Clean Energy Standard: Potential Qualifying Energy Sources
Congressional research reportMay 16, 2012
Ask Donna
What actually matters in this document.
Text
Clean Energy Standard: Potential Qualifying
Energy Sources
-name redacted-, Coordinator
Specialist in Agricultural Conservation and Natural Resources Policy
-name redactedSpecialist in Energy Policy
-name redactedSpecialist in Energy and Natural Resources Policy
-name redactedSpecialist in Energy Policy
-name redactedSpecialist in Energy Policy
-name redactedSpecialist in Energy Policy
May 16, 2012
Congressional Research Service
7-....
www.crs.gov
R41797
CRS Report for Congress
Prepared for Members and Committees of Congress
Clean Energy Standard: Potential Qualifying Energy Sources
Summary
A clean energy standard (CES) has been identified as one possible legislative option to encourage
a more diverse domestic electricity portfolio. A CES could require certain electricity providers to
obtain a portion of their electricity from qualifying clean energy sources. A CES is broader than a
renewable energy standard (RES), including “clean” energy sources along with renewable
sources. The RES has been a topic of legislative attention since at least the 105th Congress. A CES
gained legislative attention with the introduction of the Clean Energy Standard Act of 2012 (S.
2146). The bill would require large utilities to sell a percentage of their electricity from clean
energy sources—at least 24% in 2015 and gradually increasing over time to 84% by 2035. Some
assert that a CES could lead to economic growth, reduce greenhouse gas emissions, and secure
U.S. leadership in clean energy technology. Others argue that it could raise electricity prices,
necessitate additional financial investment in grid infrastructure, and—in some cases—depend on
energy technologies that are not yet established for widespread commercial-scale use.
Without a CES, some clean energy sources—mostly the renewables—may face barriers to
penetrating and gaining traction in the electricity market. Renewable sources (including
conventional hydroelectric) constituted roughly 12% of total electric power net generation in
2011. Analysis from the Energy Information Administration (EIA) suggests that without a CES or
RES, electricity generation for renewable sources (including conventional hydroelectric) will
grow from 10% in 2010 to 16% in 2035. EIA analysis indicates that most of the growth in
renewable electricity generation, excluding hydroelectricity, in the power sector from 2010 to
2035 will consist of generation from wind and biomass facilities.
Policy, economic, and technical considerations arise when evaluating CES options. A primary
question in the CES legislative discussion is which energy sources would be eligible to
participate. Congress could take into account the following clean energy source selection criteria:
geographic location of the energy source, energy source supply levels, job creation associated
with the energy source, the implementation time frame, environmental regulations (existing and
forthcoming), and cost. Each potential qualifying energy source has advantages and
disadvantages, and has different natural resource, economic, and technical challenges. For
instance, the cost to build, operate, and maintain clean energy power plants varies widely, from
$63 (natural gas advanced combined-cycle) to $312 (solar thermal) per megawatt-hour.
Moreover, some of the sources proposed have encountered public opposition (e.g., nuclear
energy). Many proposed sources (e.g., solar) have received government support in the form of
research and development assistance or favorable tax treatment. In some cases, the technology
that might allow certain sources to qualify for a CES is not yet at commercial scale (e.g., coalfired plants equipped with carbon capture and sequestration). Cross-cutting issues including
electricity transmission, variability, and material cost and supply are associated with large-scale
electricity production for many of the commonly discussed clean energy sources.
Many questions will need to be answered if a CES is established. How much clean electricity can
be generated from each qualifying energy source, given the proposed CES time frame? Should a
carbon accounting parameter be assigned to each source? Will a time come when some resources
(e.g., wind, solar) used to generate clean electricity cease to be considered a “free” resource?
Should energy efficiency be included in a CES, and if so, how should it be included? How would
a CES interact with state renewable electricity requirements? Who would assume the costs of new
transmission capacity?
Congressional Research Service
Clean Energy Standard: Potential Qualifying Energy Sources
Contents
Introduction...................................................................................................................................... 1
Clean, Renewable, Alternative—What Is the Difference? .............................................................. 3
Possible Selection Criteria for CES Energy Resources ................................................................... 4
Potential Supply-Side CES Qualifying Energy Resources .............................................................. 4
Issues Applicable to All Clean Energy Resources..................................................................... 4
Biomass ..................................................................................................................................... 5
Fossil Fuels Qualifying as Clean Energy................................................................................... 7
Natural Gas Combined-Cycle ............................................................................................. 7
Clean Coal........................................................................................................................... 8
Geothermal Resources............................................................................................................. 10
Nuclear .................................................................................................................................... 12
Solar......................................................................................................................................... 14
Water........................................................................................................................................ 16
Wind ........................................................................................................................................ 18
Potential Demand-Side Source: Energy Efficiency ....................................................................... 19
CES Legislative Initiatives in the 112th Congress.......................................................................... 22
S. 1220..................................................................................................................................... 22
S. 2146..................................................................................................................................... 22
Unresolved Issues .......................................................................................................................... 23
Figures
Figure 1. 2011 Electric Power Net Generation by Energy Source................................................... 2
Tables
Table 1. Estimated Levelized Cost of Selected New Generation Resources, 2016 ......................... 3
Contacts
Author Contact Information........................................................................................................... 24
Congressional Research Service
Clean Energy Standard: Potential Qualifying Energy Sources
Introduction
A clean energy standard (CES) has been proposed as a tool to provide a more sustainable
domestic energy supply, reduce greenhouse gas emissions, and secure the United States as a
leader in clean energy technology. Some assert that a CES could contribute to economic growth.
Opponents of a CES contend that a CES could raise electricity prices, introduce grid reliability
concerns, require significant investment in additional transmission lines, and depend on adopting
some technologies not yet established for widespread commercial-scale use. A CES could require
certain electricity providers to obtain a portion of their electricity from qualifying clean energy
sources. In his 2012 State of the Union address, President Obama challenged Congress to “set a
clean energy standard that creates a market for innovation.”1 A CES could be one approach if
Congress chooses to act. On March 21, 2011, Senators Bingaman and Murkowski issued a white
paper on a clean energy standard that laid out some of the key questions and potential design
elements of a CES, in order to solicit input from a broad range of interested parties, to facilitate
discussion, and to ascertain whether or not consensus can be achieved.2 On March 1, 2012,
Senator Bingaman introduced the Clean Energy Standard Act of 2012 (S. 2146), which would
require large utilities to sell a percentage of their electricity from clean energy sources—at least
24% in 2015 and gradually increasing over time to 84% by 2035.
The CES expands on the concept of a national renewable energy standard (RES), an idea that has
received significant congressional attention. An RES would encourage the production of
electricity from renewable resources.3 RES legislative discussions date back to at least the 105th
Congress. A CES expands qualifying energy sources to include other “clean” energy sources
(e.g., nuclear, natural gas, clean coal) along with renewable energy sources (e.g., wind, solar).
Any CES would need to define which energy sources would qualify as “clean.”
The bulk of electricity generation in 2011 was from coal, natural gas, and nuclear (see Figure 1).
Renewable sources constituted roughly 12% of total electric power net generation in 2011
(including conventional hydroelectric). Analysis from the Energy Information Administration
(EIA) that does not include the addition of a federal RES or CES suggests that electricity
generation from renewable sources (including conventional hydroelectric) will grow from 10% in
2010 to 16% in 2035.4 EIA analysis indicates that most of the growth in renewable electricity
generation in the power sector, excluding hydroelectricity, from 2010 to 2035 will consist of
generation from wind and biomass facilities.
Multiple features of a CES may require congressional action.5 Eligible energy sources would
likely be among the topics at the forefront of a CES debate; at stake is what resources could and
could not participate in a CES. Each energy source has advantages and disadvantages, and each
brings different natural resource, economic, and technical challenges. For example, the cost to
1
U.S. President (Obama), “State of the Union 2012,” January 24, 2012. In the State of the Union 2011, President
Obama challenged the country to produce 80% of its electricity from clean energy sources by 2035.
2
Paper available at http://energy.senate.gov/public/index.cfm?FuseAction=IssueItems.View&IssueItem_ID=
7b61e406-3e17-4927-b3f4-d909394d46de.
3
Renewable resources are those generally not depleted by human use, such as the sun, wind, and movement of water.
4
U.S. Energy Information Administration, AEO2012 Early Release Overview, DOE/EIA-0383ER, January 23, 2012,
http://www.eia.gov/forecasts/aeo/er/.
