sales have been to the investor-owned

segment of the industry.

Also, nonutility generation is an important source

of electricity in some States (California, Louisiana,

Texas, Maine, Alaska, Hawaii) and is starting to

become a national factor. Moreover, several regions,

including New England and the Mid-Atlantic, will

increasingly depend on nonutility generation additions to ensure supply adequacy or offset capacity

shortfalls over the next 10 years.

A wide range of technologies can be used to

cogenerate electric and thermal energy, e.g., steam

turbines, open-cycle combustion turbines, combined

cycle systems, and diesels. Much of the investment

in new generating technologies, particularly cogeneration, has come from nonutility generators. For

more information about cogeneration technologies,

the reader is referred to the OTA report Industrial

and Commercial Cogeneration.

l~wn El&tic Institute, op. cit., foomote 65.
Chapter 4

Potential Scenarios for Future

Energy Trends
. .“

CONTENTS

Page

PROJECTIONS FOR THE ... ... ... ... ... ... ..

112

Scenario 1: Baseline ... ... .

112

Scenario 2: High Growth ... ... ... ... .. .

114

Scenario 3: Moderate Emphasis on Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Scenario 4: High Emphasis on Efficiency . . . . . . . . . . . . ........ . 121

Scenario 5: High Emphasis on Renewable Energy ● . 124

Scenario 6: High Emphasis on Nuclear Power . ............. . 127

Comparative Impact of Scenarios. . ........ .

129

Tables

Table Page

4-1. Baseline Energy Use and Supply ... ... ... ... ... ... . . 113

4-2. High Growth Energy Use and Supply . ......... . 115

4-3. Moderate Efficiency Scenario Energy Use and Supply . . . 119

4-4. Potential for Energy Demand Reduction From Base Case by 2015 . 119

4-5. High Efficiency Scenario Energy Use and Supply . ............. . 122

4-6. High Renewable Scenario Energy Use and Supply . ........*... . 125

4-7. High Nuclear Scenario Energy Use and Supply . . . 127

4-8. New Nuclear Plant Construction Schedule in High Nuclear Scenario . . . . . . . . . . 128

4-9 Summary of Scenarios ... .................. .

130

4-10. Comparative Impact of Scenarios . ..................... . 131
Chapter 4

Potential Scenarios for Future Energy Trends

Previous chapters have described historical energy trends and identified the major components of

our energy future. The relative emphasis on these

various components will guide our energy future

along one path or another. There is considerable

variation among the potential paths. In general, the

Nation can remain on a course that emphasizes

conventional fossil supply patterns. Alternatively,

an emphasis on high efficiency can reduce projections of energy demand. Such a shift would entail

radical changes in energy supply planning and use,

and in their economic and environmental impacts. If

concern over global climate change increases, then

increased emphasis on energy sources that do not

produce carbon dioxide (C02

)--nuclear power and

renewable energy--could be necessary. These different paths entail many choices, such as which

technologies to emphasize, and the technologies

have large differences in their impact.

Of all the factors influencing energy trends, three

of the most important are the growth rate of the

economy (commonly measured by the gross domestic product (GDP)), the price of oil, and the status of

technology. The GDP is a measure of the demand for

the goods and services that require energy. Prior to

the energy crisis of 1973-74, there was a general

assumption that energy growth was intimately

linked to GDP. That assumption has been disproved

by the flat energy demand from 1972 to 1985 while

the GDP grew by 39 percent in real terms.1 Had

historical trends held, U.S. energy use would have

reached nearly 100 quads (quadrillion British thermal units) in 1985, up from 72.5 quads in 1972.

Instead, only 74.9 quads were required that year.

Two factors accounted for this loosening of the

connection between economic and energy growth.

Improvements in energy efficiency accounted for

almost two-thirds of the difference. Shifts in the

structure of the economy (e.g., decline in energyintensive heavy industries and growth in services

that require relatively little energy) accounted for the

remainder of the difference.

Since 1985, energy demand has resumed higher

growth trends, increasing 8 percent by the end of

1988. Low oil prices and strong economic growth

(the latter partly a result of the former), particularly

in energy-intensive industries including steel and

aluminum, appear to be responsible for this shift.

Neither economic growth nor the resultant effect

on energy demand can be predicted confidently. The

U.S. Department of Labor’s moderate economic

growth scenario for 1988 to 2000 assumes a

2.3-percent rate, lower than the 2.9-percent rate of

the previous 12 years. This is consistent with other

projections, but growth could be substantially higher

or lower. In any case, it can be assumed that as long

as economic growth is a national goal, demand for

the services that energy provides will increase

substantially.

..< The amount of energy that will be required to

perform these services is a function of the efficiency

with which it is used. As discussed in chapter 2, a

particular service (e.g., transportation in a car,

heating a house, making steel) can be performed in

a variety of ways, some of which use far more energy

than others. If the cost of energy rises (or if other

incentives are applied), energy users will consider

improving existing processes (e.g., insulating their

house), buying more efficient equipment (e.g.,

higher mileage automobiles), or altering their behavior. However, rising energy costs also reduce consumers’ ability to afford these investments.

Different forms of energy have different costs, but

the most variable is petroleum. The price of petroleum is dependent to a large degree on political and

market decisions that occur outside of the United

States. The prices of other fuels are influenced by

petroleum but are not subject to such large swings.

Changing technology will affect energy use by

providing new options, especially as environmental

regulations and resource constraints eliminate older

options. For example, more stringent air emissions

requirements could curtail industrial coal use, but

emissions are easier to control in small facilities

using the emerging technologies of fluidized-bed

combustion and gasification. Improved technology

is necessary for widespread use of solar energy and

ITMS dis~ssion is drawn from U.S. Conwss, Ofilce of Technology Assessment Energy Use and the U.S. Economy, OTA-BP-E-57 (w~mto%

DC: U.S. Government Printing Offke, June 1990).

–111–
112 . Energy Technology Choices: Shaping Our Future

may be important for nuclear power. As discussed in

chapter 2, a variety of technologies are available

now in all sectors to raise efficiency, and many more

could be developed and implemented.

PROJECTIONS FOR THE FUTURE

As discussed above, the qualitative aspects of the

energy situation are not by themselves very useful in

projecting future energy trends. Nor do they allow

any quantification of the potential impacts of future

policy options. For such purposes, scenarios have

been derived from the analyses developed for the

OTA report on climate change.2 A simple accounting model modified the results of the energy/

economic model of the Gas Research Institute,

which in turn was based in part on the Data

Resources, Inc. energy model, to estimate the

effectiveness of various technical options for lowering C02 emissions. The reader is referred to the OTA

report on climate change for a detailed explanation

of the models used and the specific assumptions

involved. Two scenarios are modifications of one of

these cases in order to explore a higher emphasis on

solar and nuclear energy. One additional scenario

(number 2) involving higher demand was created

and analyzed for this study.

These scenarios reflect the major issues discussed

in chapter 1 that energy decisionmakers are likely to

confront in the coming years: how to reduce C02

emissions to slow global climate change, should that

prove necessary, and minimize other environmental

and health impacts of energy use; how to reduce

dependence on imported oil; how to assure that a

reasonable diversity of supply options is available at

the lowest possible cost.

All the scenarios except high growth used the

same economic and energy cost assumptions: gross

national product (GNP) growth of 2.3 percent (a

moderate projection); price increases of 3.7 percent

per year for oil, 4.8 percent for natural gas, and 1.7

percent for coal. These costs are based on production

costs and do not necessarily reflect prices to

consumers, which may be affected by temporary

market perturbations and various policies, including

energy taxes. The baseline projection, which assumes no major policy changes and no major

constraints, is shown under scenario 1. Higher

economic growth and lower energy prices are

considered in scenario 2 to explore a future where

very optimistic projections are realized. This scenario differs from the others in that a higher level of

goods and services requiring energy are assumed.

Scenario 3 is based on the moderate scenario in the

OTA climate change report and emphasizes efficiency of energy use in order to reduce demand.

Scenario 4 is based on the tough scenario and

represents an intensification of the measures in

scenario 3 to reduce energy demand. Scenarios 5 and

6 are modified versions of scenario 3 that exploit

alternative energy sources (renewable and nuclear)

to reduce emissions of C02

, in contrast to the major

emphasis on efficiency in scenario 4.

Collectively, these scenarios are representative of

the main energy choices facing the country even

though four of them were created to test C02

reduction decisions. Steps to reduce Co2 emissions

are largely congruent with steps to address the other

energy issues. One notable exception is the development of synthetic fuels to reduce dependence on

imported fuels, a topic discussed in scenario 2.

These scenarios should be viewed as guidelines

only, not predictions. If one proves accurate, that

will be largely accidental. Energy events of the last

two decades have been too capricious and turbulent

to allow much confidence that all problems in

making energy projections have been anticipated.

Unexpected disruptions will almost certainly occur,

and so may some pleasant surprises, e.g., technological developments that permit the economic extraction of our vast domestic reserves of unconventional

natural gas. The scenarios are sketches of plausible

energy futures and what has to be done to get there.

They provide a consistent framework for decisionmakers to compare the desirability of different

energy futures we could work toward, and they

suggest the costs and risks involved in the necessary

decisions.

Scenario 1: Baseline

This scenario assumes no major policy initiatives

are undertaken and present trends are largely continued. In particular, fossil fuel use continues to grow

because it is the most convenient energy source

available and is still affordable under the price

increases assumed here. Total energy use rises

~.S. Congress, Office of Technology Assessment Changing by Degrees: Steps To Reduce Greenhouse Gases, OTA-O-482 (Washington, DC: U.S.

Government Printing Office, February 1991).
Chapter 4--Potential Scenarios for Future Energy Trends . 113

slowly from 83.9 quads in 1989 to 112.4 in 2015,

about 1 percent per year. Demand for electric power

increases at 2.3 percent per year, equaling economic

growth, as has been the case in recent years. The

breakdown by fuel and end-use sector is shown in

table 4-1. Electricity is listed separately because it is

an intermediate carrier, neither supply nor demand,

and accounts for the largest single use of primary

energy.

The baseline growth rate is slower than that of the

past few years but faster than the prior 15 years. It is

consistent with slowly rising energy prices and an

economy that largely maintains its current mix of

activities. Some improvements in efficiency are

implemented so that energy intensity (energy per

dollar of GDP) continues to decline. Of particular

interest are the following:

The highest energy growth is in the commercial

sector. Industrial sector energy growth is the

largest in absolute terms, but it remains modest

for this sector, primarily due to reduced manufacturing growth. Transportation increases at a

slightly slower rate than industry. The residential sector is essentially flat, largely because

population growth is low.

U.S. oil production is expected to decline from

9.73 million barrels per day (MMB/D) in 1990

to 8.61 in 2000 and 6.94 in 2015.3 Even keeping

to this schedule will require the discovery and

exploitation of new fields, which are most

likely to be offshore or in Alaska.

Future domestic production of conventional

natural gas resources will be supplemented by

tight gas formations plus coal seam methane

and Alaskan gas. Predictions of total production are tentative, largely because the economics of the unconventional resources are uncertain. This scenario projects a slowly rising

production curve for about a decade, followed

by essentially flat production.

Coal remains the fuel of choice for electric

power generation because of its long-term

availability at low cost and the lack of major

new environmental restrictions. Nuclear power

declines after 2000 as plants are retired and no

compelling reason arises to start many for

operation before 2015.

Table 4-l—Baseline Energy Use and Supply

(quadrillion Btu)

1989 2015

Demand

Residential

Natural gas . . . . . . . . . .

Electricity a 

. . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Renewable . . . . . . . . .

Total . . . . . . . . . . . . . . .

Commercial

Natural gas . . . . . . . . . .

Electricity a 

. . . . . . . . . . .

oil . . . .’.. . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Transportation

Oil . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . .

Electricity . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Industrial

Natural gas . . . . . . . . . .

Oil (fuel) . . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . .

Electricity . . . . . . . . . . .

Renewable . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Total demanda 

. . . . . . . . .

Electricity b

Coal . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . .

Supply Oil

. . . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

10.9

2.7

2.7

0.7

ne

6.1

21.6

0.6

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

24.5

63.6

16.0

5.7

2.9

1.7/3.0

29.2

34.0

Domestic . . . . . . . . . . . . (18.3)

Imported . . . . . . . . . . . . (17.0)

Exported . . . . . . . . . . . . ( 1.8)

Synthetic . . . . . . . . . . . . (ne)

Gas . . . . . . . . . . . . . . . . . . 19.5

Domestic . . . . . . . . . . . . (17.5)

Imported . . . . . . . . . . . . ( 1.4)

Synthetic . . . . . . . . . . . . (ne)

Coal . . . . . . . . . . . . . . . . . . 18.9

Produced . . . . . . . . . . . . (21.2)

Exported . . . . . . . . . . . . ( 27)

Synfuel feed . . . . . . . . . (ne)

Nuclear . . . . . . . . . . . . . . . 5.7

Renewable . . . . . . . . . . . . 5.8

4.2

4.0

1.1

0.1

1.5

10.9

3.4

5.2

0.9

0.1

9.6

27.5

0.7

ne

28.2

7.7/5.0

5.7

5.3

3.5

4.6

31.8

80.5

29.1

3.8

6.3

1.6/5/7

46.4

41.8

(12.0)

(27.8)

( 0.0)

( 20) 22.3

(16.5) .

( 5.8/ne

33.8c

(40.7)

( 4.0)

( 29) 3.8

10.7

Total . . . . . . . . . . . . . . . . . 83.9 112.4

KEY: ne = negligible.

a DWS not inclU& conversion losses at powerplants, Which make up about

two-thirds of the total consumed there.

bAll fuel US~ for power, with hydroelectric and other nonthermal pOWerplants artificially rated at average thermal efficiency.

c Note that a total of 40.7 quads of coal are mined, 2.9 quads of Which are

converted into 2 quada of synthetic fuel, which are included under oil.

SOURCE: 1989 data-U.S. Energy Information Administration, AnmM/

Energy Review 1989, DOE/EIA-0384(89), May 24, 1990, tables

1,2,3,4,5, 11, 17,25,88, and 99; Office of Technology Assessment, 1991.

sDeriv~ from tie U.S. Ener~ Information AdrniniStrstiOp AnnualEnergy Outlook 1990, DOE/EIA-0383), J~. 12, 1990, by Om for afofi~m

update of its 1984 report U.S. Vulnerability to an Oil Import Curtailment: The Oil Replacement Capability.
114 ● Energy Technology Choices: Shaping Our Future

●

●

●

Security concerns increase with oil imports, but

import growth rates are not so high that

additions to the Strategic Petroleum Reserve

(SPR) cannot keep up. By 2015, however, the

Middle East supplies a very large and rising

fraction of U.S. imports. Depending on the

geopolitical environment at that time, the SPR

might have to expand to several times its

current size. The anticipated price of oil is

substantially higher, which seriously aggravates the balance of trade.

CO2 emissions would rise almost 40 percent by

2015. While no environmental constraints are

envisioned for the duration of this scenario,

such a large additional contribution from the

United States would pose a substantial risk of

accelerating global climate change.

The near doubling of coal consumption will

aggravate problems in meeting local and national air quality standards unless better technology such as integrated gasifier, combinedcycle combustion becomes available.

Conclusions-This traditional approach is feasible if several conditions are met: 1) domestic oil and

gas reserves prove adequate to support the projected

production at reasonable prices; 2) chronic shortages

of imported oil do not develop; 3) the costs of renewable energy become more competitive; 4) CO2 and

other pollution problems are not so serious as to

restrict the coal option; and 5) economic growth

does not greatly exceed the assumed level. If these

conditions are not met, energy prices will rise with

tighter supply, and demand will shrink to fit (as it

always does in principle), but not without likely

economic penalties, e.g., increased inflation.

Scenario 2: High Growth

Scenario 1 does not represent an upper limit on

energy growth even though there are more potential

constraints on supply (e.g., resource depletion, siting

difficulties, regulations, etc.) than on demand. In

fact, there is no absolute upper limit on energy

supply growth that could be usefully defined at this

time.

Scenario 2 was created for this report to explore

the implications of higher energy growth. It is not

found in the OTA report on climate change.4 Though

even higher growth could be envisioned, the assumptions made for this scenario are sufficiently

optimistic that higher growth is unlikely. Economic

growth is assumed to be in the high range of

projections, perhaps 3 percent, resulting in higher

demand for energy services. Energy costs have to

stay low despite higher demand, either because of

technological breakthroughs or unexpected resource

discoveries. No major new environmental regulations are expected in this scenario.

A guiding principle behind this scenario is that the

United States maintains an orientation toward energy production rather than energy conservation.

The result will be higher demand for energy

services, tempered by the faster replacement of

older, less efficient facilities and equipment. Total

energy demand grows 1.7 percent annually, reaching

127 quads in 2015. Energy use in all sectors

increases faster than in scenario 1. The industrial

sector experiences 2-percent growth, consistent with

a resurgence in manufacturing. The commercial

sector rises faster at 2.7 percent, which is slightly

above the rate assumed in scenario 1. Transportation

energy demand increases 1.2 percent annually over

the study period. Lower fuel prices provide less

incentive to purchase efficient automobiles, and

commercial traffic will be higher than in scenario 1.

