From District Energy Magazine, Third Quarter, 2010
Consider these facts: In 1800, the world's population was 1 billion and there was just one city on the planet with a population over 1 million inhabitants - London. Today, only 210 years later, global population is over 6.8 billion and there are 287 cities on the planet with a population over 1 million. In fact, according to WorldWatch Institute, each of the 100 largest cities on the planet today has an average population over 5 million and there are 18 "mega-cities" with populations exceeding 10 million. While the global birth rate has declined from a peak of 2.2% in 1963, world population is anticipated to grow to over 9 billion people (nearly a 50% increase) by 2040. In just 30 more years, as population migration to urban centers accelerates, the world's cities must accommodate nearly 5 billion people. This is a staggering requirement that will place huge demands on urban energy infrastructure.
Today, the energy appetite of this growing global economy consumes over 86 million barrels of oil, 245 billion cubic feet of natural gas, 15 million tons of coal, and 500,000 pounds of uranium every single day. Looking only at oil, current consumption is equal to burning one thousand barrels of oil per second. Let me repeat ... one thousand barrels, or 42,000 gallons of oil every second! Where will we be in another thirty years when global population has increased by 50%?
It is pretty clear that, as IDEA begins our second century, we must step up our efforts to accelerate the transition to cleaner, more efficient use of thermal energy in our cities, communities and campuses. We can simply no longer afford to throw away two-thirds of the fuel we burn to make electricity as "waste heat." We must build thermal energy distribution infrastructure to recover heat from power generation and other industrial sources of surplus energy. I would submit that for any city, campus or community claiming to be "green" or "sustainable," it must feature robust district energy infrastructure that recovers and efficiently uses thermal energy. Continuing to ignore the importance and value of thermal energy imperils the economic stability and environmental viability of the world's cities and dramatically discounts the value of energy resources.
Recovering useful thermal energy is the low-hanging fruit in today's energy mix. Here in the U.S., the extraction of fossil energy supplies resulted in the tragic loss of 29 coal miners in the Upper Big Branch coal mine accident in West Virginia on April 5, 2010. The harsh realities of human risk in mining were just beginning to penetrate consumer consciousness when the somber images of a mourning West Virginia coal community were literally blown off the front page two weeks later by the horrific conflagration that killed 11 and injured dozens aboard the Deepwater Horizon oil rig in the Gulf of Mexico. Since then, unrelenting news coverage has shown nearly continuous video of the unabated flow of oil gushing into the Gulf waters, paralyzing the local economy and despoiling the once bountiful ocean ecosystem with unimaginable long-term damage. The consequential environmental remediation costs are simply staggering, if not heartbreaking.
Yet our junkie/dealer addiction to fossil fuels continues almost unabated. The oil extraction industry employs thousands of people and is fundamental to local economies, so a drilling moratorium in the Gulf has been overruled by a local court. Elsewhere, since it's not in our backyard, we tend to shrug it off and return to business as usual in the brown states where fuels are extracted and processed, and in green states where fuel is imported and largely just consumed. These state-by-state differences in energy perspective have led to dysfunctional debate in Congress on energy and climate legislation. Lost in all the media furor about political "shakedowns" and "apologies" is the fundamental recognition that exploiting fossil fuels has profound economic implications. Today's cheap energy is tomorrow's cleanup cost, diminished resource or long-term liability. The full cost of fossil fuel damage to the Gulf will never be fully recovered in terms of local jobs lost, businesses shuttered and damage and depletion of the ecosystem. There are significant external costs to fossil fuel dependence that are not reflected in today's price per barrel, and we can no longer kick the can down the road to the next generation.
That is not to say that we can snap our fingers to switch over to alternative resources and eliminate combustion of oil, gas and coal overnight. The U.S. currently sends over $1 billion offshore every day for foreign oil. But clearly, the handwriting is on the wall. Population growth, coupled with finite resources, demands bold action. If these recent events fail to stimulate meaningful debate and timely action on energy and climate policy, I don't know what will.
Now is the time to get serious about implementing energy efficiency as a means to reduce reliance on fossil fuels.