5
For more information on clean energy standards, see CRS Report R41720, Clean Energy Standard: Design Elements,
State Baseline Compliance and Policy Considerations, by (name redacted). For more information on a federal RES, see
CRS Report R41493, Options for a Federal Renewable Electricity Standard, by (name redacted).
Congressional Research Service
1
Clean Energy Standard: Potential Qualifying Energy Sources
build clean energy projects and operate and maintain them is expected to vary (see Table 1).
Additionally, sources for supply-side energy options are dependent on regional resources; energy
efficiency is a demand-side source that is available everywhere because it is derived from power
consumption locations—not from natural resource geography. Congress might consider these
factors, among others such as how a federal CES would interact with state power provisions, in
determining which energy sources would be eligible for a CES.
This report begins with a brief examination of clean energy, renewable energy, and alternative
energy. It then presents possible selection criteria Congress could use to determine which sources
could be eligible for a CES depending on the goal(s) of the CES. The report provides an overview
of the energy sources most commonly discussed as potential CES qualifying sources: biomass,
fossil fuels (natural gas combined-cycle and coal-fired power plants with carbon capture and
sequestration), geothermal resources, nuclear, solar, water, and wind. The report describes where
each source can be found in the United States, the estimated quantity available for electricity
generation, technologies used to create electricity from the source, advantages and disadvantages
of using the source for electricity generation, and policy implications should the source be
included in a CES.6 The report also contains a section on energy efficiency and its potential
inclusion in a CES.
Figure 1. 2011 Electric Power Net Generation by Energy Source
(4,105,734 thousands of megawatt-hours total)
Source: U.S. Energy Information Administration, Electric Power Monthly, December 2011,
http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html. Adapted by CRS.
Notes: Coal includes anthracite, bituminous, subbituminous, lignite, waste coal, and coal synfuel. Petroleum
liquids include distillate fuel oil, residual fuel oil, jet fuel, kerosene, and waste oil. Other gases include blast
furnace gas, propane gas, and other manufactured and waste gases derived from fossil fuels. Other includes nonbiogenic municipal solid waste, batteries, chemicals, hydrogen, pitch, purchased steam, sulfur, tire-derived fuel,
and miscellaneous technologies. Wood and wood-derived fuels include wood/wood waste solids (including paper
pellets, railroad ties, utility poles, wood chips, bark, and wood waste solids), wood waste liquids (red liquor,
sludge wood, spent sulfite liquor, and other wood-based liquids), and black liquor. Other biomass includes
biogenic municipal solid waste, landfill gas, sludge waste, agricultural byproducts, other biomass solids, other
biomass liquids, and other biomass gases (including digester gases, methane, and other biomass gases).
6
This report will generally identify electric supply (megawatt-hours). In a few instances (e.g., geothermal resources)
only capacity (megawatt) estimates are available.
Congressional Research Service
2
Clean Energy Standard: Potential Qualifying Energy Sources
Table 1. Estimated Levelized Cost of Selected New Generation Resources, 2016
(U.S. average levelized cost [2009 $/megawatt-hour] for plants entering service in 2016)
Plant Type
Capacity Factor (%)
Total System Levelized Cost
Conventional Coal
85
94.8
Advanced Coal
85
109.4
Advanced Coal with CCS
85
136.2
Conventional Combined-cycle
87
66.1
Advanced Combined-cycle
87
63.1
Advanced Combined-cycle with CCS
87
89.3
Advanced Nuclear
87
113.9
Wind
34
97.0
Solar PVa
25
210.7
Solar Thermal
18
311.8
Geothermal
92
101.7
Biomass
83
112.5
Hydro
52
86.4
Natural Gas-fired
Source: DOE Energy Information Administration, Levelized Cost of New Generation Resources in the Annual Energy
Outlook 2011, Annual Energy Outlook 2011, December 2010, http://www.eia.doe.gov/oiaf/aeo/
electricity_generation.html. Adapted by CRS.
Notes: Levelized cost represents the present value of the total cost of building and operating a generating plant
over an assumed financial life and duty cycle, converted to equal annual payments and expressed in terms of real
dollars to remove the impact of inflation. Levelized cost reflects overnight capital cost, fuel cost, fixed and
variable O&M cost, financing costs, and an assumed utilization rate for each plant type.
a.
Costs are expressed in terms of net AC power available to the grid for the installed capacity.
Clean, Renewable, Alternative—What Is the
Difference?
Clean energy, renewable energy, alternative energy—these terms have been used interchangeably.
However, they are not synonymous, although one term can encompass another. The terms differ
with respect to an energy source’s point of origin (e.g., fossil or non-fossil), replenishment time
frame (e.g., instantaneously or millions of years), supply (e.g., exhaustible or inexhaustible), and
environmental impact (e.g., greenhouse gas emissions and other pollutants), among other
qualities. In general, a renewable energy source is naturally replenishing but flow-limited.7 A
clean energy source is typically a source that produces little to no air pollution. The term
“alternative” usually describes a non-conventional energy source. Most but not all renewable
energy sources qualify as clean energy, depending on how electricity is produced from the source.
Some clean energy sources (e.g., nuclear) are not generally considered renewable.
7
The Energy Information Administration states that renewable energy resources are virtually inexhaustible in duration
but limited in the amount of energy that is available per unit of time.
Congressional Research Service
3
Clean Energy Standard: Potential Qualifying Energy Sources
Possible Selection Criteria for CES Energy
Resources
Potential CES energy source selection criteria could depend on the goal of a CES. While a CES
generally would have the basic goal of producing a significant portion of electricity from clean
energy sources, the reasoning behind this goal could influence which sources are selected. In
evaluating individual energy sources for possible inclusion, Congress might consider the
following criteria:8 geographic location of the energy source, energy source supply levels, job
creation associated with the energy source, implementation time frame, EPA regulations (existing
and forthcoming), environmental issues (air quality, water quality, water quantity, wildlife),
greenhouse gas emissions, baseload versus non-baseload, energy balance,9 energy content,10 land
use change, scalability, and cost.
Potential Supply-Side CES Qualifying Energy
Resources
This section discusses selected energy resources that are commonly identified as potential
qualifying sources for a CES.11 Each overview describes where the source can be found in the
United States, how much is estimated to be available for electricity generation, the technologies
used to create electricity from the identified source, advantages and disadvantages of using the
source for electricity generation, and policy implications. Potential resources are renewable (e.g.,
wind) or technology-aided (e.g., fossil fuels). The energy resources may include biomass, clean
energy fossil fuels, geothermal resources, nuclear, solar, water, and wind.12
Issues Applicable to All Clean Energy Resources
A number of cross-cutting issues are associated with large-scale electricity production for many
or all of the clean energy sources:13
•
Technology. For certain energy sources, technology to capture the resource and
generate electric power is likely to require significant upgrading and financial
investment.
8
The criteria are not presented in any order of priority. The criteria presented are not a complete list, but are provided
to give an indication of the range of policy options.
9
Energy balance is the difference between the total incoming and total outgoing energy of a clean energy production
system.
10
Energy content is the amount of energy contained in a given mass of a source.
11
An explanation of every proposed clean energy source is beyond the scope of this report.
12
Overviews for landfill gas, coal-mine methane, and waste-to-energy—three other potential qualifying CES energy
sources—are not provided in this report. The captured gas from landfills and coal mines can be used to generate
electricity. For more information on this process, see CRS Report R40813, Methane Capture: Options for Greenhouse
Gas Emission Reduction, by (name redacted) et al. Waste-to-energy is the combustion of municipal solid waste for
electricity production.
13
The issues are not presented in any order of priority.
Congressional Research Service
4
Clean Energy Standard: Potential Qualifying Energy Sources
•
Electricity Transmission. In some cases, the energy source is located a
considerable distance from where the electricity is needed. Transmission lines
may have to be constructed to transmit the electricity from its point of origin to
its point of use. This raises concerns not only for capital investment, but also
siting issues.
•
Variability. Electricity generated from certain sources (e.g., wind, solar) is
variable; it is subject to acts of nature, and is not always available. This may
affect grid stability if sufficient back-up generation is not available.
•
Project economics. It may be cost-prohibitive to embark on certain clean
electricity investments if the rate-of-return on the investment is not favorable.
The rate-of-return is likely to vary across the United States, depending on source
availability and regional market prices among other things.
•
Material cost and supply. Certain clean electricity projects may require
expensive or scarce amounts of raw materials. Use of these materials for
electricity generation may have an impact on other markets that rely on the same
materials.