Residential sector energy demand grows at 1 percent

with demand for new and larger houses; no such

growth occurs in the base scenario. Table 4-2

summarizes the details.

Electricity demand increases 3 percent annually

in this scenario. However, it is important to note that

the additional power, relative to scenario 1, is

produced with little additional fuel consumed.

Under the conditions of this scenario-higher,

sustained growth and greater confidence--utilities

will be more willing to build new plants and replace

older ones. New plants adopting modern technology

should have significantly higher efficiency. Gas

turbines should be over 50-percent efficient, and

coal plant efficiency may reach 45 percent for some

technologies. Transmission losses should be reduced as well, as a result both of new transmission

technology and because much of the growth will be

from small units close to load centers (e.g., cogeneration plants on-site at manufacturing facilities),

minimizing the need for transmission. The net

delivered efficiency assumed in this scenario is 35

percent, compared to31 percent in the base scenario.

4u.s. con~~s, oftlce of Technology Assessmen4 op.cit., foomote 2.
Chapter 4--Potential Scenarios for Future Energy Trends ● 115

Table 4-2-High Growth Energy Use and Supply

(quadrillion Btu)

1989 2015

Demand

Residential

Natural gas. . . . . . . . . .

Electricitya . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . .

Renewables . . . . . . . . .

Total . . . . . . . . . . . . . . .

Commercial

Natural gas. . . . . . . . . .

Electricitya . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Transportation

Oil including synfuel...

Alcohol (biomass) . . . .

Natural gas. . . . . . . . . .

Electricitya . . . . . . . . . .

Total . . . . . . . . . . . . . . .

industrial

Natural gas . . . . . . . . . .

Oil (fuel) . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . .

Electricity a . . . . . . . . . .

Renewables . . . . . . . . .

Coal . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Total demanda . . . . . . . .

Electricity b

Coal. . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Renewables . . . . . . . . .

Total . . . . . . . . . . . . . . .

Supply Oil

Domestic. 

imported. . . . . . . . . . . .

Exported . . . . . . . . . . . .

Synthetic . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . .

Domestic . . . . . . . . . . .

imported . . . . . . . . . . . .

Synthetic . . . . . . . . . . . .

Coalc . . . . . . . . . . . . . . . . .

Produced . . . . . . . . . . .

Exported . . . . . . . . . . . .

Synfuel feed . . . . . . . . .

Nuclear . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

5.5

4.8

1.3

0.1

1.5

10.9

2.7

2.7

0.7

0.0

6 . 1

21.6

0.6

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

24.5

63.6

16.0

5.7

2.9

1.7

3.0

29.2

34.0

(183)

(17.0)

(1.8)/ne

19.5

(17.5)

(1.4)/ne

18.9

(21.2)

( 2 2

5.7

5.8

83.9

13.2

3.6

5.5

0.9

0.1

10.1

32.6

0.5

1.5

0.7

35.3

10.9

5.6

6.5

6.4

3.8

5.3

38.5

97.1

27.4

8.2

7.0

1.6/5.5

49.7

48.5

(140)

(26.5)

(00 )

(8.0)/28.5

(21.0) .

(35 )

(4.0)32.9

(540) .

(40 )

(17.1)

11.3

129.4

KEY: ne=negligible.

aDoesnotincludecxmversion Iossesat powerplants,which makeupabout

two-thirds of thetotal consumed there.

bAflfue[ us~for~eLw~h hydroelectric and other nonthermal powerplants artifiiiallyratedataverage thermal efficiency.

cNotethatatotal of54.oquads ofcoalaremined, 17.lquadsofwhichare

convertedinto12quadsofsyntheticfue~which areindudedunderoiland

gas.

SOURCE: 1989 dat*U.S. Energy Information Administration, Annual

Ehergy Review 1989, DOE/EiA41384(89), May 24,1990, tables

1,2,3,4,5,11,17,25,88, and 99; Office of Technology Assessment, 1991.

Twenty years ago, these energy growth rates

would have been considered unrealistically modest.

Now they appear high, largely because we have

learned that it is easier to control energy growth than

to meet high demand growth. In addition, economic

growth forecasts are lower and projected energy

prices are higher. However, if energy prices remain

at current levels (about $20 per barrel for petroleum

and equivalent for other fuels), the higher growth of

the late 1980s could continue. Energy prices significantly higher than those in scenario 1 would not be

consistent with high demand growth (except for

improbably high economic growth rates), because

they would trigger efforts to increase efficiency of

use.

Therefore, significant advances in energy production technology must be assumed for this scenario in

order to control costs. Moreover, the modest energy

price increases assumed here would be insufficient

impetus to spur these advances. As a result, Federal

and private sector efforts--especially for research,

development, and demonstration (RD&D)--would

be critical to achieving the supply outcomes. It must

also be assumed for this scenario that CO2 emissions

are determined by policymakers to be a minor

problem.

A substantial number of electric vehicles (EVs)

are postulated for this scenario, largely because of

local air pollution problems. About 2.4 quads of fuel

would be required to produce and store the 0.7 quads

of electricity that EVs would consume. This electricity would replace about 3.5 quads of oil, because

EVs are more efficient than gasoline-powered automobiles. The use of natural gas in vehicles increases

significantly as well.

In order to meet the supply projections, coal,

natural gas, and nuclear energy would all have to be

expanded significantly. Domestic oil production is

almost certain to continue its decline, though improvements in enhanced oil recovery techniques

could sustain production levels at existing fields.

Exploration and development of presently protected

areas in Alaska and offshore are probably necessary

to keep the rate of production from declining faster

than assumed here. Oil imports will rise considerably, unless synthetic fuel technologies are extensively applied. Renewable energy technologies are

not likely to be widely competitive with relatively

low cost conventional sources, but some penetration
116 ● Energy Technology Chokes: Shaping Our Future

Photo credit: Electrk Vehicles SA

Prototype electric minibus.

is likely, and technological breakthroughs are possible.

Coal will be used both directly (primarily for

electric generation as it is now) and for synthetic

fuels. The additional 300 gigawatts of electric power

output (GWe) of coal-fired generating capacity

should present no insurmountable technical or

resource difficulties, even though most plants will

use relatively new technology (most probably integrated gasification combined cycle (IGCC)) to meet

air pollution emission regulations. The efficiency of

new plants should average about 40 percent, but

system efficiency will be lower because of older

plants on line and increased use of storage to meet

peak loads.

Few coal plants have been ordered over the past

few years, because utilities have shied away from

capital-intensive, long leadtime investments due to

uncertainties about growth, capital availability, and

regulatory treatment. This attitude is likely to

change in a period of sustained economic growth.

Both utilities and independent power producers

(IPPs) could favor coal-fired plants if they are the

lowest cost options in the long run. Even now, some

gas-fired facilities are being designed to accommodate coal gasifiers should that prove more economical. The costs of constructing generating facilities

and purchasing coal are likely to remain relatively

stable and predictable over the next several decades

under the assumptions of this scenario.

Synthetic liquid fuels from coal or oil shale are

unlikely to be sufficiently competitive with petroleum by 2010 that much production capacity would

be built without government incentives. However,

security concerns over high petroleum imports may

provide compelling policy reasons to ensure at least

a modest level of such production. This scenario

provides for liquid fuel production of 4 MMB/D by

2015. As discussed in chapter 3, several liquid fuel

technologies could be used. At present, all of these

technologies raise significant concerns over environmental impacts as well as costs, so major

development and demonstration programs will be

necessary in addition to promotional programs.

The national security rationale is less pertinent to

synthetic pipeline gas, because foreign gas sources

are more stable (Canada is the main supplier) and,

unlike petroleum, the production of domestic natural

gas can be increased appreciably. In fact, this

scenario is largely contingent on an increasing

supply of relatively inexpensive gas. Natural gas

production, however, is unlikely to be rising by

2015, and may well be falling significantly. Therefore, the need for replacement sources may be

substantial. In addition, an industry that produces

synthetic oil would find it simple to produce

synthetic gas, so the costs may be reasonable.

Therefore, this scenario assumes that about 4 trillion

cubic feet (Tcf) of synthetic gas will be produced

annually.

Nuclear energy could be important in this scenario if the problems that have immobilized it are

overcome. In particular:

Costs must be predictable, stable, and competitive with coal;

The institutions that build, operate, and regulate

nuclear powerplants must perform their tasks

more efficiently than has been the norm; and

The public must be convinced that nuclear

energy is safe, environmentally benign (including waste disposal), and in their best interest.

If these conditions are met, virtually any number

of nuclear plants could be built. Yet the availability

and competitiveness of alternatives to nuclear power

suggest it is unlikely that huge numbers of new

plants will be built. The viability of nuclear power

will have to be demonstrated anew before any major

commitment to construction is made. Even if

relatively familiar light water reactor (LWR) technology is used, no reactor is likely to be ordered

much before 1995 or completed before 2000.
Chapter 4--Potential Scenarios for Future Energy Trends ● 117

Assuming a construction schedule of 5 years,5 only

those reactors ordered by 2010 would be ready for

electricity generation by 2015. Since much of the

industry would have to be revamped, only a few

thousand megawatts of electric power output (MWe)

per year could be supplied at first. Less familiar

technology, e.g., high temperature gas reactors, will

require longer to develop.

This scenario optimistically projects the construction of approximately 70,000 MWe to supplement

existing nuclear capacity (about 100,000 MWe) by

2015. Accounting for existing plant retirements,

total nuclear capacity of about 140,000 MWe would

be online by 2015. Only a major national commitment to nuclear energy could result in faster growth,

but that would be a high risk strategy considering the

history of nuclear power in this country. Such a

strategy is discussed under scenario 6. If no nuclear

plants are ordered, an equivalent amount of coal- and

gas-fired capacity would have to be added to meet

the supply projections of this scenario.

Renewable supplies are only slightly higher than

in scenario 1. The lack of urgency to replace fossil

fuels assumed here leads to slow development of

renewable, and the low costs of fossil fuels limit

competitiveness. Much of the renewable energy

depicted in table 4-2 is hydroelectric power, but

contributions from wind, solar thermal, and photovoltaics could become significant over this period.

The transportation sector is assumed to consume

about half a quad of alcohol from biomass. Alcohol

fuel could become quite important in urban areas for

environmental reasons, but it is not clear how much

will be made from biomass instead of coal or natural

gas unless CO2 emissions are a limitation. Therefore, most of the synthetic fuel in this scenario is

derived from coal. As with nuclear energy, renewables have more promise beyond the timeframe of this

scenario.

Conclusions—Where scenario 1 assumed no

major policy initiatives and no major energy supply

surprises, scenario 2 depends on several pleasant

surprises: costs stay low because fossil fuels are

plentiful; domestic oil production declines more

slowly than some observers currently expect; natural

gas production increases because discoveries keep

abreast of depletion; and technology advances in

these and other supply areas help keep these fuels

competitive. In addition, features of the scenario

probably would require policy measures to encourage production (e.g., synthetic fuel initiatives to

limit imports and expanded offshore oil exploration

and development). Finally, as noted above, it is

assumed that no new major environmental constraints emerge.

If these assumptions prove out, the nation’s

mid-term energy future will present few problems.

Some of the assumptions are likely to prove

accurate, but depending on the entire package would

be extremely risky, and would do little to prepare the

country for longer-term problems such as climate

change and the depletion of the lowest-cost fossil

fuel reserves. Petroleum prices are almost certain to

be much higher by the mid-21st century when U.S.

production will be considerably lower than now.

Whether or not serious global climate changes are

imminent, they are likely eventually, probably by

2050. Rapid exploitation of fossil fuels would

increase that risk and make the transition to alternative fuels more difficult and costly.

The energy system under this scenario is vulnerable to disruptions-petroleum import interruptions,

environmental constraints, and increasing public

opposition to energy facilities. Hence, policy measures encouraging production are likely to be required

to ensure the supplies assumed in this scenario.

Synthetic fuel to moderate reliance on imported

petroleum has already been mentioned. To compensate for the higher rate of imports, the SPR would

have to be enlarged. Nuclear power will require

policy leadership to rebuild public confidence.

Additional Federal RD&D on clean coal combustion

could be necessary in order to reduce total emissions

from a greater number of plants if current efforts

prove inadequate. Siting policies may also be

required to minimize delays to powerplants, transmission lines, and other facilities. Some of these

measures are likely to be expensive and controversial.

The costs involved in this scenario are difficult to

compare directly with the other scenarios, because

the assumptions are not entirely consistent. Capital

investments are higher than scenario 1, because

5S~lm~~mmctors might be ins~edfmter~th concurrent on-site preparation and factory construction but this qproachintmduces additional

uncertainties related to economics and operability that would delay their introduction.
118 ● Energy Technology Choices: Shaping Our Future

more energy must be produced, but higher economic

growth supports the new construction.

Overall, this scenario is notable for its failure to

take advantage of efficiency opportunities that make

economic sense even at fuel prices lower than

assumed here. In keeping with long-term past trends,

efficiency improves, but only slowly because energy

costs are a small portion of overall costs, and

because relatively little attention is focused on

efficiency. The one exception is the electric utility

industry, where new generating technology is

emerging with significantly higher efficiency.

Scenario 3: Moderate Emphasis on Efficiency

As has been noted several times in this report,

many opportunities exist for reducing energy consumption in all sectors of the economy. Most of

these opportunities require some investment. Some

offer compelling economic benefits, while others are

too expensive to warrant consideration unless energy costs rise considerably above expected levels.

This scenario explores the results if the policies

discussed in the next chapter are implemented to

encourage investments that would yield net economic benefits when amortized over the expected

lifetime of the equipment, in the context of the fuel

price increases noted at the start of this chapter. Few

energy users make their decisions on this basis. Most

consumers, insofar as they consider energy costs at

all, look for a payback of no more than a few years

on additional investment to reduce energy consumption, a rate of return greatly exceeding prevailing

interest rates. Industrial users are the most costconscious, but even well-run manufacturing companies fail to make attractive investments to save

energy for a variety of reasons, e.g., overall corporate strategy, technical and economic uncertainty,

and capital spending limits. Therefore this strategy

will require significant policy changes even though

all the steps are in the long-term interests of the

individual decisionmakers as well as the Nation.

Several significant advantages would accrue to

the United States from a higher level of energy

efficiency:

•If global warming is confirmed as a serious

problem, reduced emissions of CO2 would

●

●

●

●

become important. Higher efficiency will be

the most effective strategy to reduce carbon

emissions over the next several decades. Even

without clear indications of significant warming trends now, many analysts have argued that

efforts to offset carbon emissions would be

prudent now. In addition, lower demand for

energy would reduce other environmental insults stemming from the production and use of

fossil fuels.

The economy would benefit, especially in the

long-run, because energy inputs would be used

at a more nearly optimal level. Thus, U.S.

products would generally become more competitive in world markets.

Resources of low-cost premium fuels would

last longer because of the reduced demand for

petroleum and natural gas. The forced transition to less convenient fuels could be delayed

by a decade or more.

Vulnerability to petroleum import disruptions

would be lessened, and the SPR could be kept

smaller.

There would be less intrusion from energy

facilities on society, which often resists such

construction and operation.

The major drawback to this strategy is that the

Government would have to induce people to do

things that apparently most have no particular

interest in doing. Tax credits, information programs,

and other initiatives have had some impact, but the

biggest single motivation for efficiency improvements appears to have been higher prices.6

The major effect of implementing this scenario is

to moderate the growth of energy demand. Table 4-3

compares the energy supply and demand for this

scenario with that of scenario 1. Overall, demand is

down about 13 percent by 2015 from the base case

but still up about 10 percent from current levels.

The efficiency improvements that would be implemented and their potential effect on energy

consumption are listed in table 4-4. These measures

are described in chapter 2. The assumption here is

that each energy consumer always chooses the

improvements that are expected to repay their

incremental added costs with energy savings over

their lifetimes. Considering the diversity of deci61n the united Shtes, the major exception to this general rule has been the corporate average fuel economy (CAFE) stitid for light-duty v*cl~.

American made vehicles have nearly the same mileage as the equivalent models made in Europe or JaparL but the U.S. fleet has a lower average because

Americans buy bigger cars. One of the major reasons for this difference is that gasoline costs several times as much in most other countries.
Chapter 4--Potential Scenarios for Future Energy Trends 119

Table 4-3-Moderate Efficiency Scenario Energy Use

and Supply (quadrillion Btu)

Table 4-4-Potential for Energy Demand Reduction

From Base Case by 2015 (quad/year) a

1989 2015

Demand

Residential

Natural gas . . . . . . . . . .

Electricity a

. . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Renewable . . . . . . . . .

Total . . . . . . . . . . . . . . .

Commercial

Natural gas . . . . . . . . . .

Electricity. . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Transportation

Oil . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . .

Electricity a

. . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Industrial

Natural gas . . . . . . . . . .

Oil (fuel) . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . .

Electricity a

. . . . . . . . . . .

Renewables . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Total demanda 

. . . . . . . . .

Electricity b

Coal . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . .

Total . . . . . . . . . . . . . . .