We can look to the lessons learned in Denmark since the 1973 oil embargo that literally froze up their economy. Recognizing their immediate economic peril with over 90% dependence on imported fossil fuels, the Danish government first instituted a policy that required that all electricity generating stations recover useful heat. That was soon followed by a fuel tax strategy to fund infrastructure investment in district heating networks that led to community-based heat plans to exploit surplus heat sources and deliver useful thermal energy to end users. Today, 97% of all buildings in Copenhagen are on district heating and over 60% of the country's heat is from combined heat and power sources. The Danish economy has shifted from a negative energy trade balance of nearly $6 billion in 1980 to an energy trade surplus of $5.5 billion in 2008, while the Danish GDP has grown 78%, with energy use increasing only 5% and carbon emissions actually declining by 17%.
In the U.S., we should embrace a similar vision for a more resilient energy economy by using surplus heat rather than exhausting it to oceans, lakes and atmosphere. We should have policies that encourage district energy networks with smarter grids where CHP facilities support thermal needs and generate power at fuel efficiencies double the current standard. I recognize that the U.S. is fundamentally different from Denmark, but we certainly have communities and campuses on the scale of the city of Copenhagen, with a population of 1 million, that could anchor CHP/district energy infrastructure.
I am encouraged by pockets of recognition within our federal government for the potential of district energy/CHP. Leadership from the U.S. Department of Energy has chosen to re-purpose the Clean Energy Regional Application Centers to promote and support deployment of CHP and district energy at the 20 MW scale. Senators Franken and Bond are planning to co-sponsor the Thermal Renewable Energy Efficiency Act (TREEA) to stimulate investment in cleaner district energy; enable tax-exempt financing for plants, pipes and customer connections; and provide equal standing for thermal energy in renewable portfolio standards and production tax credits. You shouldn't have to make electricity to qualify for renewable energy incentives. (I urge you to read Mark Spurr's column to understand more fully the language and objectives of this legislation IDEA has put forward.)
I am encouraged by actions in states like New Jersey, where the governor signed into law legislation allowing CHP district energy providers to wheel their power to the buildings connected with thermal services via the district heating and cooling piping network. And in upstate New York, where FERC ruled that since Cornell University's new CHP plant produces electricity largely as a byproduct of delivering thermal energy to the campus - and is therefore not operating in a competitive electricity market - the incumbent utilities must purchase the excess power at a fair price, much like under PURPA.
IDEA's message on the importance of CHP/district energy as an effective, proven near-term solution for climate mitigation has also been heard by the U.S. Environmental Protection Agency, which recently issued a notice to amend the greenhouse gas reporting rules to allow voluntary reporting of emissions from cogeneration. The amendment recognizes that while site emissions might increase with cogeneration, the efficiency of producing both useful thermal energy and electricity from a single fuel results in reduced regional emissions and should be considered in future rule-making. This specific issue was raised last year in an article co-authored by Jeff Zumwalt of the University of New Mexico, who along with other industry and university leaders from IDEA, presented it to EPA for consideration lest the pending climate rules would imperil university CHP facilities.
On the voluntary side, the EPA CHP Partnership continues to confer CHP Energy Star recognition on many highly efficient IDEA systems, including the University of Missouri-Columbia, which received the award at the IDEA Annual Conference in June. If you are looking for a textbook example of a fuel-flexible and energy-efficient campus CHP system, look no further than Mizzou. We need more of these systems across the nation, not fewer.
By coming together to share technical and business solutions, IDEA members strengthen our collective industry and our respective organizations in preparation for a greater role in tomorrow's energy mix. Working together on common challenges creates efficiencies and scale that provide dividends in greater public and employee safety, reduced energy and water consumption, and valuable information exchange to accelerate process improvements. If we are to be effective in creating a greater role for district energy and CHP, we must also educate policy makers and business leaders on the advantages our systems offer. Collectively, our strengths and successes reinforce our mutual interests.
I welcome your ideas on how we can help each other move our industry forward. For instance, in our Government Relations Forum, we hope to mobilize member resources in a more unified and effective advocacy effort to address coming energy and climate legislation and other policy challenges. Now is the time to raise our voice and our collective profile. Now is the time to tell your congressman to support investment in U.S. energy infrastructure. This will not happen overnight but it is time we woke up from the bad dream of continued dependence on fossil fuel and looked ahead to a new day of cleaner, more efficient CHP and district energy.
#2010 #PresidentQuarterlyMessage #Q3