Biomass14
Biomass is organic matter that can be converted to energy. Common types of biomass are wood,
wood residues (e.g., branches), agricultural biomass (e.g., corn stover), aquatic biomass (e.g.,
algae), animal manure, and industrial biomass wastes. Relative to other locations in the United
States, large quantities of biomass have been identified east of the Rocky Mountains, and in the
Northwest, Alaska, and Hawaii.15 Biomass can be converted to electricity (biopower) by either a
thermochemical or a biochemical conversion process. Biopower conversion processes include
combustion, co-firing, gasification, pyrolysis, and anaerobic digestion. The technologies are at
varying stages of maturity.16
Approximately 1.4% of electricity generation in 2011 originated from biomass.17 Biopower was
the third-largest renewable energy source for electricity generation (following conventional
hydroelectric power and wind).18 The EIA estimates that electricity generation for all sectors from
biomass will grow 5.6% from 2009 to 2035, and its contribution to the total U.S. electric power
capacity will be 0.5% in 2035.19
14
This section was written by (name redacted).
For a map of biomass resources available throughout the United States, see Figure 1 in CRS Report R41106, Meeting
the Renewable Fuel Standard (RFS) Mandate for Cellulosic Biofuels: Questions and Answers, by (name redacted). For
an estimate of how much biomass (tons/year) is available for biopower production at the county level, see the National
Renewable Energy Laboratory BioEnergy Atlas for Biopower http://maps.nrel.gov/bioenergyatlas.
16
For more information on biopower conversion technologies, see CRS Report R41440, Biomass Feedstocks for
Biopower: Background and Selected Issues, by (name redacted).
17
U.S. Energy Information Administration, Electric Power Monthly, December 2011, http://www.eia.doe.gov/cneaf/
electricity/epm/epm_sum.html.
18
Biopower includes electricity generated from wood and wood-derived fuels and biogenic municipal solid waste,
landfill gas, sludge waste, agricultural byproducts, other biomass solids, other biomass liquids, and other biomass gases
(including digester gases, methane, and other biomass gases). U.S. Energy Information Administration, Electric Power
Monthly, December 2011, http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html.
19
Energy Information Administration, Annual Energy Outlook 2011, April 2011, http://www.eia.doe.gov/forecasts/aeo/
(continued...)
15
Congressional Research Service
5
Clean Energy Standard: Potential Qualifying Energy Sources
There are advantages and disadvantages to pursuing biomass for electricity generation under a
CES.20 Proponents of using biomass point out that various types of biomass are available in more
than 35 states for electricity generation. In addition, they suggest that a CES would establish
another market for biomass producers to sell their product,21 and that it would serve as an
economic incentive to remove and use pest-infested woody biomass for electricity generation.
Also, some biomass feedstocks can be used for baseload power production (minimum amount of
electric power delivered or required over a given period of time at a steady rate), unlike wind or
solar, which are variable resources. Some suggest that biomass use may be unsustainable, or that
biomass combustion could increase carbon emissions.22 If it is economically advantageous to use
biomass for electricity generation, some contend, less biomass will be available for traditional
purposes. In particular, some are concerned there may not be enough biomass to meet both liquid
transportation fuels and electricity needs under a CES.23
The natural resource implications of using biomass will depend on management of the sources
from which it originates. For example, woody residues are more likely to remain available if
woodlands are sustainably managed. The following policy questions might arise when
considering biomass as a qualifying CES energy source:
•
Will agricultural producers continue to receive support from the federal
government to grow certain crops if a CES is established? Some agricultural
producers receive financial assistance from the federal government to grow select
crops (e.g., corn). In certain cases, these same producers could sell the residues of
these crops for electricity generation to meet a CES mandate.
•
Will the inclusion of biomass as a qualifying CES source conflict with other
energy mandates? The Renewable Fuel Standard (RFS) is a liquid
transportation fuels mandate that drives demand for some of the same biomass
feedstocks used for electricity generation.
•
Will the CES be economically competitive for those entities that require
feedstock collection and transportation? Some biomass is located in areas that
are difficult to reach. Would-be participants may demand that a CES offer a price
that will compensate them for feedstock collection and transportation efforts.
•
Will the CES include biomass-to-thermal applications? While discussions
about a CES have focused on energy in the form of electricity, some assert that
the standard could be broadened to include other non-electric energy applications
(...continued)
index.cfm.
20
For more information on the advantages and disadvantages of using biomass for electricity generation, see CRS
Report R41440, Biomass Feedstocks for Biopower: Background and Selected Issues, by (name redacted) and CRS
Report R40565, Biomass Resources: The Southeastern United States and the Renewable Electricity Standard Debate,
by (name redacted).
21
For example, forestry residues from timber cuttings for sawmill and paper operations currently remain in the forest or
on wooded lots. It is argued that these residues could be used as a biopower feedstock.
22
For more information on the carbon neutrality of biopower, see CRS Report R41603, Is Biopower Carbon Neutral?,
by (name redacted).
23
For more information on biomass used to meet the Renewable Fuel Standard, a mandate whereby a minimum
volume of biofuels is to be used in the national transportation fuel supply each year, see CRS Report R40155,
Renewable Fuel Standard (RFS): Overview and Issues, by (name redacted) and (name redacted).
Congressional Research Service
6
Clean Energy Standard: Potential Qualifying Energy Sources
such as space and domestic water heating, process heat, and the thermal portion
of combined heat and power.
Fossil Fuels Qualifying as Clean Energy
Natural Gas Combined-Cycle24
Natural gas, predominantly methane, is present throughout all 50 states in various forms, and is
commercially produced in 33 states.25 The recent development of large shale-gas resources has
increased U.S. reserves and production, and has contributed to a steep drop in natural gas prices.
Possible changes in government regulations regarding hydraulic fracturing—in part due to local
opposition—raise uncertainty about future development of the resource. All 50 states consume
natural gas, as vast pipeline networks transport the fuel around the country and within states.26
Natural gas is used for electric power generation in 48 states (all but Hawaii and Vermont),27 and
natural gas combined-cycle (NGCC) facilities—among the most efficient combustion
technologies for natural gas—are in 40 states.28 This highlights the role of natural gas in electric
generation throughout the United States. Natural gas ranked second behind coal as the largest fuel
source for U.S. electricity generation in 2011, accounting for almost 25% of U.S. generation.29
Natural gas has the most electric generation capacity in the United States, approximately 41%,
with NGCC facilities accounting for about half.30 However, many natural gas power plants are
not operated at capacity. While coal-fired electric generation plants operate on average at 64% of
their maximum generation capacity, NGCC facilities operate at only 43% of their capacity.31 This
is due both to the relative prices of natural gas and coal, and to the flexibility of NGCC facilities,
which can be shut down and restarted (i.e., “cycled”) depending on economic conditions. Coal
plants are difficult to cycle and thus are less able to respond to economic factors and demand
fluctuations.
With respect to a CES, NGCC facilities have certain advantages over other fuel sources. NGCC
power plants display the highest efficiency in converting thermal energy to electric energy and
can be installed quickly and cheaply relative to other generation types. NGCC facilities can
provide operational flexibility and can offer baseload or peak generation. Additionally, the almost
24
This section was written by (name redacted).
The United States has the sixth-largest natural gas reserves globally and was first in production worldwide in 2009.
The United States was the largest consumer of natural gas in 2009, with domestic sources supplying over 90% of this
usage. BP Statistical Review of World Energy 2010, http://www.bp.com/subsection.do?categoryId=9023762&
contentId=7044550.
26
The United States uses over 300,000 miles of transmission pipeline to move natural gas to markets in all 50 states.
Natural gas is distributed to customers by pipeline as well, but these pipelines are in addition to the transmission
pipelines.
27
Vermont does use landfill gas to produce electricity.
28
Combined-cycle electric generation burns fuel, most commonly natural gas, in a natural gas turbine, which turns a
generator to produce electricity. The exhaust heat from this process is then used to turn a steam turbine, which turns a
generator to produce additional electricity. The alternative to combined cycle is simple cycle, which only uses one
turbine to produce electricity and the exhaust heat is not captured to produce electricity.
29
U.S. Energy Information Administration. http://www.eia.doe.gov/cneaf/electricity/epm/table1_1.html.
30
U.S. Energy Information Administration. http://www.eia.doe.gov/cneaf/electricity/epa/epat1p2.html.
31
U.S. Energy Information Administration, http://www.eia.doe.gov/cneaf/electricity/epa/epat5p2.html.