Supply Oil

. . . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

10.9

2.7

2.7

0.7

ne

6.1

21.6

0.6

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

24.5

63.6

16.0

5.7

2.9

1.7

3.0

29.2

34.0

Domestic . . . . . . . . . . . . (183)

imported . . . . . . . . . . . . (17.0)

Exported . . . . . . . . . . . . ( 1.8)

Synthetic . . . . . . . . . . . . (ne)

Gas . . . . . . . . . . . . . . . . . . 19.5

Domestic . . . . . . . . . . . . (17.5)

Imported . . . . . . . . . . . . ( 1.4)

Synthetic . . . . . . . . . . . . (ne)

Coalc 

. . . . . . . . . . . . . . . . . 18.9

Produced . . . . . . . . . . . (21.2)

Exported . . . . . . . . . . . . ( 27)

Synfuel feed . . . . . . . . . (ne)

Nuclear . . . . . . . . . . . . . . . 5.7

Renewable . . . . . . . . . . . . 5.8

Total . . . . . . . . . . . . . . . 83.9

3.6

3.3

0.9

0.1

1.2

9.1

3.0

3.4

0.7

0.1

7.2

24.8

0.7

ne

25.5

7.5

4.4

5.7

4.4

3.2

3.3

28.5

70.3

17.8

6.6

4.1

1.5

4.5

34.4

37.9

(120)

(249)

( 00)

(1.0 )1 8 8

(17.0) .

(1.8)/ne

21.1

(2%5)

(5.0)

(1.4)

6.6

8.9

Moderate High

efficiency efficiency

Residential buildings

Envelopes . . . . . . . . . . . . . . . . . . . .

Heating and cooling . . . . . . . . . . . .

Hot water, appliances . . . . . . . . . .

Retrofits

Envelopes . . . . . . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .

Commercial sector

Envelopes . . . . . . . . . . . . . . . . . . . .

Heating and cooling. . . . . . . . . . . .

Water heating . . . . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . . . . . .

Office equipment . . . . . . . . . . . . . .

Cogeneration . . . . . . . . . . . . . . . . .

Retrofits

Envelope . . . . . . . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .

Transportation

New auto efficiency . . . . . . . . . . . .

New light trucks. . . . . . . . . . . . . . .

New heavy trucks . . . . . . . . . . . . . .

Non-highway vehicles . . . . . . . . . .

Public transit. . . . . . . . . . . . . . . . . .

improved maintenance . . . . . . . . .

Improved traffic flow. . . . . . . . . . . .

Ride sharing, etc. . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .

Industry

Cogeneration . . . . . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . . . . . .

Electric motors . . . . . . . . . . . . . . . .

New processes . . . . . . . . . . . . . . .

Process retrofits. . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .

0.96

0.07

0.89

0.59

0.44

1.48

0.37

1.41

0.67

0.59

2.89

1.70

0.74

1.55

1.18

0.07

0.15

0.59

0.37

4.51

2.96

1.15

2.22

1.55

0.07

1.41

0.59

0.37

6.29

0.59

0.37

0.30

0.37

0.15

0.22

0.89

0.30

3.11

0.59

0.44

0.89

2.22

1.41

5.62

10.36

2.70

1.92

1.77

0.89

2.59

0.30

1.04

0.74

10.73

4.07

0.71

2.85

6.07

1.48

17.06

aBe~useoftheform ofthedata andtheconversion method, alivahsare

approximate andshould beusedforgeneralguidance only.Totalsarenot

always equal tothesum ofthe parts because maximum values maybe

inconsistent, and otherfactors may reinvolved.

SOURCE: Derived from U.S. Congress, Changing byDegrees.-Sfeps To

Reduce Greenhouse Gases, OTA-O-482 (Washington, DC:

U.S. Government Printing Office, February 1991), tableA-3.

sionmakers and their different situations, this is a

highly artificial assumption. However, regulation

(e.g.,fuel economy standards for automobiles) and

93.3 transfer of decisions to energy service companies

KEY: ne=negiigible.

aDoesnotinclude~nversion Iossesat powerplants, which makeupabout

two-thirds of thetotal consumed there.

bA~fuelusedfor~er, with hydroelectric and other nonthermal pOWferplants artificiallyrated ataverage thermal efficiency.

‘The l.O quadof synthetic fuel made from 1.4 quads ofcoalis included

under oil.

SOURCE: 1989 data-U.S. Energy Information Administration, Armua/

Ehergy Review 7989, DOE/ElA43384(89), May 24,1980, tables

1,2,3,4,5,11,17,25,88, and 99; Office of Technology Assessment, 1991.

(perhaps gas and electric utilities with incentives to

increase efficiency) could produce many of the

needed choices. In addition, unanticipated, improved technology is likely to appear that makes

possible even greater savings. In general, therefore,

this assumption provides a useful standard to compare the potential efficacy of policies, as described

in the next chapter.
120 ● Energy Technology Choices: Shaping Our Future

Residential/Commercial Sector

In the residential/commercial sector, new buildings require only 50 percent of the energy used in

current new buildings for heating because of better

construction techniques, insulation, and windows.

Improved lighting and equipment provide additional

savings. For the most part, the technology for these

improvements is familiar. Some of the gains depend

on the commercialization of new technology, e.g.,

heat pump water heaters, but none of the required

advances is particularly dramatic or risky. Nor are

consumers required to accept many technologies

that would be significantly more difficult to manage

than existing equivalents.

The uncertainties are primarily with the decisionmaking to implement the improvements, particularly what it will take to induce consumers to invest

in more expensive houses and appliances in order to

save on operating costs. In no case would the

additional investment be extremely high (e.g., anew

house might cost a few thousand dollars more

because of improved insulation and appliances).

However, the decisionmaking in this sector has been

less predictable than in the others. Overall, energy

use in the residential/commercial sector could actually decline by 2015 with these changes despite a

substantial increase in per capita wealth.

Electricity use increases in both the residential

and the commercial sectors. Natural gas declines in

homes because the average thermal efficiency of

houses increases. Natural gas and electricity will

dominate the supply of energy under any conditions.

The balance between the two will depend on relative

costs and availability, as well as the success of

various RD&D and commercialization programs.

Policy decisions will strongly influence the successful implementation of new technologies, and the

implications for the country of the various choices

are significant, as described in the following chapter.

Oil is likely to continue its decline because of cost

and convenience considerations. Wood and other

forms of solar energy could be increased by various

policy initiatives but, as discussed in scenario 5, the

initiatives would have to be powerful for the

additional contribution to be large in this timeframe.

In the long term, renewable could become very

important in the residential/commercial sector.

Transportation Sector

Energy use in the transportation sector is much

less likely to drop than in the residential/commercial

sector, but the growth rate can be slowed. Costeffective improvements in the mileage of new cars,

trucks, and airplanes will reduce demand significantly, but the increase in miles traveled will

outweigh them. In the long term, improved mileage

will make a dramatic difference. With improvements to already existing technology, the fuel

economy of new automobiles in this scenario

increases to 39 miles per gallon (mpg) by 2010, as

compared to 36.5 mpg in the base case and 27 mpg

now, using only evolutionary improvements to

existing technology, as discussed in chapter 2.

However, over the next 20 years, nontechnical

measures, e.g., increased van pooling, improved

vehicle maintenance, and reinstatement of the 55

mile per hour (mph) speed limit, will have more

impact.

Achieving major fuel economy gains in the

transportation sector may be hindered by conflicting

demands. For example, reducing vehicular emissions often results in some compromise to fuel

efficiency and vice versa. The expected growth of

alternative fuels resulting from the 1990 amendments to the Clean Air Act may reduce oil imports

but does not promise greater efficiency. Indeed, the

recent revisions to the Clean Air Act mandate

several changes that will affect how the transportation sector uses fuel. Gasoline will still be the

dominant fuel by 2015, but the large, powerful cars

that many consumers prefer now will be squeezed

between demands for cleaner emissions and higher

mileage. In some metropolitan areas, alternative

fuels, e.g., methanol and electricity, will be favored,

but it is assumed here that their penetration is too

small to be significant.

Industrial Sector

The diversity of the industrial sector complicates

any analysis of future fuel use. Several fuels, various

processes, and different industries with a variety of

financial situations must be considered. Over the

past 17 years, industry has made notable” strides in

increasing energy efficiency for economic reasons.

More improvements are possible, particularly

through electric motor improvements, process modification, lighting, and energy management systems,

and with processes specific to certain industries, but

the gains will be relatively modest. About 15 percent
Chapter 4-Potential Scenarios for Future Energy Trends ● 121

(4 quads) of the energy required in the base case is

saved by these measures by 2015, but a net increase

of 4 quads over 1987 is still required.

Fuel shifting within the industrial sector is relatively easy for applications such as process heat and

cogeneration (about 60 percent of all energy used in

manufacturing), but quite difficult or impossible for

other categories. Many boilers and heaters incorporate dual-firing capability to switch between oil and

natural gas as economics and emission regulations

dictate. Coal can also be a major energy source,

actually surpassing oil by 2015 in this scenario.

Policy incentives or disincentives focused on natural

gas and coal are likely to have more effect than those

aimed at efficiency.

Electric Power Sector

The electric power sector consumes more primary

energy than any of the three sectors discussed above.

One of the main issues related to electric power

involves nonfossil energy sources, which are discussed in scenarios 5 and 6. There are also some

important options to raise the efficiency of the sector

through improved generation and transmission, but

few are implemented, because so little new generating capacity is required. In this scenario, demand for

electricity is lower than in the base case because the

efficiency of use increases. Demand rises from 2.7

trillion kWh (kilowatt-hours) in 1987 to 3.4 trillion

kWh in 2015, compared to 4.6 trillion kWh in 2015

in the base case.

In the long term, new plants can be significantly

more efficient than existing ones. The efficiency of

new technologies, e.g., fuel cells and intercooled

steam-injected gas (ISTIG) turbines, may approach

50 percent, higher than any existing technology.

Advanced pulverized coal or IGCC technologies

should also have significantly higher efficiency than

current plants. The competitiveness of the new

technologies will depend in part on environmental

constraints. Tighter restrictions on sulfur oxides

(SOX

) and nitrogen oxides (NOX) will favor new

technologies that can be cleaner as well as more

efficient.

Conclusions-There are two major reasons why

policymakers might choose to move the country

toward this scenario. One is economic: this is the

least cost scenario, and implementing it (or some of

its major features) would improve the economic

well-being of the country and its international

competitiveness. The other reason is environmental:

reducing energy use generally, though not always,

reduces emissions of pollutants from both the use

and supply of energy. This scenario would provide

many environmental benefits without drastic curtailments. It represents a moderate response to concerns

over global climate change and reducing CO2

emissions, consistent with the conclusion that the

problem has not been verified at present but maybe

serious in the coming decades.

As noted above, however, this scenario will not

occur by itself. There are too many constraints and

market imperfections for people to make all the

necessary decisions that would be required to

implement this level of efficiency. Policy initiatives

that would help overcome these constraints are

discussed in the following chapter.

Scenario 4: High Emphasis on Efficiency

Extreme measures to improve efficiency could be

justified under some circumstances. Perhaps global

warming will be confirmed as an imminent problem

with potentially devastating consequences, or international political instability will severely threaten

the supply of petroleum. Even in highly efficient

countries, almost any activity consuming energy

could be accomplished with much less. If energy

were to become very expensive or limited in

availability, the number of viable, alternative approaches to reduce energy use would increase. This

scenario incorporates measures that are equivalent to

the most efficient that have been demonstrated to

date and assumes that these are widely applied.

Table 4-5 shows the energy use that results. Table

4-4 lists the measures that are implemented.

Residential Sector

Energy use in the residential sector drops sharply

compared to the last scenario. Residential buildings

are constructed to such high standards that heating

requirements in new northern homes are reduced 85

percent from average existing stock, and air conditioning by 45 percent. These are extremely optimistic projections based on the assumptions that essentially every new house will match the most efficient

houses currently available and be maintained in that

condition.

Superinsulation, including the latest developments in windows (which are quite expensive) can

achieve as much as a 75-percent reduction in
122 . Energy Technology Choices: Shaping Our Future

Table 4-5-High Efficiency Scenario Energy Use and

Supply (quadrillion Btu)

1989 2015

Demand

Residential

Natural gas . . . . . . . . . .

Electricity a 

. . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Renewables . . . . . . . . .

Total . . . . . . . . . . . . . . .

Commercial

Natural gas . . . . . . . . . .

Electricity a 

. . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Transportation

Oil . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . .

Electricity a 

. . . . . . . . . . .

Total . . . . . . . . . . . . . . .

industrial

Natural gas . . . . . . . . . .

Oil(fuel) . . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . .

Electricity a 

. . . . . . . . . . .

Renewables . . . . . . . . .

Coal . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Total demanda

. . . . . . . . .

Electricity b

Coal . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . .

Renewables . . . . . . . . .

Total . . . . . . . . . . . . . . .

Supply Oil

. . . . . . . . . . . . . . . . . . .

Domestic . . . . . . . . . . . .

imported . . . . . . . . . . . .

Exported . . . . . . . . . . . .

Synthetic . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . .

Domestic . . . . . . . . . . . .

imported . . . . . . . . . . . .

Synthetic

Coal . . . . . . . . . . . . . . . . . .

Produced . . . . . . . . . . . .

Exported . . . . . . . . . . . .

Synfuel feed . . . . . . . . .

Nuclear . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9 - —

10.9

2.7

2.7

0.7

ne

6.1

21.6

0.6

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

2.9

2.6

0.8

ne/o.6

6.9

3.8

1.7

0.3

0.1

5.9

17.7

0.7

0.1

18.5

7.7

3.3

5.7

3.2

2.2

1.5

24.5 23.6

63.6

16.0

5.7

2.9

1.7

3.0

29.2

34.0

(183)

(17.0)

1.8/ne

19.5

(17.5)

(1.4)/ne

18.9

21.2/2.7

5.7

5.8

54.8

5.3

6.8

5.3

0.2

5.2

22.8

27.8

(120)

(15.8)

(0.0)/ne

20.3

(1%5)

(2.8)/ne

7.0

(13.0)

(6.0)/ne

6.8

8.0

83.9 70.0

KEY: ne=negligible.

aDoesnot include conversion Iossesat powerplants,which makeup about

two-thirds ofthetotal consumed there.

bA~fuel usedforWwer, with hydroelectric and other nonthermal powerplants artificially rated at average thermal efficiency.

SOURCE: 1989 data-U.S. Energy Information Administration, Armua/

EnergyRetiew1989, DOE/EiA0384(89), May24,1990,tables

1,2,3,4,5, 11,17,25,88,and 99;OfficeofTechnologyAssessment, 1991.

residential heating. Exceeding 75 percent will require meticulous attention to design, construction,

and materials, and possibly, compromises on appearance and lifestyle as well. For example, houses

and their windows may have to be oriented toward

the sun (rather than toward the street), or the number

of windows could be reduced.

Very tight houses require ventilation systems to

keep indoor air pollution at tolerable levels. As air

exchange is reduced by tightening shells, problems

arising from indoor air centaminants (radon, NOX

from natural gas cooking, vapors from building

materials) and irritants (particulate, aerosols) will

worsen unless countervailing measures are taken.

Fireplaces and woodstoves would be incompatible

with supertight houses, because they require continual ventilation while in operation. Even with heat

recuperators, significant heat losses from ventilation

systems will interfere with the 85-percent heat

reduction goal. As a result, multiunit buildings may

have to be encouraged as an important alternative to

single family homes in order to achieve the energy

projections for this sector.

Existing building shells are aggressively retrofitted in this scenario. Energy savings of 20 to 30

percent are anticipated. This goal is less controversial than that for new houses.

In addition, appliances will have to be as efficient

as currently feasible. Electric or gas-fired heat

pumps or pulse furnaces would replace conventional

furnaces in new construction. Electric heat pumps

would be at least 50-percent more efficient than

those in use now. Water would also be heated with

heat pumps. Lighting will be primarily with fluorescent or halogen bulbs. Important appliances such as

refrigerators, ovens, and clothes dryers increasingly

are based on new technology that cuts energy

consumption dramatically.

These changes will add substantially to the cost of

buying a home, perhaps $6,000 to $8,000 for the

supertight envelope. Total costs, including lost

living space because of thicker walls and efficient

equipment would be higher (though heating and

cooling equipment might be cheaper than in a

conventional house because small units would be

adequate). The energy costs of the buildings are

quite low, but the savings may not be commensurate

with the additional capital costs if the price of energy

to the consumer follows the assumptions listed

earlier in this chapter.
Chapter 4--Potential Scenarios for Future Energy Trends ● 123

Commercial Sector

Energy consumption in the commercial sector

drops 30 percent relative to the moderate projection

scenario. Buildings require 25 percent of the current

average for heating, and appliances are as efficient

as the best available now. The most notable shift is

the replacement of purchased electricity with natural

gas, some of which is used in cogeneration.

Transportation Sector

The transportation sector produces large savings

relative to the last scenario, mostly because mileage

standards on new automobiles are raised sharply.

The previous scenario raised the 2010 average from

the 36.6 mpg of the base case to 39.0 mpg, which

would have little effect on consumer choice or cost.

The increase to 55.0 mpg here would require an

aggressive emphasis on new technology, such as

adiabatic diesel engines, lighter materials, and

continuously variable transmissions. Some shift

toward smaller cars in the fleet mix would be

required to meet this standard if the technological

improvements prove inadequate. Only one or two

models on the market now are rated at 55 mpg, and

these are very small. In addition, there will have to

be a strong emphasis on car pooling, public transportation, and advanced traffic control. The 55-mphspeed limit is reinstated under this scenario as well.