25
Congressional Research Service
7
Clean Energy Standard: Potential Qualifying Energy Sources
50% decline in 2011 natural gas prices for electric generation from their peak in 2008 has led
utilities and generators to substitute natural gas-fired electric generation for other generation
types.32 Spot natural gas prices are down even more in 2012.33
Relative to coal and oil, natural gas—whether in NGCC or simple cycle—produces fewer
greenhouse gas emissions (almost 40% less carbon dioxide) and other pollutants, including
carbon dioxide, nitrogen oxides, sulfur dioxide, and particulate matter.34 However, natural gas
still emits greenhouse gases. Methane (CH4), the main component of natural gas, is a potent
greenhouse gas when released into the atmosphere, but is not emitted in the electricity generation
process. When combusted, natural gas produces nitrogen oxides and carbon dioxide, but in lower
quantities than would occur burning oil or coal.
The following policy questions could arise when considering natural gas as a qualifying CES
energy source:
•
Does the United States have enough natural gas to devote to a CES?
Development of shale gas will be critical for the long-term use of natural gas.
With prices as low as they are currently, some companies have proposed and
applied for permits to export natural gas as a way to increase demand.
Environmental concerns regarding water and air may limit development of shale
gas resources.
•
Will the inclusion of natural gas as a qualifying CES energy source conflict
with other energy mandates? Natural gas qualifies as an alternative fuel under
various programs targeting the transportation sector.
•
Will including natural gas as a CES energy source have negative
consequences for other consumers of natural gas? Increased demand from
inclusion in a CES could put upward pressure on natural gas prices. Natural gas
is used in industrial manufacturing and residential heating, both of which would
be negatively affected by a rise in prices. However, increased demand could also
make some additional natural gas resources economic to develop. Some
producers have stopped production because of low prices during the last two
years.35
Clean Coal36
There has been considerable discussion about including clean coal (coal-fired power plants
equipped with carbon capture and sequestration) as a qualifying energy source for a CES.37 Coal
was the largest fuel source for electricity generation in 2011, accounting for nearly 42% of U.S.
32
U.S. Energy Information Administration, http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm.
U.S. Energy Information Administration, Natural Gas Spot and Futures Prices (NYMEX), http://www.eia.gov/dnav/
ng/hist/rngwhhdd.htm.
34
Environmental, Health, and Safety Guidelines for Thermal Power Plants, International Finance Corporation, World
Bank Group. December 19, 2008, pp. 8 and 23.
35
“Exxon not shutting N. American gas wells,” Reuters, October 28, 2010.
36
This section was written by (name redacted).
37
For more information, see CRS Report RL34621, Capturing CO2 from Coal-Fired Power Plants: Challenges for a
Comprehensive Strategy, by (name redacted) and (name redacted).
33
Congressional Research Service
8
Clean Energy Standard: Potential Qualifying Energy Sources
generation.38 U.S. coal deposits are mainly in three large regions: the Appalachian Coal Region,
the Interior Coal Region, and the Western Coal Region.39 Coal is mined in 25 states. The top coalproducing states are Wyoming, West Virginia, Kentucky, Pennsylvania, and Montana. In 2009,
about 5.5% of coal produced in the United States was exported, over half to Canada, Brazil, the
Netherlands, the United Kingdom, and France. At the same time, 2.3% of coal consumed in the
United States (mainly barged to the Gulf and east coast states) is imported, primarily from
Colombia.
Carbon capture and sequestration (or storage)—known as CCS—involves capturing carbon at its
source, transporting and storing it to prevent or minimize its release to the atmosphere. Currently,
three main approaches are available to capture CO2 from large-scale industrial facilities or power
plants: post-combustion capture, pre-combustion capture, and oxy-fuel combustion capture. After
capture, the next step is transportation. Most CO2 transport in the United States is through
pipelines. The last step is sequestration in geological reservoirs. Three main types of geological
formations are being considered for carbon sequestration: depleted oil and gas reservoirs, deep
saline reservoirs, and unmineable coal seams.
Coal-fired electricity-generating plants are strong initial candidates for CCS or reuse of CO2
because they are usually large, stationary, single-point sources of emissions.40 According to the
Environmental Protection Agency, the United States produces over 5.1 billion metric tons of CO2
each year from fossil fuel combustion over the past six years, and in 2010 nearly 42%, or 2.26
billion metric tons, of that was from generating electricity.41 The United States can potentially
store CO2 for decades or longer at current emission rates from power plants and other stationary
sources. According to the Department of Energy (DOE), storage estimates range from 1.65
trillion to 20.2 trillion metric tons for deep saline reservoirs, the geological formation with the
highest potential for long-term CO2 storage.42 If these estimates are correct, then the United States
has the capacity to store all of its emissions from electricity generation for the next 770 to 9,400
years in saline reservoirs at current emission rates.
Questions to consider about CCS as a qualifying source for a clean energy standard include the
following:
•
Can CCS be a long-term component of a CES portfolio? Using CCS to limit
CO2 emissions to the atmosphere is widely perceived as a medium-term option,
allowing continued use of coal to generate electricity until less carbon-intensive
technologies can substitute at an equivalent cost. Adding CCS to coal-fired
38
U.S. Energy Information Administration, Net Generation by Energy Source: Total (All Sectors), Electric Power
Monthly, December 2011, http://www.eia.doe.gov/cneaf/electricity/epm/table1_1.html.
39
U.S. Energy Information Administration, Annual Coal Report 2009, DOE/EIA-0584, October 2010,
http://www.eia.doe.gov/cneaf/coal/page/acr/acr_sum.html.
40
Large industrial facilities, such as cement-manufacturing, ethanol, or hydrogen production plants, that produce large
quantities of CO2 as part of the industrial process are also good candidates for CO2 capture and storage.
Intergovernmental Panel on Climate Change (IPCC) Special Report, Carbon Dioxide Capture and Storage, 2005.
41
U.S. Environmental Protection Agency (EPA), Draft Inventory of U.S. Greenhouse Emissions and Sinks: 1990-2010,
Table ES-3, February 2012, http://epa.gov/climatechange/emissions/downloads12/Executive%20Summary.pdf.
42
Department of Energy, Carbon Sequestration Atlas of the United States and Canada, 3rd edition, 2010.
http://www.netl.doe.gov/technologies/carbon_seq/refshelf/atlasIII/index.html.
Congressional Research Service
9
Clean Energy Standard: Potential Qualifying Energy Sources
generation, however, reduces the efficiency of the plants and increases the cost to
produce electricity, especially during the capture step.43
•
Will inclusion of CCS as a qualifying CES source spur the adoption and
deployment of CCS in the energy sector? Without an economic incentive or a
regulatory requirement to install CCS at existing power plants or to build new
plants with CCS, it is unlikely that CCS would be deployed commercially, unless
its costs decrease dramatically. In addition to the cost of capture, the legal and
regulatory framework for storing CO2 underground is under development.
•
At what stage of research, development, and deployment is CCS? Many
experts call for a series of industrial-scale CCS projects to demonstrate how CO2
can be captured, transported, and stored safely and efficiently in a variety of
environments throughout the United States and how costs, decreases in
efficiency, and transportation issues might be managed.
Geothermal Resources44
Geothermal resources are found where circulating groundwater contacts the heated rocks near the
Earth’s surface, and where the resulting hot fluid can potentially be exploited for heat or
electricity. To generate electricity, wells are drilled into the geothermal resource to extract the hot
water or steam, which is then used to drive a turbine. In general, geothermal resources above
150oC (300oF) are used for electricity generation.45 Resources below 150oC are typically used for
direct heating.
The United States is the largest producer of electricity from geothermal resources, with 2,382
megawatts (MW) of net installed capacity in 2009 (0.2% of total net summer electric generating
capacity in 2008).46 The size of individual geothermal power plants ranges from small (less than 5
MW) to large (greater than 30 MW). Most of the installed capacity is in California and Nevada,
with additional capacity in Hawaii, Utah, Idaho, and Alaska. The Geysers, comprising 45 square
miles in northern California, contains a large geothermal complex with multiple power plants and
over 300 steam wells; these facilities account for most of the electricity generated from
geothermal resources in California, and a large share of the U.S. installed capacity.