Although they are not emphasized here, alternative fuels and electric vehicles could play a large role

under the conditions of this scenario. If the concern

is over CO2 emissions, then the replacement of

gasoline by methanol from biomass would have

substantial benefits. Methanol from natural gas

would be beneficial (but less so), while synthetic

fuels from coal or oil shale would be very counterproductive as an option to reduce CO2 emissions. If

energy security is the concern, any of these alternative sources would serve to reduce imports of

petroleum and so would be consistent with this

scenario. However, security is unlikely to be the

major issue driving this scenario, because it would

be cheaper and easier to enlarge the SPR. Alternative

fuels and electric vehicles are discussed in the last

two scenarios.

Industrial Sector

Energy consumption in the industrial sector

would decrease more than 25 percent from current

levels under this scenario. The efficiency gains are

even greater than this, but economic growth offsets

many of them. Process changes provide the greatest

energy savings, followed by improved maintenance,

more efficient electric motors, and cogeneration

growth. Some of the new processes will require

research and development (R&D) and probably

Government support for demonstrations. Industry is

willing to accommodate changes to improve energy

efficiency, but only if the changes are demonstrably

cost-effective and of acceptable risk, suggesting that

an increase in the price of energy would be the most

effective motivation. The major difference between

this scenario and the previous one is that the universe

of acceptable technological options to save energy

expands, and increased use is made of technologies

implemented in scenario 3. Some of the most

important changes are in industry-specific processes, e.g., direct steelmaking and biopulping for

papermaking.

Widespread implementation of many of these

options would require major alterations to old

facilities or the construction of entirely new ones.

These major changes would not be done purely for

energy reasons, though the energy savings would

represent a significant part of the economic benefits.

Therefore, this scenario is most likely to be initiated

as part of an overall upgrading of much of the

industrial infrastructure in this country. Such an

overhaul is beyond the scope of this report, but it

should be noted that considerable promise exists for

major industrial gains in both energy efficiency and

economic competitiveness.

Electric Power Sector

Efficiency gains in the electric power sector are

slightly greater than in scenario 3. Improved efficiency in the other sectors controls electricity

demand to the point where few (if any) new

generating facilities are required. While this eliminates a source of higher efficiency, many generating

plants would have to be retired, and these are likely

to be the least efficient ones. Retrofits to existing

plants would raise efficiency modestly. If further

gains are required in the electric power sector,

existing plants could be replaced with new ones.

The motivation for much greater efficiency is

important here. If the goal is to increase energy

security, then replacing existing plants has little

value. Only 5 percent of the oil consumed in this

country is used to generate electricity, and most

generating plants burn coal, which is not a security

problem. If the motivation is to reduce Co2 emis-
124 ● Energy Technology Choices: Shaping Our Future

sions--generating stations produce over one-third

of all the CO2 emitted in the United States-then

replacements may be warranted. However, the

environmental benefits of replacing an old coal plant

with anew one are much smaller than the benefits of

replacing it with a nonfossil plant. This approach is

considered in the next two scenarios.

Therefore the major assumption of the high

efficiency scenario is that most existing coal plants

are retired by 2015. Coal consumption in the sector

drops by almost two-thirds. As noted below, this

would have extremely serious economic consequences in some coal-producing areas. Most new

construction is highly efficient combined-cycle,

gas-fired technology. Some nuclear (5 GWe) and

renewable (15 GWe, mostly hydroelectric) energy is

also included. In addition, the improved operation of

existing plants raises their efficiency by about 5

percent, as in the previous scenario.

Conclusions-This scenario is notably more

successful in reducing energy demand than the

previous one, but it relies on measures that would be

even more difficult to implement. Housing and

automobiles would be significantly more expensive

to purchase, though cheaper to operate. Much new

technology, particularly in the transportation and

industrial sectors, is assumed to be available and

reliable. Industry may find more compensating

advantages than consumers, but companies would

still find their planning processes heavily influenced

by this major effort to reduce national energy use.

Therefore, this scenario is very unlikely to be

implemented unless driven by major national

threats. As noted above, the only threats that appear

sufficiently ominous over the next 25 years are

severe oil import disruptions and global warming.

By itself, this scenario would not solve either

problem, but it probably represents a practical upper

limit for national demand reduction efforts.

The two remaining scenarios are alternative,

though not necessarily incompatible, approaches to

mitigating the threat of global warming. In the long

term (before the end of the 21st century), some of the

measures outlined in these three scenarios may be

necessary merely from the worldwide depletion of

petroleum if synthetic fuels prove too expensive to

adopt on a wide scale. Whether any threats justify

this level of action is a judgment that cannot be

determined analytically at this point.

Scenario 5: High Emphasis on

Renewable Energy

Renewable energy sources (solar and geothermal)

have considerable appeal from an environmental

perspective. In most cases, the energy already exists

naturally, and there are few harmful emissions from

its use. However, with some exceptions, renewable

currently are not economically competitive with

fossil fuels or nuclear energy. As discussed in

chapter 3, some renewable technologies show considerable promise for near-term competitiveness on

a wide scale. Policy intervention could assure a

much more rapid penetration than assumed in the

previous scenarios. The impetus could be concern

over global warming, other environmental issues

such as air quality, or energy security.

However, it does not appear that any of these

options will ever seem inexpensive by current

standards. Hence, a high dependence on renewable

energy should start with an economy that has built

in as much efficiency as practical. This scenario

builds on the energy distribution in scenario 3

(moderate efficiency) but shifts some of the supply

from fossil to renewable sources. Table 4-6 outlines

the supply and demand. As each sector will adopt

renewable for unique functions, they are discussed

separately.

Residential/Commercial Sector

The major direct use of renewable in the residential/commercial sector would be passive and active

solar heating. As in the previous scenario, wherever

possible, buildings would be oriented toward the sun

and designed to maximize capture of solar energy in

the winter while excluding it in the summer. Active

panels to collect solar energy for both heat and hot

water would become common. The use of firewood

(now the dominant use of renewable energy in

buildings) would also increase, but environmental

and safety considerations suggest that firewood

should not be a favored energy source. Processed

fuels from biomass should be more benign. By 2015,

the solar contribution could be displacing 1.0 quad

of fossil or electric heating in buildings, and

geothermal another 0.5.7 In addition, biomass could

7~e v~u= ti tis sw~on ~e dtived from SOlm Ener~ Research Institute et al., The Potential of Renewable Energy; An Medaborutory White

Paper, prepared for the U.S. Department of Energy, SERI/TP-2@3674, DE90000322 (Ooldeu CO: Solar Energy Research Institute, March 1990).
Chapter 4--Potential Scenarios for Future Energy Trends ● 125

be increased by 0.5 quad. The total additional

renewable contribution to the two sectors is 2 quads.

Commercial buildings may be less appropriate

than residences for solar heating, because most are

too large for on-site collectors. Furthermore they use

heat for unique functions and often extended periods

(hospitals, restaurants). However, commercial

building owners can also arrange for service companies to supply heat or cooling from off-site solar

stations.

The size of the solar collector industry has

decreased greatly since the 1970s from the loss of tax

credits and the drop in fossil fuel prices. Rapid

growth would risk repeating the experience of the

1970s, when inadequate designs and unskilled or

dishonest installers plagued the industry. The technology is much better now, but controls to ensure

that the solar contribution is achieved efficiently

would be prudent.

Other applications for renewable energy include

electricity generation and the replacement of natural

gas with hydrogen, which could be produced by

photovoltaics. Alternatively, synthetic gas could be

produced from biomass. These options also apply to

the sectors discussed below.

Transportation Sector

The transportation sector would use fuels derived

from biomass. If advances in plants, cultivation, and

processing are successful, methanol from wood or

herbaceous crops is the most likely fuel though some

of the ethanol technologies are promising. By 2015,

as much as 1.2 quads could be supplied, displacing

0.6 MMB/D. Moving toward methanol would reduce air pollutants such as ozone, though handling

would have to be stringent to minimize toxic

exposure. Energy security would be well served,

because most of the feedstock would be domestic.

However, the long-term transition to a biomassderived, methanol-fueled fleet would be very difficult. If biomass is not to interfere with food

production, presently unused farmland or forests

would have to be cultivated. As much of the

farmland would be marginal, environmental problems, e.g., erosion, could be potentially serious. A

major industry for fuel processing and distribution

would have to be established. A dual distribution

system for methanol and gasoline would be required

for many years. Automobiles would be either

multifueled, which is less efficient, or limited to one

Table 4-6-High Renewable Scenario Energy Use and

Supply (quadrillion Btu)

1989 2015

Demand

Residential

Natural gas . . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .

Commercial

Natural gas . . . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Transportation

Oil . . . . . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Industrial

Natural gas . . . . . . . . . . . . . .

Oil (fuel) . . . . . . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Total demanda . . . . . . . . . . . . .

Electricityb

Coal . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .

Supply

Oil . . . . . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

3.3

2.8

0.7

ne

2.3

10.9

2.7

2.7

ne/0.7

ne

9.1

2.7

3.0

0.9

0.5

0.1

6.1

21.6

0.6

ne

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

7.2

23.6

0.7

1.2

ne

25.5

6.7

3.7

5.7

4.4

4.8

3.2

24.5 28.5

63.6

16.0

5.7

2.9

1.7

3.0

29.2

34.0

19.5

18.9

5.7

5.8

83.9

70.3

12.1

4.3

2.7

1.2

11.3

31.6

35.3

16.0

15.4

4.3

20.5

91.5

KEY: ne = negligible.

aDoes not include conversion losses at powerplants, which makeup about

two-thirds of the total consumed there.

bAll fuel USed for power, with hydroelectric and other nonthermal powerplants artificially rated at average thermal efficiency.

SOURCE: 1989 data-U.S. Energy Information Administration, Armua/

Energy Review 1989, DOE/EIA-0384(89), May 24,1990, tables

1,2,3,4,5,11,17,25,88, and 99; Office of Technology Assessment, 1991.

type of distribution, as are diesel cars now. Problems

such as starting the engine in cold weather would

need to be solved. The transition would be eased if

methanol is first introduced as an additive to “
126 ● Energy Technology Choices: Shaping Our Future

gasoline, and then as a pure fuel for urban fleets,

before individuals are expected to purchase cars that

burn only methanol.

An alternative is cars powered by solar-generated

electricity. Electric cars have even more environmental advantages than methanol cars, emitting

almost no pollution when the electricity is produced

cleanly. However, significant storage improvements

would be necessary before electric cars could

expand beyond small niche markets. In this scenario,

the penetration of electric vehicles is assumed to be

small relative to methanol. (The following scenario

reverses this assumption.) Solar electricity is discussed below. If the technology can be developed,

powering cars with hydrogen produced from solar

electric plants might be superior to using the

electricity directly. The infrastructure required for

hydrogen would be quite different, but the overall

environmental, economic, and social impact probably would be about the same.

Industrial Sector

The industrial sector already uses substantial

amounts of biomass, primarily through combustion

of wood wastes by the forest products industry.

Biomass use could be expanded about 1.5 quads by

2015.

Industry uses primary energy mainly as process

heat. Most process heat requires temperatures far

greater than that produced by flat solar panels, but

such high heat is easily obtainable by the type of

collectors used in solar thermal electric plants.

Industry could replace a significant fraction of its

fossil fuel use with solar energy, but only if

long-term storage technology is perfected as well.

No company would risk plant shut downs from

something as common as several cloudy days.

Backup energy supplies can be arranged, but they

would add considerably to costs and complexity,

which could deter many companies from adopting

these technologies at all.

Penetration of these technologies is likely to be

slow, because most industrial energy consumption

in 2015 will be in facilities that have already been

constructed and that are not necessarily appropriate

for solar energy. This scenario assumes that industrial solar energy use will be small in 2015, though

it could expand considerably beyond the time frame

of this scenario.

Photo credit:Aian T Crane

Parabolic dishes focused on a Stirling engine to produce

electricity. This assembly was designed and built in the

United States and exported to France.

Electric Power Sector

If solar energy is to supply a large fraction of U.S.

energy requirements, it will be achieved only with

conversion to electricity (with storage) or perhaps

hydrogen. Direct applications of solar energy are

modest, and most solar technologies lend themselves to electricity generation. Hydroelectric power

is the largest renewable energy source and will

remain so for many years. Photovoltaics and wind

produce electricity directly. Solar thermal and geothermal facilities produce high-grade heat that can

be used in several ways, including processing other

fuels, but electricity would be the easiest to deliver

and use in the foreseeable future. Biomass already

fuels a small amount of electrical generation, largely

in the forest products industry, and many more

opportunities could be created. Hence a commitment

to solar implies increased electrification, just as a

commitment to nuclear power does in the next

scenario.

This scenario projects renewably generated electricity supplies to grow from 3.0 to 11.3 quads by

2015, an increase of 6.8 quads compared to the

moderate efficiency scenario. Most of the potential

hydropower presently economic or close to it

(considering environmental constraints) is developed for an additional 32 GW (yielding 1.5 quads).

Biomass for electricity increases 1.7 quads. Solar

thermal and photovoltaics together could supply 2.1
Chapter 4--Potential Scenarios for Future Energy Trends ● 127

quads and wind 2.2 quads. Geothermal increases 0.5

quads. Solar electricity could displace some direct

fossil fuel use, but that is not assumed in this

scenario. In fact, electricity generation drops 2.9

quads from displacement by the direct use of

renewable energy.

Conclusions-The largest uncertainty for the

high renewable scenario is whether the technology

can be improved sufficiently to provide a reliable,

affordable energy source. Only a few renewable

technologies are now competitive and most of these

only in special situations. Furthermore, as these

intermittent sources begin accounting for larger

fractions of electricity generation, improved storage

will become essential. Cost projections suggest that

at least several technologies will be competitive, but

that is not yet certain. If the projections prove

correct, renewable could grow very rapidly. Some

adaptation by individuals and companies might be

required to make the most effective use of renewable

energy (e.g., revising energy demand profiles to

track more closely solar energy availability, and

increased installation of backup power equipment).

In addition, wide-scale exploitation of renewable

energy is likely to cause some conflicts with

environmental goals (e.g., farming practices for

biomass, aesthetics of solar collectors). Overall,

however, if the economics are solved, renewable

will follow with considerably less difficulty.

Scenario 6: High Emphasis on Nuclear Power

Twenty-five years ago, the total capacity of all

nuclear powerplants in the United States was less

than 1200 MWe, about the size of one large modern

plant. Today there are over 100,000 MWe in

operation, producing almost 20 percent of the power

in this country. Over the next 25 years, nuclear

power could grow by several hundred thousand

MWe, or it could shrink. No domestic energy source

except coal has the potential to grow as much in this

time interval, but none evokes as much opposition

and distrust. The amount of nuclear power capacity

that is built in the future depends almost entirely on

political decisions and economic factors, but very

little on resource constraints or industrial capability

(although the latter would be a constraint to very

rapid growth).

This scenario assumes that a major commitment

to nuclear power is deemed essential, most probably

because of global climate change. Table 4-7 shows

Table 4-7—High Nuclear Scenario Energy Use and

Supply (quadrillion Btu)

1989 2015

Demand

Residential

Natural gas . . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Commercial

Natural gas . . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Transportation

Oil . . . . . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Industrial

Natural gas . . . . . . . . . . . . . .

Oil (fuel) . . . . . . . . . . . . . . . . .

Oil (nonfuel) . . . . . . . . . . . . .

Electricity a

. . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

Total demanda . . . . . . . . . . . . .

Electricityb

Coal . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . .

Oil . . . . . . . . . . . . . . . . . . . . . . .

Renewables . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .

Supply

Oil . . . . . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

3.4

3.4

0.8

ne/1.5

10.9

2.7

2.7

ne/0.7

ne

9.1

2.8

3.5

0.3

0.5

0.1

6.1

21.6

0.6

ne

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

24.5

7.2

23.4

0.7

0.7

0.7

25.5

7.2

4.2

5.7

4.6

3.6

3.2

28.5

63.6

16.0

5.7

2.9

1.7

3.0

70.3

12.1

12.0

5.0

1.3

7.6

29.2

34.0

19.5

18.9

5.7

5.8

83.9

38.0

35.9

19.1

15.4

12.0

13.7

96.1

KEY: ne = negligible.

aDoes not include conversion losses at powerplants, which make up about

two-thirds of the total consumed there.

bAll fuel US~ for power, with hydroelectric and other nonthermal powerplants artificially rated at average thermal efficiency.

SOURCE: 1989 dat&U.S. Energy Information Administration, Annua/

Energy Review 1989, IXX3EIA-0384(89), May 24,1990, tables

1,2,3,4,5,11,17,25,88, and 99; Office of Technology Assessment, 1991.

the energy supply and demand figures. Under this

scenario, initial orders are placed by 1994 for

updated LWRs, the only proven, commercial nuclear technology. A revival of orders probably
128 ● Energy Technology Choices: Shaping Our Future

would involve a consortium of utilities, manufacturers, and architect-engineers implementing a prelicensed design. Under circumstances leading to high

national priority, at least two separate consortia

would be likely, each building a reactor of about 600

MWe. These initial reactors would require about 7

years to attain commercial operation, which would

be in 2001.