In a 2008 assessment of U.S. geothermal resources, the U.S. Geological Survey estimated that the
mean electric power generation potential from identified geothermal systems is slightly over
9,000 MW, distributed over 13 states.47 California has nearly 60% of the identified geothermal
resource base, followed by Nevada (15%) and Alaska (7.5%). The USGS also indicated that
43
For detailed CCS cost estimates, see CRS Report R41325, Carbon Capture: A Technology Assessment, by (name
redacted).
44
This section was written by (name redacted).
45
Lund, John W., “Characteristics, Development and Utilization of Geothermal Resources,” Geo-Heat Center
Quarterly Bulletin, vol. 28, no. 2 (2007), p. 1.
46
U.S. Department of Energy, Energy Information Administration, http://www.eia.gov/renewable/annual/pdf/
table1_12.pdf. The U.S. Geological Survey cites a slightly higher number: 2,500 MW of installed and utilized power
production capacity; USGS Fact Sheet 2008-3082, http://pubs.usgs.gov/fs/2008/3082/pdf/fs2008-3082.pdf.
47
USGS Fact Sheet 2008-3082.
Congressional Research Service
10
Clean Energy Standard: Potential Qualifying Energy Sources
undiscovered geothermal resources could add over 30,000 MW of potential production capacity
from public and private lands.48
A different category of geothermal resource, called enhanced geothermal systems (EGS), further
adds to the nation’s potential geothermal resource base. EGS require some form of engineering to
drill down to high temperature zones to access the hot water or steam and recover the heat to
generate electricity. Conventional geothermal systems take advantage of naturally circulating hot
water and steam. Enhanced geothermal systems require elevated temperatures at drillable depths,
which expands the potential resource base outside the boundaries of conventional geothermal
resources but also increases the technical difficulty to harness the resource. Assuming that EGS
technology is feasible, the USGS estimated that the mean electric power-generating capacity from
EGS could be over 517,000 MW.49
Future exploitation of these resources depends in part on their nature compared to other sources
of energy. A potential advantage of geothermal resources is that, in contrast to fossil fuel energy
resources, the heat from geothermal fluids may be used without combustion, thus avoiding
releases of carbon dioxide and other waste gases. A possible disadvantage involves the
accessibility of geothermal resources. Geothermal plants must be built at the resource site, and are
thus limited to locations where geothermal resources occur in the United States. By contrast,
while proximity to the fuel source is considered in determining the economic viability of a fossilfuel power plant, fossil fuels like coal and natural gas can be transported to the plant site; thus
conventional plants may be built almost anywhere in the United States.
Other policy questions in considering geothermal resources for a CES include the following:
•
If geothermal is included in a CES portfolio, what other factors may affect
its expansion and deployment as a source of energy for electricity
generation? Similar to mineral and energy resource development, geothermal
resources need to be discovered and characterized, and the reservoir itself
engineered and managed to most efficiently extract its energy. That process can
require significant investment and long lead times before any electricity is
actually produced. Factors such as accessibility, distance to electricity consumers,
the presence of adequate supplies of cooling water, and other site-specific factors
affect the economic and regulatory (e.g., transmission siting) viability of the
resource.
•
At what stage of research, development, and deployment are enhanced
geothermal systems? Enhanced geothermal systems (EGS) could expand the
potential geothermal resource geographically, but require large engineering and
infrastructure investments that so far constitute an unproven technology. Key
technical challenges must be met for EGS to succeed, such as creating an
efficient closed-loop system and limiting the amount of fluid loss.50 In addition,
48
Ibid.
The USGS cautions that this estimate should be considered provisional, as EGS technology is in an early stage of
development. The total electric generating capacity for the electric power sector (power only) in 2010 was
approximately 989.2 gigawatts. EIA, Energy Information Administration, Annual Energy Outlook 2012, Early Release,
Data Table A9, January, 23, 2012, http://www.eia.gov/forecasts/aeo/er/.
50
MIT, The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the
21st Century, 2006, http://geothermal.inel.gov/publications/future_of_geothermal_energy.pdf.
49
Congressional Research Service
11
Clean Energy Standard: Potential Qualifying Energy Sources
water resources for EGS may be constrained in the more arid portions of the
country. The role of the federal government in advancing EGS technology is an
ongoing question.
Nuclear51
Nuclear energy results from the fission (splitting) of the nuclei of heavy radioactive isotopes,
such as uranium-235 and plutonium-239, in a nuclear reactor.52 The United States has 104
licensed commercial nuclear reactors that generated about 19% of U.S. electricity in 2011.53
Nuclear power plants are the largest U.S. source of non-carbon-emitting electricity generation,
although some carbon is emitted during the production of nuclear fuel.
U.S. nuclear reactors are fueled by enriched uranium (uranium with an increased proportion of
uranium-235). About 8% of the uranium purchased by U.S. reactor operators in 2010 came from
domestic sources,54 with most foreign supplies typically coming from Australia, Canada, and
Russia.55 Using the classification system of the International Atomic Energy Agency, worldwide
reasonably assured uranium resources are estimated to equal about 80 years of current annual
consumption.56 Some countries, particularly France, are reprocessing and recycling spent fuel
from nuclear reactors to modestly extend uranium supplies. Research on technologies that could
extend uranium supplies much further is being conducted by DOE and in several other countries.
A major concern about such technology is that it may encourage the production of material that
could be used in nuclear weapons.
Growth in U.S. nuclear power generation is expected to be small without favorable federal
policies, such as carbon controls or a CES that includes nuclear energy. EIA projects that under
current policies, U.S. nuclear power generating capacity will rise from 101 gigawatts in 2009 to
112 gigawatts in 2035, with the increase coming from a combination of new reactor construction
and increased capacity at existing reactors.57 One new power reactor is currently under
construction in the United States, the Watts Bar 2 reactor owned by the Tennessee Valley
Authority. Construction of Watts Bar 2 began in the 1970s but had been suspended until recently.
The Nuclear Regulatory Commission (NRC), on February 9, 2012, approved the first licenses to
build new U.S. commercial reactors since the 1970s, for two new units at the Vogtle nuclear
power plant in Georgia. License applications for as many as 18 additional reactors are still
51
This section was written by (name redacted).
For more information on nuclear energy policy, see CRS Report RL33558, Nuclear Energy Policy, by (name redacted).
53
U.S. Energy Information Administration (EIA), “Net Generation by Energy Source: Total (All Sectors),”
http://www.eia.doe.gov/cneaf/electricity/epm/table1_1.html.
54
EIA, “Uranium Purchased by Owners and Operators of U.S. Civilian Nuclear Power Reactors,” May 31, 2011,
http://www.eia.gov/uranium/marketing/html/summarytable1.html.
55
EIA, “Uranium Purchased by Owners and Operators of U.S. Civilian Nuclear Power Reactors by Origin Country and
Delivery Year,” August 18, 2010, http://www.eia.gov/cneaf/nuclear/umar/table3.html.
56
World Nuclear Association, “Supply of Uranium,” September 2011, http://www.world-nuclear.org/info/inf75.html.
International Atomic Energy Agency, Classification of Uranium Reserves/Resources, 1998, http://www-pub.iaea.org/
MTCD/publications/PDF/te_1035_prn.pdf.
57
Energy Information Administration, Annual Energy Outlook 2012 Early Release Overview, “Electricity Generation,”
January 23, 2012 http://www.eia.gov/forecasts/aeo/er/early_elecgen.cfm.
52
Congressional Research Service
12
Clean Energy Standard: Potential Qualifying Energy Sources
pending before NRC,58 but several other proposed projects have been suspended or delayed, and
the number of reactors that will actually proceed to construction is unknown.
Along with low carbon and other emissions, a major advantage of nuclear power is its relative
invulnerability to volatile fuel prices. The cost of uranium is a small fraction of the total cost of
nuclear generation, unlike coal- and gas-fired plants, in which fuel is a major cost driver.
However, the cost of building nuclear power plants is higher than that of fossil-fuel plants,
placing new nuclear plants at an overall economic disadvantage, especially if natural gas prices
remain relatively low. EIA estimates that a new two-unit nuclear plant would cost $5,335 per
kilowatt of capacity (in 2010 dollars without interest), compared with $978 for a combined-cycle
natural gas plant and $2,844 for a two-unit advanced pulverized coal plant.59 Nuclear power is
also facing renewed scrutiny over safety in the wake of the March 2011 disaster at the Fukushima
Daiichi nuclear plant in Japan, and continued concern over storage and disposal of highly
radioactive spent fuel.