If progress during construction of these test cases

is reasonably smooth, subsequent orders might be

placed in 2000. Some risk would be involved in

ordering before completion of the construction,

regulatory, and operational demonstrations, but the

situation is not analogous to the premature orders in

the sixties and seventies. Now the technology is

much more familiar and stabilized. However, utilities are likely to be cautious, so only two more plants

(1200 MWe total) are ordered in 2000, and four in

2001. These and following reactors are built on a

5-year construction program.

Alternative technology, in particular the hightemperature gas reactor (HTGR), would be available

slightly later, but the net effect on this scenario

would be small. Ironically, one of the major advantages suggested of advanced reactors, improved

public acceptance, would not apply in this scenario,

because public acceptance of conventional reactors

is already assumed. However, alternative reactors

should still have safety advantages. The type of

accident that occurred at Three Mile Island, which

entailed serious financial and public relations damage, though releasing only trace amounts of radioactivity, becomes a significant risk if hundreds of

LWRs operate for decades. Since this type of

accident would again damage the prospects for

nuclear power, conversion to more resilient technology probably is necessary at some point. Thus, a

high nuclear scenario should include an emphasis on

improved technology, even though the risk of a

major accident that would harm the public is already

much lower than other commonly accepted risks.

Rising uranium prices by 2015 may also improve the

competitiveness of the liquid metal reactor, but a

breeder/plutonium recycle would not be necessary

until several hundred GWe have been built.

Table 4-8 shows the progression of orders and

commercial operation assumed in this scenario.

Reactors are assumed to average 600 MWe each.

The rate of starts is low at first, grows rapidly, and

then levels out as the number of plants in the

Table 4-8-New Nuclear Plant Construction Schedule

in High Nuclear Scenario

Plants

started Total new Operating

Year in year starts capacity ( MWe)

2000 . . . . . . . . . 2 4 0

2001 . . . . . . . . . 4 8 1,200

2002 . . . . . . . . . 8 16 1,200

2003 . . . . . . . . . 12 28 1,200

2004 . . . . . . . . . 16 44 1,200

2005 . . . . . . . . . 20 64 2,400

2006 . . . . . . . . . 22 86 4,800

2007 . . . . . . . . . 24 110 9,600

2008 . . . . . . . . . 26 136 16,800

2009 . . . . . . . . . 28 164 26,400

2010 . . . . . . . . . 30 194 38,400

2011 . . . . . . . . . 32 226 51,600

2012 . . . . . . . . . 34 260 66,000

2013 . . . . . . . . . 36 296 81,600

2014 . . . . . . . . . 38 334 98,400

2015 . . . . . . . . . 40 374 116,400

SOURCE: Office of Technology Assessment, 1991.

construction process becomes large. By 2015, the

additional operating capacity is 116,000 MWe and

growing rapidly. The existing 103,000 MWe can be

expected to decline by about 19,000, for a grand total

by 2015 of 200,000 MWe, producing 12 quads. Even

faster growth could be envisioned; in 1975, projections called for 1,000,000 GWe in 2000, 10 times

what we shall have. However, the rapid growth rate

at that time was the source of many of the industry’s

problems. This more controlled rate should give

industry time to acquire qualified workers and build

an adequate infrastructure. By 2015, however, the

capacity reaches the levels ordered in the early

seventies, so the industry may again become

strained. In addition to the reactors, several enrichment plants would be required, probably using the

laser technology now being developed, which

should be cheaper and much more energy efficient

than present mass diffusion enrichment technology.

At least two high-level waste repositories will also

be needed.

In addition to nuclear, substantial amounts of

gas-fired, hydroelectric, and municipal solid waste

capacity are built in this scenario. The total capacity

by 2015 would be 740,700 MWe. Most coal plants

would be retired to reduce C02 emissions. Despite

the additional energy generated by nuclear reactors,

the net output of the electric power sector is only

marginally higher than in scenario 3, largely because

of the relative inefficiency of nuclear plants.
Chapter 4--Potential Scenarios for Future Energy Trends ● 129

Relying on nuclear power will change the nature

of the energy system, but not as greatly by 2015 as

after. This scenario uses nuclear energy more as a

means to reduce coal combustion than as an effort to

increase electricity production. The use of nuclear

reactors to produce industrial process heat has been

proposed, particularly using HTGRs, but that is not

assumed in this scenario.

The transportation sector will be especially difficult to convert to electricity, because batteries are

unlikely to improve sufficiently by 2015 for EV

performance to match that of present vehicles. EVs

will become widespread after 2000 in this scenario,

but the motivation assumed here centers on local

environmental benefits rather national efforts to

reduce fossil fuel use. Electricity and biomass each

supply 0.7 quads in the transportation sector (table

4-7). The biomass component would be more

assimilable, but the electricity will power about four

times as many vehicles. Alcohol or other biomass

fuels must be burned and converted to work at

relatively low efficiencies (generally much lower

efficiencies than at large, stationary powerplants),

whereas the electricity is used directly.

Industry would be unlikely to shift its bulk

process heat to electricity because of the cost, unless

industrial heat pumps prove effective. Industry will

enjoy the greatest benefits from electrification if

process redesign exploits electricity’s controllability

and cleanliness.

Conclusions-Nuclear power will not solve either the C02 problem or energy security concerns by

2015, but it can make a major contribution that

would grow rapidly thereafter. Before this scenario

could be implemented, however, the factors that

have immobilized the nuclear option must be

addressed. Utilities, their customers, local residents,

State rate regulators, investors, and the general

public must be convinced that nuclear power in

general, and specific proposed plants in particular,

are necessary and in their interests.

It is not clear exactly how this consensus would

emerge. Global climate change is the issue most

likely to improve acceptability. The negative effects

that have been suggested for climate change greatly

exceed even very pessimistic projections of nuclear

accidents. However, the nature of the problems are

very different, and people will not necessarily accept

a nuclear plant in their area in order to reduce global

C02 emissions.

This scenario is impossible unless the industry

can demonstrate mastery of the technology with

existing as well as new plants. Furthermore, a

functioning waste repository must be a near-term

probability before many new plants are ordered, and

proliferation risks must be strictly minimized. In

addition, at least initially, nuclear power must be

significantly less expensive than renewable options

or fossil-fired plants for utilities to consider choosing nuclear.

All of these conditions are possible to meet, but

the likelihood of meeting all of them is uncertain.

The nuclear industry retains a strong commitment to

a revival, but strong policy leadership will be

required to convince the rest of the country, at least

at frost.

Comparative Impact of Scenarios

The six scenarios discussed above are summarized in table 4-9. They represent different assumptions about the problems and opportunities facing

the Nation. It would be quite difficult to specify

exactly what impact would result from the implementation of any of them, because that would

depend on additional assumptions, e.g., regulation

of emissions and interest rates. Furthermore, the

value of scenarios 4, “5, and 6 depends to a large

extent on how crucial it becomes to reduce C02

emissions, which cannot be determined at this time.

However, major types of impacts can be identified.

The three major parameters for the design of the

scenarios were: 1) how to minimize environmental

impacts, especially global warming; 2) how to

minimize vulnerability to energy disruptions; and 3)

how to minimize economic costs to society. Success

in meeting these three goals, assuming the scenarios

are implemented successfully, is the first type of

impact to be considered. This has been discussed for

each scenario above. As summarized in table 4-10,

the high growth scenario worsens environmental and

security impacts relative to the base scenario and

leaves economic impacts about the same, largely

because of the assumption that the scenario is

improbable unless fuel prices stay lower than

assumed in the other scenarios. The remaining

scenarios reduce environmental impact and security

risks. The moderate efficiency scenario shows a

strong positive economic impact because it is the

least-cost path. High efficiency and high nuclear

should not cost much more than the base scenario
130 . Energy Technology Choices: Shaping Our Future

Table 4-9-Summary of Scenarios

2015 2015 2015 2015 2015

2015 High Moderate High High High

1989 Baseline Growth Efficiency Efficiency Renewable Nuclear

Demand

Residential

Natural gas. . . . . . . . . . . . . . . . . . . .

Electricitya . . . . . . . . . . . . . . . . . . . .

Oil. . . . . . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . .

Renewable. . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . .

Commercial

Natural gas,... . . . . . . . . . . . . . . . .

Electricitya 

. . . . . . . . . . . . . . . . . . . .

Renewable. . . . . . . . . . . . . . . . . . .

oil . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . .

Transportation

oil . . . . . . . . . . . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . . . . . . . . . . . .

Renewable. . . . . . . . . . . . . . . . . . .

Electricity. . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . .

Industrial

Natural gas..... . . . . . . . . . . . . . . .

Oil-fuel . . . . . . . . . . . . . . . . . . . . . .

Oil--non-fuel . . . . . . . . . . . . . . . . . .

Electricity . . . . . . . . . . . . . . . . . . . .

Renewable. . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . .

Total demanda . . . . . . . . . . . . . . . . . . .

Electricity b

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . .

oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Renewable. . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

supply

oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nuclear . . . . . . . . . . . . . . . . . . . . . . . . .

Renewable . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.0

3.1

1.8

0.1

0.9

4.2

4.0

1.1

0.1

1.5

5.5

4.8

1.3

0.1

1.5

3.6

3.3

0.9

0.1

1.2

2.9

2.6

0.8

ne/2.3

3.3

2.8

0.7

ne/1.5

3.4

3.4

0.8

ne/1.5

10.9

2.7

2.7

ne/0.7

ne

10.9

3.4

5.2

ne/0.9

0.1

6.1

21.6

0.6

ne

ne

9.6

27.5

0.7

ne

ne

22.2

8.3

3.8

4.4

3.2

1.9

2.9

24.5

63.7

16.0

5.7

2.9

1.7

3.0

29.2

34.0

19.5

18.9

5.7

5.8

28.2

7.7

5.0

5.7

5.3

3.5

4.6

31.8

80.5

29.1

3.8

6.3

1.6

5.7

46.4

41.8

22.3

33.8

3.8

10.7

13.2

3.6

5.5

ne/0.9

0.1

10.1

32.6

1.5

0.5

0.7

35.3

10.9

5.6

6.5

6.4

3.8

5.3

38.5

97.1

27.4

8.2

7.0

1.6

5.5

49.7

48.5

28.5

32.9

8.2

11.3

9.1

3.0

3.4

ne/0.7

0.1

7 . 2

24.8

0.7

ne

ne

25.5

7.5

4.4

5.7

4.4

3.2

3.3

28.5

6.9

3.8

1.7

ne/0.3

0.1

5 . 9

17.7

0.7

ne/0.1

18.5

7.7

3.3

5.7

3.2

2.2

1.5

23.6

9.1

2.7

3.0

0.9

0.5

0.1

7 . 2

23.6

0.7

1.2

ne

25.5

6.7

3.7

5.7

4.4

4.8

3.2

28.5

9.1

2.8

3.5

0.3

0.5

0.1

7 . 2

23.4

0.7

0.7

0.7

25.5

7.2

4.2

5.7

4.6

3.6

3.2

28.5

70.3

17.8

6.6

4.1

1.5

4.5

34.5

37.9

18.8

21.1

6.6

8.9

54.9

5.3

6.8

5.3

0.2

5.2

22.8

27.8

20.3

7.0

6.8

8.0

70.3

12.1

4.3

2.7

1.2

11.3

31.6

35.3

16.0

15.4

4.3

20.5

70.3

12.1

12.0

5.0

1.3

7.6

38.0

35.9

19.1

15.4

12.0

13.7

83.9 112.4 129.4 93.3 70.0 91.5 96.1

KEY: ne=negligible.

aDoesnot inc[ude transmission and disribution lo.ssesnor conversion losses atpowerplants, which is abouttwo-thitdsof the total consumed there.

bA~fuel us~forpoweL with hydroelectric and othernonthermal powerplants artificialiy rated at average thermal efficiency.

SOURCE: Referencefor1989data-U,S. Energy lnformationAdministration, Armua/E nergyRev/ew1989,D OE/EIA-0384(89), May 24, 1990,tablelsl,2,

3, 4, 5, 11, 17,25,88,and99; Office of Technology Assessment 1991.

because they use relatively familiar technology that another scenario. Some scenarios involve considers competitive or nearly so now. Renewable costs able uncertainty regarding resource availability or

presently are higher, and projections of reductions technical progress, and some introduce additional

are somewhat speculative. uncertainties for unpredictable events, e.g., nuclear

However, other factors will be crucial in deter- accidents or major climatic events that reduce solar

mining the national impacts of committing to one or energy significantly. Resilience of the scenarios to
Chapter 4--Potential Scenarios for Future Energy Trends ● 131

Table 4-10-Comparative Impact of Scenarios

High High

Impact Base Growth Efficiency Efficiency Renewable Nuclear

Environmental . . . . . . . . . . . . . 0 – – + ++ ++ +

Security . . . . . . . . . . . . . . . . . . 0 — + ++ ++ ++

Economic . . . . . . . . . . . . . . . . . 0 0 ++ o — o

Resilience . . . . . . . . . . . . . . . . 0 —— + ++ + 0

Implementability

Infrastructure. . . . . . . . . . . . 0 ++ — —— — +

Public acceptance . . . . . . . 0 0 + — +

Sustainability. . . . . . . . . . . . . . 0 --

—

+ ++ ++ +

KEY: O = about the same as the base case;+ . somewhat better or easier; ++ - much better; – = somewhat worse

or harder; – – = much worse.

SOURCE: Office of Technology Assessment, 1991.

uncertainties includes both the probability of success and the consequences of failure and depends in

part on the technologies involved. The high growth

scenario has particularly uncertain assumptions. The

high efficiency scenario is most immune against

negative surprises and vulnerable principally to

improbably low energy prices.

The ability to implement any of the scenarios

depends on several factors. Public acceptance is one

consideration. Some technologies (e.g., solar) are

quite popular with the public (in the abstract), and

promotional policies are likely to be widely supported. Conversely, the level of public involvement

required to implement these technologies may be

high, which increases the difficulty of implementation. Demand-side measures in particular require

people to focus on energy decisions (purchasing and

operating equipment) more than has been experienced to date. Some solar options also involve users

more intensively than does the purchase of conventional energy. Industrial readiness to implement the

scenarios also varies. The fossil and nuclear industries already exist. The solar and conservation

industries would have to expand greatly.

Finally, there is every reason to believe that in the

next century, U.S. energy supplies will have to shift

from fossil fuels toward a more sustainable system.

Significant changes to the energy system can take

decades to accomplish, but some scenarios would

make these changes faster and more efficiently than

others.

Some factors are not considered here because they

are too complex. In particular, employment under

the different scenarios will vary in numbers, types of

jobs, and geographic location. One of the most

notable shifts would be the decrease in coal field

employment under scenarios 4, 5, and 6. Compensating increases could be found elsewhere, but they

are unlikely to help the coal miners or their regions.

Nor are changes in energy demand and supply due

to global warming (other than those changes deliberately implemented out of concern over climate

change) considered here, even though such warming

could be detectable (though probably not large) by

2015 under scenarios 1 and 2.

Table 4-9 evaluates these factors qualitatively

relative to the base scenario. The scores cannot be

averaged to determine totals because the six factors

listed do not represent all important considerations,

nor would they be equally weighted. However, it

does appear that scenario 3, moderate conservation,

has most of the advantages and few of the disadvantages of the others.

overall, it is clear that no one subset of energy

technologies is going to solve all the problems the

Nation will have to confront eventually. Each

scenario has drawbacks as well as advantages, and

different circumstances could invalidate any of

them. We do not know: how much of the Nation’s

huge unconventional gas resources can be developed

at reasonable cost; what technology breakthroughs

will change the relative economics of the various

energy sources; what new sources of demand will

emerge; how serious global warming will be; or

what external events will occur to change the way we

think about energy.

Furthermore, if the Nation decides that global

warming is a serious problem, then even the interim

goal of a reduction of 20 percent in C02 emissions

will be much too small. Even 50 percent could be
132 ● Energy Technology Choices: Shaping Our Future

modest under some conditions, but such a goal could This argues strongly for assuring that a wide range

only be achieved by strenuously combining scenar- of technologies is available in the future, and that no

ios 4, 5, and 6. option be discarded prematurely.
Chapter 5

Policy Issues
CONTENTS

Page

INTRODUCTION .......... + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

BASELINE SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

HIGH GROWTH SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

MODERATE EFFICIENCY SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

HIGH EFFICIENCY SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

HIGH RENEWABLES SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

HIGH NUCLEAR SCENARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

COMPARING SCENARIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Figure

Figure Page

5-1. DOE Conservation R&D Budgets, Budget Requests, and Appropriations . . . . . . . . 137

Table

Table Page

5-1. Summary of Policy Options . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Chapter 5

Policy Issues

INTRODUCTION

The previous chapter describes six alternative

views of the Nation’s energy future presented as

divergent scenarios of U.S. energy supply and

demand by 2015. This chapter explores policy issues

concerning each of these energy futures. The options

are considered as they relate to the three major goals

behind energy policy discussed in chapter l—

economic competitiveness, environmental health,

and energy security. These three goals are also

recognized as preeminent in the Presidents National

Energy Strategy (NES).l

As mentioned earlier, the scenarios in this report

are not predictions. Their purpose is to convey

outcomes for six alternative energy futures based on

varying assumptions about the implementation of

differing technologies that could affect energy

supply and demand by 2015. This chapter is not

meant as a general description of energy policy nor

as a quantitative assessment of policy options. With

few exceptions, the scenarios are developed without

a priori assumptions about the exact nature and

extent of policies used to attain the technological

implementation assumed in each. Those decisions

are left to policymakers and are not directly relevant

to conveying the technological promise theoretically

possible under each scenario.

Only the first case, the base scenario, could be

implemented without altering existing Federal statutory and regulatory policies. The other scenarios, to

varying degrees, draw on the following categories of

policy initiatives: standards; financial mechanisms;

energy taxes; information management; research,

development, and demonstration programs; and

Federal programs.

standards can be designed to promote energy

efficiency, pollution reduction, or improvements in

energy-using behavior. Automobile fuel economy,

appliance efficiency, pollution control, and building

code standards can improve the energy performance

of new equipment or processes and can eliminate the

manufacture or construction of the least efficient

equipment or stock in the marketplace.

Although not typically conceived as such, pollution limits have the potential to save energy as well.

If properly designed, pollution standards can

encourage manufacturers, utilities, and consumers to

increase their level of goods or services per unit of

energy consumed, or per unit of emissions generated. For example, pollution standards that encourage the use of industrial wastes as feedstock or the

implementation of cogeneration systems would lead

to direct gains in energy efficiency.

Along with efficiency and pollution standards, a

third type of requirement can induce energy-savings

through behavior modification. For example, a

mandated national speed limit of 55 miles per hour

(mph) would slow average highway speeds and save

a considerable amount of energy in transport.2

Financial mechanisms can increase the competitiveness of energy efficient measures, technologies,

or fuels not otherwise economical or preferred by

consumers. Financial mechanisms include incentives such as tax credits, low-cost loans, or direct

payments by Government or, in the last two instances, by utilities. Financial mechanisms can

establish a level field for competing goods or

services by eliminating indirect subsidies that discourage energy conservation or by creating subsidies that encourage energy conservation. For example, consumer appliance efficiency rebate programs

can spur energy-saving retrofits while reducing

utility load requirements.

Other kinds of financial mechanisms use the

market directly to improve energy use, e.g., tradable

emissions permits. Tradable permits have been

authorized under the U.S. Clean Air Act (CAA) to

reduce emissions of sulfur dioxide (S02

) at coalfired electricity generating plants, and the concept

could be extended to carbon emissions. By enabling

firms to profit from exceptional emissions reductions, tradable permit systems provide an incentive

llVatio~/ Energy strategy: powe@d Zdeasfor America, 1st ed. 1991/1992 (Washington DC: U.S. Government mting ~1% FebW 1991).

2A 1985 study on tie effect Of vehicle speeds Orl riutornobile fuel consumption found that the average fuel economy 10SS Of tested Vcticlcs Wm akut

18 percent when average speed increased from 55 to 65 mph. See Stacy C. Davis and Patricia S. Hu, Transportation Energy Data Book: Edition 11,

ORNL-6649 (Oak Ridge, TN: Oak Ridge National Laboratory, Janumy 1991), p. 3-68.

–135–
136 ● Energy Technology Choices: Shaping Our Future

for polluting industries to reduce emissions beyond

mandated standards, which by themselves offer no

benefit or incentive for polluters to surpass once they

are in compliance.

With the tradable permit system created under the

CAA, utilities have been given a strong incentive to

increase their energy production per unit of S02

emissions as a means of generating additional profit.

Technologies now or nearly available, e.g., integrated gasification combined cycle (IGCC) and

steam-injected gas turbines (STIG), offer both low

emissions and high efficiency, and they may become

more widespread as the new provisions of the CAA

are implemented.

Thus, appropriately designed incentives could

guarantee that energy efficiency becomes an integral

rather than confounding feature in efforts to reduce

emissions. Marketable emissions permits for carbon

dioxide (C02

) in the industrial and utility sectors

would be even more useful than those for sulfur in

promoting energy savings.

Energy taxes have the potential, if set high

enough, to reduce energy consumption and petroleum imports, while encouraging investments in

energy efficient equipment and technologies. Energy taxes may apply directly to energy purchases,

e.g., gasoline taxes, or they may apply to the initial

purchase of energy-using equipment, e.g., gas guzzler taxes for the least efficient vehicles in the new

light-duty fleet market. A currently discussed alternative, a tax based on carbon emissions, would also

improve the competitiveness of renewable and

nuclear technologies, while reducing C02 emissions.

A disadvantage of energy taxes is that they are

generally regressive, burdening lower income

groups disproportionately. In the short term at least,

energy taxes would reduce some economic activity

and have an inflationary impact on the economy.

These effects would be partially offset by a growth

in energy efficient technologies and services. The

general economic effects of energy taxes, however,

would shrink as the economy became less energy

intense in response to the price increases brought on

by taxes. Finally, energy taxes would directly

increase Treasury revenues and reduce the Federal

deficit, but these benefits would be indirectly offset

to some degree by reduced economic activity, at

least in the short term, which would lower Federal

tax revenues from other sources.

Information management—in the form of public or professional education, training, workshops,

information dissemination, or program evaluation—

educates consumers and professionals about options

to improve energy efficiency and conservation

practices.

Research, development, and demonstration

(RD&D) programs develop new options or advance

current options toward commercial availability. The

last element, demonstration, can be vital, because

research and development (R&D) programs often

fail to demonstrate the practical applications of new

or improved technologies or fail to improve the

prospects of their commercial availability.

Promising energy technology R&D projects are

shown in tables 2-1 and 3-1. Budget increases will

be needed for many of these technologies to achieve

widespread commercial availability. Reversing the

drastic cuts in U.S. Department of Energy (DOE)

R&D conservation budgets that began in 1982

would be an important step to improving the

commercial prospects of these technologies (figure

5-l).

Federal programs can increase energy conservation and efficiency in the Government and other

sectors or increase energy supplies. A recent OTA

report describes in detail the progress and prospects

of improving Federal Government energy efficiency. 3 In addition to lowering Federal and State

energy costs, Government programs can help new or

experimental energy technologies reach the marketplace. Additionally, Federal efforts to push exports

of domestically manufactured energy efficient technologies can improve their economies of scale in

production, with the prospect of expanding the

markets for these goods both domestically and

internationally.

On the supply side, Federal policies determine

areas available for oil, natural gas, renewable, and

other supply source exploration and development.

This category includes decisions about whether new

areas, e.g., the Alaska National Wildlife Refuge,

3U.S. cov~~, Office of TW~olou A~~~~~ent, Ene~~Y Efi&?ncY in the Federal Govern~nt: Govern~nt by Good Example? OTA-E-492

(Washington, DC: U.S. Government Printing Oftlce, May 1991).
Chapter 5--Policy Issues ● 137

Figure 5-l—DOE Conservation R&D Budgets, Budget

Requests, and Appropriations

Millions of 1982 dollars

4 0 0

350 + I

11<

300 , ‘ “,

.? .

250 “I,

2ooj \ I

150- +

,

100- “. ,

‘. /

‘. /

. ‘. /

\ ~ - . . . . . . . . . . -

50- . /

. ,

‘,/

.,

0 I I 1 1 1 1 I 1 1 1

80 81 82 83 84 85 86 87 38 89 90 91

Fiscal year

+ Cong. appropriations ----- Admin. budget requests

SOURCE: U.S. General Aeeounting Office, Ene@y F/&D-Conservation

Planning and Management Should Be Strengthened, GAOI

RCED-90-195, July 1990.

should be open to development. Federal programs

also include the Strategic Petroleum Reserve (SPR).

At varying levels of implementation, these policy

options are discussed below for the six scenarios

given in this report. Each scenario covers the period

1989-2015.

BASELINE SCENARIO

The first scenario assumes that no major new

energy-related policy initiatives are undertaken. In

this scenario, fossil fuels remain the cheapest

available energy source, and they continue to drive

the economy. Total energy consumption climbs

almost 1 percent per year, reaching 112.4 quads

(quadrillion British thermal units) in 2015.

The baseline scenario is not meant to suggest that

no energy policy changes will be implemented

during the period 1989-2015. As national and

international developments occur in this period,

energy-related policy changes are likely to follow.

The recent Gulf War suggests how quickly attention

to energy policy is revived. Moreover, energy

legislation proposed in the 102d Congress—

including the proposed NES—promises to alter

national energy policy in the near term. For the

purposes of this scenario, however, we assume no

changes that would significantly alter the framework

under which energy decisionmaking takes place

today.

Even without major policy changes, some energy

efficiency improvements are expected. Under the

conditions described in chapter 4, this scenario

predicts modest efficiency improvements by 2015

through normal upgrading and equipment turnover.

Use of available shell improvements will allow the

35 million new homes and apartments projected to

be built between 1995 and 2015 to require 15-

percent less heat and 8-percent less air conditioning

than current new homes. Without changing current

Federal fuel economy standards, new cars are

projected to average 36.5 miles per gallon (mpg) by

2010. The appliance efficiency standards under the

National Appliance Energy Conservation Amendments of 1988 (NAECA), Public Law 100-12, are

assumed to remain in effect as well.

Under this scenario, U.S. oil import dependence

would reach unprecedented levels, about two-thirds

of consumption by 2015.4 The prospects of climate

change would worsen as well, and urban air quality

would remain poor from continued transportation

energy growth.

HIGH GROWTH SCENARIO

Government policies in this scenario focus on

expanding supply rather than on diminishing demand to fuel a period of high economic growth. The

high growth scenario envisions total U.S. energy

demand rising to 127 quads by 2015, a growth rate

of about 1.7 percent annually. Energy demand in this

scenario exceeds that of the base scenario for all

sectors. Like the base scenario, this scenario requires

a plentiful supply of relatively cheap fossil energy

during a period that introduces no major new

environmental constraints that might induce controls on energy demand.

To meet the supply projections under the high

growth scenario, coal, natural gas, and nuclear

energy would all have to be expanded significantly.

Efforts to bolster domestic oil production would also

dRec~t U.S. Departmmt of Energy (DOE) projections of U.S. petroleum import dependence suggest that foreign sOurCes could reprewnt over

two-thirds of U.S. supplies by 2010 under their reference (base) case. The DOE reference case assumes nearly the same level of economic growth (2.1

percent) used here (2.3 percent). Annuu2 Energy Outlook 1991: With Projections to 2010, DOE/EIA-0383(91) (Wasbingto~ DC: U.S. Government

Printing OffIce, March 1991), pp. 3,43.
138 . Energy Technology Choices: Shaping Our Future

be necessary to keep domestic production from

dropping too sharply by 2015. Policies would have

to encourage increased domestic production of these

sources, while protecting against supply disruptions

to prevent shortages and drastic energy price rises.

The options to expand supply in this scenario echo

the proposed NES. For example, the development

and use of advanced oil recovery technology to

extract currently unrecoverable domestic reserves in

the range of 300 billion barrels would be important.

Also, increasing exploration in offshore and other

unexplored areas, such as the Alaska National

Wildlife Refuge, would help meet the supply

projections in this scenario. To expand domestic

supply exploration and development, a variety of

environmental concerns would have to be addressed,

but they could not raise the cost of the final products

by much or they would not be competitive under this

low-price scenario.

If coal is to be used in the quantities assumed here,

stricter SO2 and nitrogen oxide (NOX) emissions

controls may be necessary to avoid violating air

quality standards. Though coal remains abundant

and cheap under this scenario, tighter emissions

standards could not raise the price of energy

significantly, or the low-price, high-growth conditions of this scenario would be compromised, and

prices would rise and demand would shrink accordingly. Thus, expanding Government support for

RD&D to improve combustion (e.g., fluidized bed

or gasification in combined cycle plants) would help

enhance generating efficiency while offsetting the

emissions increases that are a major feature of this

scenario. In addition, a tradable emissions permit

system (broader in scope than that created under the

Clean Air Act Amendments of 1990) could stimulate technological improvements in emissions control for coal burning or motivate an increase in the

energy intensity of electricity generation beyond the

levels expected under current legislation.

Heavy reliance on fossil fuels will negatively

affect urban air quality (particularly in carbon

monoxide and ozone nonattainment areas).s In

response, this scenario assumes that the use of

electric vehicles (EVs) becomes more widespread,

which would require Government incentives to

induce manufacturers to produce such vehicles on a

larger scale. This option is an element of the NES,

and some areas (e.g., California) are already beginning to incorporate EVs in their environmental and

transportation planning. However, EVs are expensive and suffer from poor performance. Government

RD&D and incentives are likely to be required if

they are to be important contributors to urban air

improvement in the short to medium term.6

To maintain low electricity prices, increasing

competition could be vital. Changes to the Public

Utility Holding Company Act of 1935 (PUHCA)

could ease the financial and other constraints on

utilities that service customers in more than one

State. Though amending PUHCA could have a

generally positive effect on competition, the full

effects of any PUHCA changes need to be understood before major amendments are made to prevent

either small or large generators from enjoying undue

competitive advantages or disadvantages.

The large diversion of coal (one-third of production) to synthetic fuel production under the modest

price rises assumed for oil and natural gas in this

scenario is not probable absent price incentives and

expanded RD&D, both of which the Government

would have to provide. Concerns about rising levels

of petroleum imports, which are assumed in this

scenario and likely in any event, would be the likely

impetus for synthetic fuel production of this magnitude.

To expand domestic natural gas supplies, increased RD&D for gas recovery in tight sand and

other unconventional formations would be necessary to exploit the greater part of U.S. reserves at

reasonable cost. As noted in chapter 4, this scenario

is largely contingent on the increased supply of

relatively cheap natural gas and, without government help, domestic natural gas production is likely

5For the period Iglll’-gg, the U.S. I?nvironmen@ Protection Agency (EPA) determined that 96 areas (mOStly -JOr metrOpOliti me=) f~led to m~t

the Federal ozone standard, and 41 areas failed to meet the Federal carbon monoxide (CO) standard in the period 1988-89. The total population in the

areas violating these health-based standards was an estimated 66.7 million in 1989 for the ozone areas alone. Furthermore, the comection between these

areas and transportation emissions is strong; in 1989,65 percent of national CO emissions were from transportation sources, while 35 percent of national

volatile organic compound emissions, the precursors of ground-level ozone formatioq were from transportation sources. U.S. Environmental Protection

Agency, National Air Quality and Emissions Trends Report, 1989, EPA-450/4-91 -O03, February 1991, pp. 3-17,3-27,4-1,4-5.

6A de~l~ ~SeSSmmt of we Prospwts for ~crew~g the use of ~t~mtive fiels in the transpo~~on s~tor is fowd in U.S. CO~SS,OffIM Of

Technology Assessment Replacing Gasoline: Alternative Fuels for Light-Duty Vehicles, OTA-E-364 (Washingto~ DC: U.S. Government Printing

Office, September 1990).
Chapter 5--Policy Issues ● 139

to be waning by 2015, because the price assumptions

used in this scenario would be insufficient to spur

natural gas exploration at the levels projected here.

As proposed, the NES supports R&D to improve

natural gas production, as well as regulatory reform

to prevent delays in building new pipeline capacity.

Both of these steps would be important in this

scenario.

Additional RD&D for enhanced oil recovery in

existing fields may be required, as well as improved

exploration and drilling techniques, especially offshore. Increasing both imports and domestic production also suggests that improved safeguards against

oil spills would be necessary. To reduce the potential

for oil supply and price disruptions under the high

growth scenario, exploiting protected areas in

Alaska and off-shore would help prevent domestic

oil production from diminishing too quickly. Even

with expanded exploration of this kind, however,

domestic oil production is expected to continue

declining. For further protection against supply or

price disruptions, the SPR would have to be enlarged.

To expand nuclear power, attention to RD&D,

regulatory treatment, waste disposal, and decommissioning would be necessary, as well as a visible

effort by the Government to restore public confidence in the industry. Standardizing designs and

simplifying licensing are crucial ingredients for a

revival. Proapproval of designs, and perhaps sites,

might be possible. However, it could be very

damaging to public acceptance if a streamlined

licensing process is viewed as steamrolling opposition. Along with an improved regulatory environment, the nuclear industry itself would require

improvement in financial and facility performance

for nuclear power to expand to the 70,000 megawatts

(MW) by 2015 assumed here.

Part of the effort to restore the credibility needed

for the nuclear industry to gain wider public support

will require faster progress on a waste disposal

facility. OTA believes that the construction of new

nuclear facilities will be limited until major progress

toward an operable waste disposal facility is visible.

In addition, public acceptance of expanded nuclear

power is not likely to improve as long as the

availability of cost-effective efficiency improvements remains great. Suggestions in the proposed

National Energy Strategy to improve the acceptance

and use of nuclear power fail to indicate how to

address potential public concern about nuclear

growth at a time when many options to implement

cost-effective demand control are available.

The nuclear R&D program has been declining

since the cancellation of the Clinch River Breeder

Reactor in 1983. Increased RD&D for alternative

reactor designs and processes could lead to technology that could more easily recapture public trust.

MODERATE EFFICIENCY

SCENARIO

Improved efficiency has been the major energy

success story since the first oil crisis in 1973. Had

the pre-1973 trends in the growth of U.S. energy

consumption continued unabated, total energy use

here would have been 32 quads higher in 1986 than

the actual 72 quads consumed that year. For the

period 1973-86, this resulted in a cumulative savings

totaling 171 quads, valued at over $950 billion (1986

dollars).7 Despite these large gains, there are vast

opportunities for further improvements.