Following are some policy questions that arise when considering the expansion of nuclear power
in the context of a CES:
•
Would inclusion of existing nuclear power capacity in a CES encourage life
extension of existing reactors? Concerns have been raised about the safety of
older reactor designs, including those that are similar to the damaged Fukushima
reactors. NRC contends that no U.S. reactor would be permitted to keep
operating if it did not meet U.S. safety standards, regardless of any economic
incentives for continued operation.
•
How would an expansion of nuclear power affect the management of highly
radioactive waste? The Obama Administration has moved to halt further
development of the proposed national nuclear waste repository at Yucca
Mountain, Nevada. To develop an alternative waste management strategy, the
Administration established the Blue-Ribbon Commission on America’s Nuclear
Future, which issued its recommendation on January 26, 2012. Until a new
strategy can be implemented or the Yucca Mountain project is restarted, spent
nuclear fuel will continue to be stored at nuclear plant sites.
•
Could new nuclear fuel technology lead to the proliferation of nuclear
weapons? Advanced spent fuel reprocessing and reactor technologies could
greatly increase the amount of energy extracted from uranium supplies and
reduce the long-term radioactivity of nuclear waste. Such technologies are often
viewed as crucial for long-term expansion of nuclear power. However, such
technologies also raise concerns about the separation of weapons-useable
plutonium from spent fuel. A major goal of DOE nuclear research is to minimize
that problem. The spread of uranium enrichment technology also poses
proliferation concerns.
58
U.S. Nuclear Regulatory Commission, “Expected New Nuclear Power Plant Applications,” October 6, 2011,
http://www.nrc.gov/reactors/new-reactors/new-licensing-files/expected-new-rx-applications.pdf.
59
EIA, “Updated Capital Cost Estimates for Electricity Generation Plants,” November 2010, http://www.eia.gov/oiaf/
beck_plantcosts/.
Congressional Research Service
13
Clean Energy Standard: Potential Qualifying Energy Sources
Solar60
Solar energy, in the context of electricity generation potential, might be defined as radiation from
the sun that reaches the earth’s surface. Energy from the sun can be used for heat and electricity.
Converting solar energy into electricity is generally accomplished by capturing and converting
solar photons (photovoltaic), or capturing and converting heat from the sun (solar thermal).
Photovoltaic conversion typically uses semiconductor material (i.e., silicon) that absorbs photons
of a certain wavelength. Absorbed photons create electricity by dislodging electrons from the
semiconductor material. Electricity from this conversion process can be used at the generation
source or transmitted on the electrical grid to the areas of demand.61
Solar thermal electricity conversion (also known as concentrating solar power) typically uses heat
from the sun to generate electricity. Technologies used for solar thermal electricity generation
include parabolic trough, power tower, linear fresnel, and dish stirling technologies. Trough,
tower, and fresnel technologies typically use thermal energy from the sun to heat water and make
steam. The steam then powers a turbine generator, which in turn produces electricity. Dish stirling
technology typically does not require water for electricity production and instead relies on
thermal expansion properties of gases, usually hydrogen or helium, to mechanically power a
stirling engine.62
At the end of 2011, total solar electricity capacity in the United States was approximately 4,460
megawatts, up from 494 megawatts in 2000.63 U.S. electricity generation in 2011 from
photovoltaic and solar thermal technologies was approximately 1.8 million megawatt-hours,
which represented roughly 0.04% of total U.S. electricity generation.64 The majority of this
electricity generation came from photovoltaic solar systems.65 California, New Jersey, Arizona,
Massachusetts, and Pennsylvania are the top five states, in terms of total installed photovoltaic
capacity.66 Concentrated solar power (CSP), a much less mature solar market segment, is
generally better suited for large utility-scale operations located in high solar insolation areas such
as the desert Southwest. Most existing CSP capacity and planned projects are located in
southwestern states such as California, Arizona, and Nevada.67
Some argue that solar electricity provides a number of benefits to the United States, such as zeroemission electricity generation, electricity that can be consumed at the point of generation, and
60
This section was written by (name redacted).
For more information about photovoltaic technology, see National Renewable Energy Laboratory photovoltaic
information available at http://www.nrel.gov/learning/re_photovoltaics.html.
62
For more information about solar thermal technologies, see National Renewable Energy Laboratory solar thermal
information available at http://www.nrel.gov/learning/re_csp.html
63
Solar Energy Industries Association, Solar Energy Facts: Year in Review 2011, March 6, 2012.
64
U.S. Energy Information Administration, Electric Power Monthly, accessed May 16, 2012, http://www.eia.doe.gov/
cneaf/electricity/epm/epm_sum.html.
65
For more information about solar markets, see Department of Energy, Energy Efficiency and Renewable Energy,
2008 Solar Technologies Market Report, January 2010.
66
National Renewable Energy Laboratory, The Open PV Project, http://openpv.nrel.gov/rankings, accessed May 16,
2012.
67
Solar Electric Power Association, Solar Data & Mapping Tool, http://www.solarelectricpower.org/solar-tools/solardata-and-mapping-tool.aspx.
61
Congressional Research Service
14
Clean Energy Standard: Potential Qualifying Energy Sources
peak power production.68 Critics of solar electricity point out several limitations to widespread
solar electricity deployment. Possible limitations may include the cost of electricity generation,69
intermittent operation,70 and that some solar thermal technologies may require abundant water
supplies in areas that are typically water constrained.71 Another possible disadvantage is that
large-scale solar projects typically require large swaths of land that may not be located near
electricity consumers. Connecting large volumes of solar electricity with sources of demand may
be challenged by limits to existing transmission infrastructure, or by the cost of building new
transmission capacity.
Policy questions for solar as a qualifying CES energy source could include the following:
•
How will the electricity grid compensate for the intermittent nature of solar
electricity? Grid operators are challenged with maintaining the grid integrity and
keeping electricity supply balanced with electricity demand. Stable sources of
supply are necessary for reliable grid operations. Electricity generated from solar
technologies is, by its nature, variable and can fluctuate based on weather
patterns. If solar electricity installations become a large source of electricity, grid
operations and reliability might be impacted.
•
Should the federal government fund additional research and development
efforts that might reduce the cost of solar electricity production? In order to
reduce the cost of solar electricity, research and development initiatives may be
necessary. As a result, solar technology companies may seek additional
government assistance to pay for cost reduction R&D activities.72
•
Will off-grid solar electricity projects be included in a CES? Opportunities
exist for businesses and homeowners to generate solar electricity that may be
completely consumed on-site. These types of projects will be generating
electricity, but the electricity may not be sent to the electric grid for sale to other
consumers. Determining if off-grid solar generation will receive CES credits and
accounting for the role of state metering laws may be policy considerations as
legislation is formulated.
•
How might a CES policy interact with natural resource policy? Solar projects
(photovoltaic and thermal) generally require relatively large land areas for utility
scale generation. Some solar thermal technologies may also require large
68
In certain locations, depending on the solar resource and local environmental conditions, solar electricity production
matches well with peak demand. Solar electricity generation could potentially satisfy peak load requirements, which is
generally when electricity prices are high.
69
Solar is generally considered the most expensive form of electricity with estimates ranging from $0.16 to $0.34 per
kilowatt-hour: estimated natural gas electricity costs are $0.06 - $0.07 per kilowatt-hour. Annual Energy Outlook 2011,
Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011, Energy Information Administration,
available at http://www.eia.doe.gov/oiaf/aeo/electricity_generation.html
70
Solar electricity can be produced when conversion equipment is exposed to solar radition. Additionally, local
environmental conditions and weather patterns can impact the amount, and consistency, of electricity production.
71
For more information, see CRS Report R41507, Energy’s Water Demand: Trends, Vulnerabilities, and Management,
by (name redacted).
72
DOE’s Sunshot Initiative aims to reduce the total system installation cost for solar to $1/watt, with an estimated cost
of energy of $0.06/kWhr. On April 8, 2011 DOE awarded $170 million towards solar efficiency improvements and cost
reductions. Additional information available at http://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=
16882
Congressional Research Service
15
Clean Energy Standard: Potential Qualifying Energy Sources
volumes of water. Balancing electricity generation with natural resource
requirements may be a topic of interest as CES policy is formulated.73
Water74
Water can be used in various ways to generate electricity. Some water energy technologies
include conventional hydropower, small hydropower, low-head hydropower, hydrokinetic, tidal
turbines, and ocean thermal energy. Hydropower is the generation of electricity from flowing or
falling water. Hydrokinetic electricity is generated by river currents that drive turbines anchored
to a river bottom or attached to an existing structure such as a bridge foundation. Tidal turbines
capture energy from tidal waves. Ocean thermal energy conversion uses the heat energy stored in
the earth’s oceans to generate electricity.
The most established form of water energy is conventional hydropower. Conventional
hydropower technologies include using turbines at storage facilities, pumped storage, and run-ofriver plants.75 Larger potential for increased hydropower generation lies primarily in the western
United States (California, Oregon, and Washington) and Alaska.76 However, DOE reports that
roughly 33 states could increase their hydropower generation by 100% or more, assuming they
develop as low-power (less than 1 average megawatt or MWa) projects or small hydro (between 1
and 30 MWa) projects.77 Moreover, the Bureau of Reclamation identified 70 sites on federal land
that could prove economically feasible for development of hydropower based on available data
and study assumptions.78
The United States has used hydropower for more than 100 years, and at one point hydropower
supplied roughly 40% of all electricity generated. Conventional hydropower was the largest
renewable energy source for electricity generation in 2011.79 Nearly 9% of total electricity net
generation in 2011 originated from conventional hydropower.80 In the 2011 Annual Energy
Outlook, EIA projected that conventional hydropower generation will have an annual growth rate
73
For instance, concentrating solar power technologies can use more water to produce electricity than coal or natural
gas. For more information, see CRS Report R40631, Water Issues of Concentrating Solar Power (CSP) Electricity in
the U.S. Southwest, by (name redacted) and (name redacted).
74
This section was written by (name redacted).
75
For more information on hydropower technologies, see CRS Report R41089, Small Hydro and Low-Head Hydro
Power Technologies and Prospects, by (name redacted).
76
For an estimate of natural stream water energy resources available anywhere in the United States for hydropower, see
the Idaho National Laboratory (INL) Virtual Hydropower Prospector (VHP) http://hydropower.inl.gov/prospector/
index.shtml.
77
Douglas G. Hall, Kelly S. Reeves, and Julie Brizzee, et al., Feasibility Assessment of the Water Energy Resources of
the United States for New Low Power and Small Hydro Classes of Hydroelectric Plants, Department of Energy Office
of Energy Efficiency and Renewable Energy, DOE-ID-11263, January 2006, http://www1.eere.energy.gov/
windandhydro/pdfs/doewater-11263.pdf.
78
U.S. Department of the Interior Bureau of Reclamation, Hydropower Resource Assessments at Existing Reclamation
Facilities, Denver, CO, March 2011, http://www.usbr.gov/power/AssessmentReport/
USBRHydroAssessmentFinalReportMarch2011.pdf.
79
U.S. Energy Information Administration, Electric Power Monthly, December 2011, http://www.eia.doe.gov/cneaf/
electricity/epm/epm_sum.html.
80
U.S. Energy Information Administration, Electric Power Monthly, December 2011, http://www.eia.doe.gov/cneaf/
electricity/epm/epm_sum.html.
Congressional Research Service
16
Clean Energy Standard: Potential Qualifying Energy Sources
of 0.5% from 2009 to 2035, but is not expected to exceed 7% of total U.S. electricity generating
capacity in 2035.81
Depending on the technology and site location, there are benefits and drawbacks to expanding
hydropower. Some advantages include the generation of electricity as needed to meet demand
during peak periods, potentially lower capital costs to upgrade an existing facility or power a nonpower dam, and minimal carbon dioxide emissions from energy production in the United States
relative to coal power plants. Moreover, certain hydropower facilities may also be used for other
purposes, such as irrigation, flood control, and recreation. Disadvantages include relatively high
capital costs to construct a new large facility, potential adverse impacts from dams on the
environment, and dam safety concerns. Dams can change the natural habitat, affecting wildlife,
water quality, and land erosion rates.
One primary natural resource concern for hydropower is adequacy of fresh water supplies.
Electricity use and distribution plans must ensure adequate water loads to satisfy energy, human
consumption, and agrarian purposes, among others.
Policy questions for water as a qualifying CES energy source could include the following:
•
Should existing hydropower facilities be included as a CES qualifying
energy source? An analysis of EIA data suggests that, if allowed, a few states
would currently comply with President Obama’s proposed CES mandate of 80%
clean energy generation by 2035 largely through the use of existing hydropower
facilities.82 A goal of past CES proposals has been to encourage development of
new hydropower facilities.
•
If new hydropower facilities qualify for a CES, will potential licensing issues
discourage investment in privately owned facilities? Privately owned facilities
operate under licenses issued by the Federal Energy Regulatory Commission
(FERC).83 The licenses are valid for 30 to 50 years and establish operating
parameters for privately owned facilities. Time and cost concerns have arisen in
the licensing and relicensing of privately owned facilities.84 It can take multiple
years and millions of dollars to obtain a license.
•
Will small hydro and low-head hydro power facilities be included as
“qualifying hydropower” in a CES? Development of economic small and lowhead hydropower resources may be emphasized in a CES.
•
Will new water energy technologies be included as “qualifying hydropower”
in a CES? Hydrokinetic turbines, tidal turbines, and ocean thermal energy
conversion are relatively new water energy technologies that might help meet a
CES mandate.
81
Energy Information Administration, Annual Energy Outlook 2011, “Electricity Generation,” April 2011,
http://www.eia.doe.gov/forecasts/aeo/index.cfm.
82
For more information, see Figure 3 in CRS Report R41720, Clean Energy Standard: Design Elements, State Baseline
Compliance and Policy Considerations, by (name redacted).
83
Federal hydropower dams do not require FERC licenses.
84
For more information, see archived CRS Report RL31903, Relicensing of Nonfederal Hydroelectric Projects:
Background and Procedural Reform Issues, by (name redacted).
Congressional Research Service
17
Clean Energy Standard: Potential Qualifying Energy Sources
Wind85
Wind results from uneven heating of the atmosphere by the sun, surface irregularities, and the
earth’s rotation. Wind is essentially kinetic, or motion energy that can be “harvested” into
mechanical and electrical energy through a conversion technology.86 Typically, a turbine and
generator are used to capture wind energy and convert it to usable electricity.
Other than hydropower, wind is the largest developed renewable source of electricity in the
United States. In 2011, approximately 2.9% of U.S. electricity was generated from wind energy.87
Wind electricity generation facilities produced nearly 120,000 million kilowatt-hours of
electricity in 2011.88 To date, wind electricity generation has come from onshore assets. Abundant
offshore wind resources have not been developed for a variety of reasons, although they are close
to coastal demand loads.
The United States was the largest wind market in the world in 2009, with installed U.S. wind
capacity of approximately 35 gigawatts.89 However, in 2010 China took the lead for the most
installed wind capacity, with approximately 44 gigawatts.90 Total installed wind capacity in the
United States at the end of 2011 was approximately 47 gigawatts. U.S. wind capacity is expected
to grow by 2.1% from 2009 to 2035, but is not expected to exceed 5% of total U.S. electricity
generating capacity in 2035.91
Wind is currently one of the lowest-cost renewable electricity options. According to the EIA, the
total levelized cost of energy (LCOE) for onshore wind electricity is $97 per megawatt-hour
(MWhr) (see Table 1).92 For reference, EIA estimates that solar photovoltaic and solar thermal
LCOEs are $210/MWhr and $311/MWhr, respectively.93
Proponents for wind development in the United States argue that wind power is clean and
emission-free, and that it does not deplete finite resources. In addition, proponents assert that fuel
for wind power is essentially free, thus providing a hedge against relatively volatile fossil energy
costs. Other suggested advantages are that encouraging wind energy may create jobs if the U.S.
wind market is expanded and may establish the United States as a global renewable energy leader.
Opponents of wind energy development argue that wind energy is an intermittent resource and
large-scale wind development may result in electricity grid disruptions, if not properly managed.
85
This section was written by (name redacted).
Bureau of Land Management, Wind Energy Guide, http://windeis.anl.gov/guide/index.cfm.
87
U.S. Energy Information Administration, Electric Power Monthly, December 2011, http://www.eia.doe.gov/cneaf/
electricity/epm/epm_sum.html.
88
Ibid.
89
American Wind Energy Association, U.S. Wind Industry Market Report, year ending 2009.
90
Wind Energy Report 2010, World Wind Energy Association, April 8, 2011, available at http://www.wwindea.org/
home/images/stories/pdfs/worldwindenergyreport2010_s.pdf.
91
Energy Information Administration, Annual Energy Outlook 2011, “Electricity Generation,” April 2011,
http://www.eia.doe.gov/forecasts/aeo/index.cfm.