In contrast to the previous scenario, therefore, the

focus of the moderate efficiency scenario switches

from increasing energy supply to reducing energy

demand. As noted in chapter 4, this scenario

assumes that available cost-effective, energysavings opportunities are fully exploited due to

direct policy intervention. 8 While this optimal level

of cost-effective investment would theoretically

benefit consumers and the Nation as a whole, it

would be unprecedented, requiring the elimination

or reduction of significant market, institutional, and

behavioral barriers that prevent the full use of

currently available cost-effective energy-savings

opportunities.

A combination of policy options (energy taxes,

standards, financial mechanisms, information programs, RD&D) would best serve the efficiency

targets in this scenario, because each exerts unique

effects in overcoming the barriers to optimal energy

efficiency and conservation actions. The NES advoW.S. Department of Energy, Energy Conservation Trends: Understanding the Factors That Aflect Conservation Gains in the U.S. Economy,

DOE/PBO092 September 1989, p. 5; and Annual Energy Review 1989, DOE/EIA-0384(89), May 24, 1990, p. 7.

8~~ maximum number is based on the energy price projections noted inch. 4, and it considers only investments that yield net positive eeonomic

benefits when amortized over expected equipment life.
140 . Energy Technology Choices: Shaping Our Future

cates strongly only the last three options, while

postponing or dismissing consideration of revising

standards or broadening energy taxes. Nonetheless,

a significant, broad-based energy tax is perhaps the

single most effective means of improving efficiency

in this or other scenarios. A gasoline tax in the range

of $0.50 per gallon, with equivalent increases for

other energy sources, would have a major impact on

how consumers make energy-related decisions. For

example, a recent OTA report suggested that a

sustained increase in gasoline prices of 50 percent

could lessen gasoline demand 8 percent (between 5

and 20 percent),9 but the gasoline price elasticity

assumed in this estimate is an extrapolation of

empirical data. In other words, estimating gasoline

price elasticity at such high prices is uncertain,

because the United States has not experienced

sustained gasoline price rises (in real terms) of this

magnitude.

Across the board energy taxes would increase the

level of energy efficient construction and manufacturing for residential and commercial stock, vehicles, appliances, and other equipment. In the industrial sector, energy taxes could motivate the wider

adoption of adjustable-speed drive (ASD) and other

motor efficiency improvements to save 10 percent of

the energy projected for use by motors in the base

scenario in 2015. Of course, taxes would have to be

high enough to motivate improvements but low

enough to allow consumers sufficient investment

capital to afford such equipment and conservation

measures.

Energy taxes could also be applied to the initial

purchase of energy-using equipment. These taxes

could be scaled in a way that would raise the cost of

the least efficient equipment the most in order to

produce a level field for similar products in consumer markets. Taxes on carbon emissions or

imported oil would have similar but more selective

results. These taxes could be justified as efforts to

capture the environmental and social externalities of

providing energy or they could be levied in an effort

to reduce the Federal deficit. Raising prices through

energy taxes to capture these externalities would be

consonant with the combination of economic, environmental, and energy security goals outlined in

chapter 1.

Of course, there are social costs to raising energy

taxes significantly. In particular, energy taxes would

be regressive; lower income individuals and families

would experience a greater marginal burden if such

taxes were imposed, because energy costs consistently account for a higher fraction of income in

low-income households.10 This report does not

analyze social equity issues such as this. It merely

notes that one of the most efficient ways to induce

effective energy-saving decisions is to raise the cost

of energy.

Barriers to maximizing cost-effective, energysaving investments are not merely price-oriented.

Reliable information on energy-saving opportunities needs to increase in all sectors. Most people, for

instance, are aware that measures such as insulating

residences or driving high mileage cars will save

energy, but few are aware of the full range of

investments that can profitably save money by

saving energy. Information programs such as appliance labeling can be useful, but only if consumers

are aware of them and understand them. The scope

and clarity of Federal energy information programs

could increase to assure consistent and meaningful

information for appliances, building energy rating

systems, and other energy-using equipment or stock.

Passive programs that simply supply some information, or supply information only when asked, will

not reach a high proportion of consumers. Other

actors that can aid or influence consumer decisions

about energy use-builders, lenders, landlords,

manufacturers, utilities, and the media-should

participate to ensure that appropriate decisions about

energy use are made. The assumed level of building

retrofits in this scenario implies a key role for

information programs, because the first step in

retrofitting programs is generally informational.

Buildings, vehicles, and appliances possess a

wide range of energy efficiencies. Stringent standards can eliminate the least efficient. Moreover,

standards would correct a problem unique to buildings: many decisions about investing in energy

90ff1c. of Tm~~l~~ Assessment, c~nging @ ~egree~: Steps To R~uce Green~~u~e Gases, OTA-O-4$2 (Washington, ~: U.S. @velllIIlent

Printing Office, February 1991), p. 165.

l~or exmple, ~ 1984, low.~come ho~sehol~ (&Jow $5,~) tit us~ automobiles spat about $’770 (1s percent) per yw fOr mOtOr fuel On

average. Households earningmore than $25,000 per year spent about $1,140 formotorfuel, or less than5 percent of income on average. U.S. Department

of Energy, “Energy Security: A Report to the President of the United States,” DOE/S-0057, March 1987, p. IL6.
Chapter 5-Policy Issues . 141

efficient design are made by builders and landlords,

rather than subsequent buyers or renters. Unlike

appliances and vehicles, the decision about whether

to invest in energy efficient building design is made

for the consumer in advance. Standards would help

correct this basic problem.

In the moderate efficiency scenario, standards

could be raised significantly in all sectors and still

meet the criterion of life-cycle paybacks used in this

scenario. The NAECA standards, for example, could

be strengthened; at present, the method for revising

these standards may effectively encourage the widespread use of three-year payback periods,11 but the

opportunity for efficiency gains typically increase

when longer paybacks are used in setting standards.

To be sure, there is no current requirement under

NAECA to set standards at levels that would ensure

paybacks strictly determined on a life-cycle basis.

Mandatory Federal building standards are currently restricted to Federal buildings, and they are

not enforced strictly. Under this scenario, these

standards could be strengthened to require high, but

still cost-effective, efficiency levels, expanded to

include residential and commercial structures, and

enforced. State energy grants disbursed through the

Federal State Energy Conservation Program (SECP)

and other DOE and U.S. Department of Housing and

Urban Development (HUD) programs could be

restricted to States that have adopted the national

Building Energy Performance Standards (BEPS) or

other building codes, such as the Council of American Building Officials “Model Energy Code”

(CABO “MEC”). One way to bolster enforcement

programs is to attach major fries for noncompliance

or encourage States and localities to deny occupancy

permits to new buildings failing to meet efficient

design requirements. Even if strictly voluntary, an

aggressively promoted Federal standards program

for buildings could dramatically improve energy

efficiency in new residential and commercial structures.

Arguably, increasing energy prices might be more

economically efficient in improving energy use in

buildings compared to setting rigid standards for

efficiency performance. However, estimating the

effects between taxes and standards in the buildings

sector is complicated by the diversity and uses of

building types. Comparing the effects of taxes and

standards for vehicles, on the other hand, is less

complicated. Meeting the fuel economy targets

given in this scenario might be achieved most

efficiently through energy taxes, but experience in

other industrialized nations suggests that such a tax

would have to be high, as much as two to three times

the current U.S. price.

Strengthening fuel economy standards directly is

an alternative approach to taxes that appears to have

been effective in the United States with lower cost to

consumers. However, raising prices through energy

tax increases would affect all vehicles, not just new

ones. Raising energy prices and strengthening fuel

economy standards together would encourage the

scrappage of older, less efficient vehicles at a time

when new vehicle fuel economy was rising. The

effect would be to raise the efficiency of the entire

fleet much more quickly than we have experienced

in the United States with just new vehicle standards

working by themselves.

In fact, fuel economy standards in this scenario

would not need to increase much over levels

expected in the base scenario to achieve significant

energy savings. Year 2015 new auto fuel efficiency

of 39 mpg and new light truck efficiency of 35.5 mpg

could be achieved if regulations raised the fuel

economy of these vehicles only about 10 percent

above that already predicted by the base scenario

where no regulatory changes occur. Along with

reinstating the 55-mph speed limit, improving traffic

flow in urban areas, and several other measures,

growth in transportation energy use could be halved

relative to the base scenario if existing vehicle

efficiency standards were raised to the levels suggested above. While small increases in vehicle

standards would not eliminate gas guzzlers, which

tend to be the most expensive personal passenger

vehicles, they would raise the fleet average.

The additional purchase cost (also known as first

cost) of energy efficiency measures commonly

II( qf~e DE]swre~ finds that the additional cost to the ~~erof purchasing aproductcomplying with an energy conservation standard level

will be less than three times the value of the energy savings during the fiist year that the consumer will receive as a result of the standard, as calculated

under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economically justi.iled. A determination by the

Secretary that such criterion is not met shall not be taken into consideration in the Secretary’s determina tion of whether a standard is economically

justMed.”42 U.S.C. 6295(l)(2)(J3)(iii). There are varying interpretations of how this requirement for determining economic justification will play out

bu~ under the conditions of the moderate efilciency scenario, this requirement would have to be strengthened to meet the condition of exploiting all

life-cycle payback opportunities.
142 . Energy Technology Choices: Shaping Our Future

prevents firms or individuals from acquiring them.

Financial mechanisms could soften or eliminate the

first cost barrier. Tax credits applied, for example, to

efficiency investments, conservation measures, or

both could be set at minimal losses to the Federal

Treasury while helping to reduce the flow of oil

imports. Moreover, revenues lost from Federal tax

and other incentive programs could be offset by

increasing energy taxes to achieve no net effect on

Government revenues.

Tax credits could also be applied to equipment

using renewable energy sources (solar, wind, geothermal). The Federal Government has experience

with both types of credits in the residential, commercial, and industrial sectors, particularly under the

Energy Tax Act of 1978 (ETA), Public Law 95-618,

and the Windfall Profits Tax Act of 1980 (V/PTA),

Public Law 96-223. Tax credits would lower Federal

Treasury revenues directly, but they would indirectly raise some of these revenues by stimulating

economic activity that might not otherwise have

occurred but for the incentives.

The marginal benefits that tax credits actually

provided the industrial sector under the WPTA was

uncertain, because many firms may have made their

efficiency investments regardless. Other mechanisms, e.g., low-cost loans and direct payments,

might be targeted and administered more effectively

by States and utilities, as they can often evaluate

better fuel use, load, and cost changes in balance

with projected demand and supply growth, but the

Federal Government could go far to ensure that such

programs are created and reach a wide audience.

Accelerated capital depreciation is also a financial

mechanism that has been cited as an option to

encourage investment in new equipment. The effect

of accelerated depreciation can be mixed, however.

By reducing the period in which businesses can

write off investments, companies lower their tax

bills, presumably leaving more for investment, but

U.S. Treasury receipts are lowered as well.12

A vigorous RD&D program could accelerate the

commercialization of new or emerging efficiency

technologies. Most of the options listed in table 2-1

would improve efficiency. For example, compact

fluorescent light bulbs are economical under some

conditions but are too costly and bulky for widePhoto credit: Southern California Edison Co.

A 500-kW wind turbine mounted on a vertical axis in

California.

spread application. As these problems are solved,

more of these bulbs should become interchangeable

with incandescent. Most efficiency RD&D programs could be usefully increased, which would

improve the chances of implementing this scenario

even though existing technology is nominally sufficient.

Many of the policy measures noted here could

also be valuable on the supply side. In particular,

energy taxes, regulatory changes, financial mechanisms, or some combination of them could expand

the fossil and nonfossil supply base. Any of these

mechanisms could be used singly or in combination

to meet the moderate growth in energy supply

assumed in this scenario. These tools could be used

singly or in combination to expand the contribution

 and incentives be U.S. Congress, 

Technology Assessment Energy Use, OTA-E-198 DC: U.S. Government Printing Office, June 1983), pp. 56-58.
Chapter 5--Policy Issues ● 143

of renewable sources of energy, which are assumed

to cover 40 percent of new electricity demand by

2010. In addition, these tools could achieve the

extensive use (70 percent) of cogeneration in new

and replacement industrial steam boilers by 2015.

Federal energy use could be improved through

mandatory building, equipment, and fleet efficiency

standards; retrofitting existing shells and lighting

systems; and participating in local utility demandside management efforts. Furthermore, committed

Federal efforts to invest in cost-effective energy

efficiency technology through serious procurement

efforts would be essential to bolster Federal credibility if major national programs are created to reduce

U.S. energy use. Federal legislation or executive

orders may be well-intentioned but have experienced poor results historically. To ensure that such

efforts attain their desired results, financial support,

enforceable provisions, appropriations contingencies, or some combination of these could be used to

achieve Government efficiency and conservation

improvements that maximize cost-effective options.

Revisions to Federal procurement and leasing guidelines and requirements could also promote new

demand- and supply-side technologies.

There are three general reasons for pursuing

energy savings through some or all of these policies.

First, maximizing cost-effective energy savings

reduces the cost to produce U.S. goods and services

in the domestic and international markets, thereby

making those goods and services more competitive.

Second, energy savings under this scenario would

dampen U.S. reliance on imported petroleum.

Finally, energy savings of the kind noted here

would soften the local and global environmental

impacts of providing and using energy, including

reductions in combustion emissions by raising the

level of delivered energy services per unit of

emissions. In fact, the environmental rationale may

prove the most compelling if the magnitude of

global climate change is as serious as some analysts

predict. On this last point, achieving this scenario

would limit the growth of U.S. CO2 emissions 20

percent by 2015 relative to base scenario projections.

HIGH EFFICIENCY SCENARIO

This scenario incorporates many energy efficiency investments that are beyond the level at

which life-cycle paybacks would be realized. This

scenario, therefore, is more difficult to justify than

the moderate efficiency scenario under current

economic, security, and environmental conditions.

For this scenario to become a national goal, extreme

threats to energy security or the global environment

would probably be necessary.

Serious climate change would probably serve as

the strongest rationale. This scenario represents a

major effort and investment to back out coal use. No

new coal-fired generating capacity would be installed; new supply requirements would be covered

by a combination of renewable, nuclear, and natural

gas technologies. Some coal-freed plants are closed

and carbon emissions at others are lowered by

natural gas co-firing. Existing fossil fuel plants

would have to be retired entirely after 40 years

(rather than the typical 60). While the natural gas,

renewable, and nuclear industries would grow

slightly, the coal industry-and coal states in

particular-would suffer abrupt economic declines

unless adequate State and National contingency

planning were conducted successfully in the short

term.

Tax incentives (e.g., a 2- to 5-cent per kilowatt

hour (kWh) credit for renewable electricity generation), accelerated plant depreciation schedules, and

information programs could encourage the use of

low- or no-carbon fuels, cogeneration, or help speed

the retirement of coal-fired generating plants. However, in an aggressive demand-side effort such as

this scenario implies, information programs and

consumer-oriented financial mechanisms are less

useful policy tools: more coercion than convincing

or consumer financial assistance would be required.

For example, eliminating the construction of new

coal-fried capacity would be a basic regulatory

requirement under this scenario. Moreover, the

Government would have a major role in coordinating activities within and among the sectors to make

the transition to such a highly energy efficient

economy as smooth as possible, especially as the

effects of such policy changes are likely to be

substantial.

Higher taxes, aggressive efficiency standards,

other regulatory changes (e.g., requirements disallowing the installation of new coal-fried generation

capacity), and sustained, high levels of RD&D

funding together would be the most valuable policy

tools in such a scenario. In this regard, the high

efficiency scenario would require an intensification
144 . Energy Technology Choices: Shaping Our Future

of the same policies suggested in the moderate

efficiency scenario. Accordingly, this scenario and

the policies that would be needed to implement it

are, for the most part, a major departure from the

NES.

In combination with other policies, higher taxes

would be essential, probably at least double the cost

of energy, which would still leave U.S. energy prices

lower than in some other countries. A carbon tax in

the range of $75 to $150 per ton would encourage

fuel switching and conservation. A tax of this

magnitude would make natural gas more competitive than coal at many electricity generating facilities.13 To offset the potential economic effects of

increasing prices through energy taxes, the Federal

Government could lower other taxes on individuals

and firms.

High-efficiency standards would be a major part

of this policy package. Buildings and appliances

would be required to meet the highest efficiency now

achievable. As a result of such standards, new

residential units by 2015 could require 85-percent

less heating and 45-percent less air conditioning

than the average home today, and retrofits could be

aggressively applied to all buildings such that their

energy needs drop 30 percent. In the transportation

sector, as part of an intensification of the other

demand-curbing measures given in the moderate

efficiency scenario, fuel economy standards for new

autos would rise to 55 mpg (holding the current fleet

size mix and performance characteristics constant).

With a shift to smaller vehicles, which is likely with

high fuel costs, the average fuel economy of the new

car fleet could rise to 58 mpg by 2010. With

standards this aggressive, the first costs for these

consumer products are expected to increase, and

consumer choice would be reduced, as fewer products would be available in the market that meet these

tough standards, at least in the short term.

RD&D would be essential to expand the menu of

available technological options. As noted, this

scenario assumes that technologies expected to be

available in 10 years are widely implemented by

2015. Expensive projects such as automobile engines and transmissions would have a high priority.

The total estimated net cost of this high-efficiency

package could be nearly as high as 1.8 percent of

gross national product (GNP), or could result in a net

savings of a few tenths of a percent of GNP. This

compares with total current U.S. environmental

GNP costs of 1.5 percent and the total current GNP

costs of direct fossil fuel and electricity consumption

of roughly 9 percent.14

A key part of a high-efficiency scenario is Federal

Government energy use. In several ways, Government efficiency lags behind other sectors, which is

not only expensive but diminishes credibility .15 Use

of standards, changes in procurement guidelines,

and realistic energy performance goals are some of

the major ways the Federal Government can reduce

its energy use if policymakers determine that this

should be a priority. Although specific changes in

Government energy use are not a defined element in

this scenario, such improvements would be necessary to achieve the goals outlined here.

In addition, the Government would need to

increase expenditures for improving transportation

and industrial infrastructure. Increased mass transit

finding is assumed in this scenario to improve

high-speed intercity rail systems enough to curb

interurban car travel by 5 percent and air travel by 10

percent.

HIGH RENEWABLES SCENARIO

The high renewable scenario represents a major

but less aggressive effort than the high efficiency

scenario to back out coal use to reduce quickly

CO2 emissions. Implementing policies for a

high level of renewable could be easier than

efficiency measures, because the need to influence

directly individual consumers would be reduced. In

large part, the development of renewable energy

sources-specially for electricity generation—

would require policies targeting utilities and industry. Financial incentives could be the most important

policy tool in this scenario, because each sector will

require investments in technological supply options

that simply are not competitive in current markets.

Historically, tax incentives in particular have hastened the commercial availability of renewable

technologies, and they appear to have had the added

effect of encouraging private sector RD&D when

ISU.S. Comss, Wlce of Technolo= Assessment, op. cit., footnote 9, P. 26.

14u.s. ConWss, OffIce of Technology Assessment, op. cit., footnote 9, pp. 10-1 L 321.

15u.s. Conmss, Office of Technology Assessment, op. cit., footnote 3.
Chapter 5--Policy Issues ● 145

Federal Government RD&D support sharply

dropped beginning in 1982.16

As a result, the Government might consider tax

credits, low-cost loans, or direct payments to subsidize the growth of solar, wind, and geothermal

electricity generation, as well as the increased

production of biomass fuels (such as ethanol for

transportation). Accelerated capital depreciation

schedules coupled with investment credits that

favored renewable could also speed the wide-scale

adoption of renewable supply technologies by encouraging their acquisition more quickly and easily

than the market generally would by itself.

Financial incentives would clearly help correct

the current inability of renewable energy sources to

compete with fossil fuels, the sources that are

currently cheaper (and that are likely to remain so in

a price system that consistently fails to capture

environmental externalities). To pay for such incentives, and to help create a level field between more

expensive renewable and less expensive nonrenewable energy forms, some energy taxes could be

established (e.g., carbon emissions) while others

could be increased (e.g., gasoline). The combined

effect of incentives and taxes has the potential to

push the expansion of the renewable energy supply

base further than either option would alone.

The most expeditious way of promoting largescale, renewable energy use would be assured by

direct regulatory intervention. If the use of renewable technologies to generate electricity, for instance, was favored as a first option by regulation,

the need for additional incentives or energy taxes

could possibly be eliminated.

The efficiency standards used in the moderate

efficiency scenario are assumed to be implemented

here. In addition, changes in the efficiency standards

required of qualifying facilities (QFs) under the

Public Utility Regulatory Policies Act of 1978

(PURPA), Public Law 98-617, could be made that

would discourage the expansion of fossil-fuel-based

generating capacity while promoting the adoption of

more efficient and less polluting systems, e.g.,

cogeneration or IGCC technologies. A special category of PURPA qualifying facilities could be

created that allowed more favorable treatment of

generators that actually operated solely on renewable sources, but the contribution of such generators

would probably be small (absent price or other

regulatory incentives) in the timeframe of this

scenario. Under our current regulatory system,

merely increasing the PURPA size qualifications for

QF status will have the effect of encouraging more

gas-fired (rather than renewable source) electricity

generation, because gas is the cheaper option. As it

is currently written, PURPA grants QF status to

many small, fossil-fried generators, which are commonly more efficient but not necessarily driven by

renewable sources.

As suggested in the NES, efforts to expand

hydropower would be eased if regulations governing

siting, permitting, and environmental review were

streamlined, but such regulatory changes could not

simply cloak efforts to reduce or effectively eliminate adequate public review of the licensing process.

The enhancement of existing hydropower capacity

also is an important option.

To expand the market for alternative transportation fuels (whether produced from biomass, coal, or

natural gas), their use as gasoline additives could be

made required practice, but the environmental tradeoffs would have to be evaluated. Similarly, the

required use of alternative transportation fuels in

U.S. fleets would increase their production and

distribution but at an undetermined cost. At a

minimum, their adoption in Federal fleets for all

nonmilitary and select military use would be appropriate if the Government decided to promote or

require their increased use.

RD&D is essential for this scenario. Many renewable technologies remain too expensive to compete

with conventional fuel technologies, but many show

considerable promise for improvement. In addition,

intermittent energy sources, e.g., photovoltaics,

solar thermal, and wind, will not develop as significant contributors to online electrical capacity until

improved storage technologies are developed.

The high costs of this scenario, occurring at a time

when conventional sources remain relatively inexpensive, suggest why the demand-side measures

implemented in the moderate efficiency scenario are

retained here to balance supply and demand forces

IG~ extended analysis and di~ussion of the role of financial mechanisms, e.g., tax incentives, to encourage renewable energy pm is ~ntained

in U.S. Congress, OffIce of Technology Assessmen~ New Electn”c Power Technologies: Problems and Prospects for the 1990s, OTA-E-246

(Washington, DC: U.S. Government Printing Offke, July 1985). See especially pp. 290-294.
146 . Energy Technology Choices: Shaping Our Future

together. Efficiency measures meeting the original

condition of achieving life-cycle paybacks will help

moderate the need for what are currently the more

expensive energy sources (renewable).

HIGH NUCLEAR SCENARIO

The high nuclear scenario assumes that a major

commitment to nuclear power is deemed essential,

most probably because of global climate change. As

a result, this scenario exploits nuclear power as

much to reduce coal combustion as to increase

electricity production. Most coal plants would be

retired to reduce U.S. CO2 emissions, one-third of

which currently derive from electricity generating

plants. Unlike renewable sources, the amount of

nuclear power capacity that is built in the coming

decades depends more on political decisions and less

on resource constraints or industrial capability.

Like the high renewable scenario, the high

nuclear scenario assumes that expensive efforts to

expand the supply base will be matched by the same

level of demand-side controls called for in the

moderate efficiency case. Thus, these three scenarios assume the same level of end-use energy demand

by 2015, and the demand control options discussed

in the moderate scenario would all apply here.

Reviving nuclear energy as a viable option would

require a major change in public acceptance, which

could be induced by serious global climate changes

or intense Government efforts to improve the safety

and public acceptance of this power source, such as

imposing stricter standards on plant design and

operations. In the absence of serious global climate

change, Government efforts to revive public acceptance of nuclear power would mirror those mentioned in the high growth scenario: regulatory

improvements, expedited waste disposal (including

resolution of the national disposal facility issue), and

expanded RD&D.

Previous Government and industry programs to

improve public acceptance of nuclear power have

had mixed results. To meet the high growth of

nuclear capacity assumed here, these programs

would need to demonstrate the safety and necessity

of the new reactors. Nuclear technology and management have improved considerably, and controlled growth would present fewer risks to society

than previously, but the case has to be made

credibly.

As discussed under scenario 2 (high growth), a

large part of the problem is waste disposal. Since this

scenario envisions even faster growth, faster progress is necessary. Waste siting is difficult but must

be done with sensitivity to local needs, addressing

the technical difficulties is also urgent.

As noted in the high growth scenario, standardization of designs and stable licensing are crucial for a

revival. Proapproval of designs, and perhaps sites,

might be possible. However, it could be very

damaging to public acceptance if a streamlined

licensing process is viewed as steamrolling opposition.

In the short term, a revival of nuclear power does

not depend on new reactor technology RD&D.

Instead, good design, public acceptance, and implementation of existing technology are more important

to achieve the sharp growth in nuclear generating

capacity for this study period. RD&D will be more

important over time. As noted in chapter 4, current

light water reactor technology may not be adequate

if hundreds of reactors are installed. Even if it is, the

economic advantages in diversifying design approaches would probably outweigh the costs of

developing new reactors, e.g., the high-temperature

gas reactor. In this regard, a decision is to be made

in 1991 on which technology will be used for the

tritium production reactor for the weapons program.

This report has not examined the question of which

technology is best for production, nor does it

recommend which technology should be used in that

military application. However, it is clear that the

decision over which technology is used for military

tritium production could have implications for

civilian nuclear energy supply options in the future,

particularly if the gas reactor technology is used.

R&D will also be important in resolving the

remaining safety issues, waste disposal, enrichment,

and other areas.

COMPARING SCENARIOS

The six scenarios used in this report contain

different assumptions about economic growth, energy supply and demand, and environmental constraints that the U.S. could face in the period

1989-2015. The scenarios are not meant as predictions, nor do they contain all the potential elements

of what our energy future may look like. However,

the varying assumptions in the scenarios are a

collection of plausible outcomes. Because the sce-
Chapter 5-Policy Issues ● 147

narios vary greatly, the best policy packages for

achieving them vary as well. As a result, comparing

the major features of the scenarios will convey their

relative merits and suggest which policies could be

the most appropriate or valuable in the future. The

policy issues most relevant to all scenarios (except

the baseline) are summarized in table 5-1.

Scenarios 4,5, and 6 are extreme outcomes based

on the growing chance of an extreme problem:

global climate change. These scenarios rapidly

reduce the use of coal in electricity generation,

despite our large resource base, in order to reduce

C02 emissions. A somewhat different package of

such extreme policy measures could be warranted if

severe threats to energy security develop. The cost

of implementing any of these three scenarios could

be high, but the cost of not implementing them if

global climate change proves as disrupting as some

analysts predict would be higher .17

Scenarios 4, 5, and 6 assume that major policy

decisions and Federal budget commitments are

made long before the problem that would precipitate

these changes—serious climate change--is likely to

occur. This fact, however, does not diminish the

value of considering these scenarios, their policy

requirements, and their effects to counter global

climate change (or severe threats to energy security);

it merely postpones their provable urgency. Our

current understanding of the lagtime in atmospheric

responses to changes in trace gas concentrations,

e.g., C02

, suggests that the urgency of making

policy decisions similar or identical to the last three

scenarios could be appropriate now.

The base case requires no policy changes. It

assumes no major changes in environmental conditions (e.g., global climate change), U.S. energy

supply security, and U.S. energy demand growth.

This future is plausible but risky. At a time when

U.S. production of natural gas and oil has slowed or

dropped, political stability in the Middle East is as

uncertain as ever, the prospects for large contributions from alternative and renewable energy supplies

are on a capricious and lingering threshhold, and the

steady buildup of atmospheric CO2 continues unabated, the probability that the availability, price, and

supply of oil fuels will all remain stable is not high.

Scenario 2 is even more optimistic. That scenario

assumes that continued fossil fuel use will not be

curbed by domestic or international concerns about

global climate, that fossil fuel reserves will actually

expand, and an uninterrupted level of economic

growth not seen in two decades will be fueled by

abundant and relatively inexpensive energy.

Scenario 3 is a moderate effort to curb U.S. energy

demand, but it would require an unprecedented use

of cost-effective investments and success in energy

efficiency and conservation. Though it requires less

extreme measures than the high-efficiency measures

in scenario 4, it would still require a prodigious

effort by Government and citizens to be realized.

Scenario 4 adopts the same approach as scenario

3 (demand control), but its measures and outcome

are more extreme. This is the only scenario that

actually results in lower total energy demand at the

end of the study period. Such an outcome would

require many investments in energy efficiency that

would exceed life-cycle paybacks suggesting that

extreme threats to the global environment or energy

security would be necessary to impose policy

measures this economically severe.

Scenarios 5 and 6 entail aggressive supplyoriented measures, but they exploit the same level of

demand-side measures as scenario 3 and thus

provide an illustrative lesson about mixing supply

and demand-side measures in an energy policy.

Any of these scenarios could be the right choice

depending on the resolution of several critical but

presently unknowable factors. In particular, the

specter of climate change could invalidate the frost

three scenarios, technical developments could make

the last three much more feasible, and unexpected

resource discoveries could lead to the high growth of

scenario 2. Prudent policymaking will protect society against negative outcomes while maximizing the

possibility of positive developments. The value

judgments and risk assessments that determine the

decisionmaking ultimately guiding the country

along its actual path are beyond the scope of this

report. It is hoped that the above discussion provides

a background for understanding where decisions

about the nation’s energy future fit in the overall

context of the national goals of economic wellbeing, environmental quality, and security.

17A~ mentioned ~alier, the e~~ted net ~o~t of the hi@ efficiency sc.e~odone co~d be a positive sever~ tenti of 1 percent of GNP to M much

as a negative 1.8 percent of GNP. Depending on its magnitude, the cost of climate change could be as great or greater; it could also be lower.
b

Table 5-l-Summary of Policy Options

Scenario Financial mechanisms Taxes Info management RD&D Standards Federal programs

High growth Credits, loans and payments for synfuels;

tradable permits for coal

emissions; incentives for

electric vehicles.

Moderate Tax credits and accelerated

efficiency depreciation for quicker

equipment turnover;

tradable permits for

emissions reductions,

(industry and utilities),

coupled with tougher

emissions standards.

Tough efficiency Similar to moderate efficiency scenario, but at a

higher level.

High renewable Renewable investment tax

credits for electricity generation & biomass fuels

production; low-cost

loans; accelerated capital depredation for existing fossil-powered systems; same demand

controls as moderate efficiency scenario.

High nuclear Accelerated depreciation

schedules for utilities

committed to investing in

nuclear plants; investment tax credits for new

nuclear construction;

same demand controls

as moderate efficiency

scenario.

No change from baseline

scenario.

Energy taxes; gasoline tax

in the range of 50 cents;

other energy taxes

raised accordingly; carbon tax of at least $75 to

$150/ton; added taxes

on inefficient equipment.

Energy taxes and especially carbon taxes of at

least $150/ton; purchase

taxes that Ievelize prices

of equipment with varying efficiencies.

Energy taxes on fossil fuel

use only; carbon taxes

as an alternative; same

as moderate efficiency

scenario.

Large carbon tax on utilities

to encourage nuclear

growth.

No change from baseline Clean coal technologies; adscenario. Improve vanced oil and gas republic acceptance of covery; synfuels; fluidized

nuclear power. bed and IGCC; electric vehicles.

Increase Government Vigorous for all sectors.

and utility efforts to impart life-cycle opportunities (retrofits & new

equipment).

Same as moderate effi- Extremely aggressive; techciency scenario. nologies available by 1999

implemented by 2015.

Same as moderate effi- Especially for storage techciency scenario. nologies.

Same as moderate effi- RD&D needed for advanced

ciency scenario. lm- reactor designs; modular

prove public accep- components; waste distance of nuclear posal technologies.

power.

No changes needed in energy performance standards; emissions reductions in utility and transportation sectors probably necessary.

Raise building and equipment performance

standards (NAECA,

BEPS); CAFE to 39 mpg;

tradable permits; 55-

mph speed limit; HOVs

and carpooling programs; and utility demand-side management

programs.

CAFE 55 mpg; most energy

efficient design for buildings and equipment;

stronger utility emissions

reductions; ban new

coal-fired generating

plants.

Same as moderate efficiency plus standards for

generating plants that

favor renewable.

Same as moderate efficiency; also higher

standards for nonnuclear plants.

PURPA/PUHCA revisions to

expand resource base, increase competition; eased

plant siting to keep costs

down; OCS/ANWR

opened; SPR increased;

improved nuclear licensing

and waste disposal facility.

Aggressive FEMP; increased

funding for urbanhterdty

rail; Federal procurement

and technology transfer

are key.

Aggressive retirement of coal

plants; natural gas cofiring;

stronger DSM programs;

aggressive FEMP; high

national priority tied to infrastructure funding.

Favorable regulatory treatment encouraging renewables; fleet use of alternative fuels; extended and

improved hydro (existing

capacity).

Streamlined licensing; waste

disposal facility.

ABBREVIATIONS: BEPS . Building Energy Performance Standards; CAFE = Corporate Average Fuel Economy Standards; DSM = Demand-Side Management; FEMP - Federal Energy

Management Program; HOVS = High Occupancy Vehicle lanes; IGCC = Integrated Gasification Combined Cycle; NAECA = Nationai Appliance Energy Conservation Act;

OCS/ANWR = Outer Continental Shelf/Arctic National Wildlife Refuge; PURPA/PUHCA = Public Utility Regulatory Policies ActiPublic Utility Holding Company Act; RD&D =

Research, Development, and Demonstration; SPR = Strategic Petroleum Reserve

SOURCE: Office of Technology Assessment, 1991.