92
EIA’s LCOE calculations do not include tax credit and other subsidies available for wind projects. Factoring in these
subsidies will reduce the cost of energy estimates. Energy Information Administration, “Levelized Cost of New
Generation Resources in the Annual Energy Outlook 2011,” http://www.eia.doe.gov/oiaf/aeo/
electricity_generation.html.
93
Energy Information Administration, “Levelized Cost of New Generation Resources in the Annual Energy Outlook
2011,” http://www.eia.doe.gov/oiaf/aeo/electricity_generation.html.
86
Congressional Research Service
18
Clean Energy Standard: Potential Qualifying Energy Sources
They also contend that the best U.S. resources are located in somewhat remote areas with
inadequate transmission access to connect the resource with load centers; that wind projects have
environmental consequences, including noise and potential threats to avian species; and that the
cost of electricity from wind, when taking into account all costs for transmission, interconnection,
and ancillary services, among others, will generally be higher than that from conventional sources
of electricity generation. Ultimately, electricity consumers will need to compensate for these
additional costs.
Policy questions for wind as a qualifying CES energy source could include the following:
•
Could project location and wildlife concerns escalate to a level that might
impede large-scale development of wind power projects? Some opponents of
wind argue that rotating wind turbines are a threat to avian species, and some
opponents charge that noise from wind turbine operations is considered a
nuisance. Others are concerned with radar interference. If wind development
continues to increase, these concerns could impact widespread development of
wind projects in optimal locations.
•
How will the electric grid compensate for the intermittent nature of wind
electricity? Electricity generated from wind is, by its nature, intermittent and
somewhat unpredictable. With grid operators having responsibility for balancing
the grid by adjusting supply to accommodate demand, it may be important to
have stable and reliable sources of power. Given the intermittent nature of wind
electricity generation, grid operators may experience challenges as wind capacity
increases.94
Potential Demand-Side Source: Energy Efficiency95
Energy efficiency is a demand-side resource that could contribute to a CES if reducing future
needs for electric energy and power plant capacity is a goal. This section describes the concept of
energy efficiency, opportunities for energy efficiency measures, and policy design issues
concerning efficiency use in a CES. The section ends with possible policy implications should
energy efficiency be included in a CES.
An energy efficiency measure reduces the amount of energy required by specific end-use devices
and systems, without reducing the services provided. Energy efficiency is increased when an
energy conversion device, such as a household appliance, central air conditioner, or electric
motor, undergoes a technical change that enables it to provide the same service (lighting, cooling,
motor drive) while using less energy. Energy efficiency involves all aspects of energy production,
distribution, and end-use. The energy-saving result of the efficiency improvement is often called
“energy conservation.”96
94
Bonneville Power Administration (BPA) announced in February 2011 that they were planning to require wind
projects in Washington and Oregon to cease operating in order to compensate for “overproduction” expected from
BPA’s hydropower assets. Wind project owners are appealing BPA’s proposed plan. More information is available at
http://www.sustainablebusinessoregon.com/articles/2011/04/bpa-pulls-back-on-plan-to-shut-off-wind.html.
95
This section was written by (name redacted).
96
These ideas of “efficiency” and “conservation” contrast with “curtailment,” which decreases output (e.g., turning
down the thermostat) or services (e.g., driving less) to curb energy use. That is, energy curtailment occurs when saving
(continued...)
Congressional Research Service
19
Clean Energy Standard: Potential Qualifying Energy Sources
For an electric utility company, energy efficiency measures are usually packaged into an outreach
program that targets demand reductions on the customer’s side of the meter. The collective effect
of efficiency improvements to a variety of end-use equipment (e.g., lights, refrigerators, air
conditioners) provides demand-side power reductions that are equivalent in many ways to supplyside production from new power plants. As a result, energy efficiency can provide power service
needs while actually reducing resource use and environmental impacts.
There has been considerable debate about the possible role of energy efficiency in a CES. There
are at least three key advantages to the use of energy efficiency measures: it is available
everywhere that power demand is located; because it cuts energy use, it may reduce
environmental impacts; and when it helps avoid growth in power plant capacity, it also reduces
the need for additional reserve capacity and may reduce the need for additional transmission
infrastructure.
On the other hand, there are at least three disadvantages and/or barriers to the use of energy
efficiency measures. First, utility profits generally follow in direct proportion to volume of power
sales: the utility has an incentive to increase power sales and a disincentive to reduce power sales.
Second, the analytic difficulty of estimating the potential cost savings from energy efficiency
measures can deter utility customers (especially residential customers) from using cost-effective
efficiency measures.97 Third, the time requirement and statistical nature of evaluating the impacts
of utility energy efficiency programs tend to cause a time delay for the results, and some degree
of uncertainty about the magnitude of actual energy savings.
The three main sectors that present opportunities for improving demand-side efficiency in electric
energy use are buildings, industry, and transportation. Buildings in the residential, commercial,
and industrial sectors present the largest available opportunity.98 In existing buildings, efficiency
improvements can reduce power demanded by hundreds of types of electrical end-use equipment
(e.g., lights, refrigerators, air conditioners).99 Savings may also be available through increased
insulation, more efficient windows, and other measures. For new buildings, additional design
measures can be incorporated, such as passive heating and cooling features and building
integrated solar photovoltaics.
For industry, on-site power generation is another means to reduce demand for electricity
generation.100 Industrial process use of electricity is the next largest opportunity for efficiency.
(...continued)
energy causes a reduction in services or sacrifice of comfort. Curtailment is often employed as an emergency measure.
97
“Smart” electronic meters for utility customers are a key part of efforts to transform the national power delivery
system into a “smart grid.” To the extent that smart meters allow customers to see the potential cost-effectiveness (bill
reductions) of energy efficiency measures, increased use of smart meters may help increase use of energy efficiency
measures offered through utility programs.
98
For more about barriers to energy efficiency in buildings, see CRS Report R40670, Energy Efficiency in Buildings:
Critical Barriers and Congressional Policy, by (name redacted), (name redacted), and (name redacted).
99
Appliance efficiency standards direct manufacturers to improve efficiency, and green labeling programs, such as the
Energy Star Program, encourage consumers to use more efficient equipment. As new forms of equipment (e.g.,
computers, power adapters, cell phones) are introduced into markets, standards may be established to make the
equipment more efficient. Also, as technology (e.g., compressors for refrigerators) becomes more efficient, new
opportunities arise to increase efficiency levels even further.
100
The largest amount of on-site power generation is derived from industrial cogeneration power plants. Lesser impacts
are derived in the residential and commercial sectors through on-site power generation from renewable energy and
combined heat-and-power (CHP) facilities.
Congressional Research Service
20
Clean Energy Standard: Potential Qualifying Energy Sources
For example, large amounts of electricity are needed to process bauxite into final alloy products
in the aluminum industry.
Due to heavy dependence on liquid fuels, the transportation sector currently provides a smaller
opportunity for efficiency to reduce electric power use. Currently, most electric power use in this
sector supports public transit systems. However, the recent policy focus on increasing the use of
electric vehicles and hybrid-electric vehicles could cause the share of power use in this sector to
climb significantly. In such a case, efficiency measures for electric vehicles would take on greater
importance.
There is at least one key issue that would influence the potential contribution from energy
efficiency resources. Decoupling of electric utility profits from sales volume is a long-standing
issue for the development of energy efficiency resources in power markets. Most utilities have
rate structures that encourage greater electricity use by offering lower rates for larger purchases.
This practice deters utility use of efficiency because it would reduce profits. Some states (e.g.,
California) have experimented with innovative rate-making policies that make efficiency
profitable. Historically, utilities were designed to make profits in proportion to power sales
volume. In the face of growing power demands, that design factor has driven utilities to seek
additional supply-side sources and deterred them from seeking demand-side energy efficiency
sources that curb sales. Recognition of this key barrier has led to some state regulatory efforts to
“decouple” utility profits from sales volume. California, for example, had such an electricity rateadjustment mechanism in the early 1990s, dropped it during the industry restructuring trend of the
mid-to-late 1990s, and re-instated it after the state power shortages of 2001. The mechanism
allows rates to increase slightly, to compensate for reduced sales, with the goal of reducing the
overall consumer bill.
The role of energy efficiency in a CES depends on potentially conflicting policy goals: use of
new, more expensive clean energy technologies or reducing overall demand for electricity. One
alternative that has been proposed is to establish a fixed percentage carve-out or “cap” for energy
efficiency resources. This was an issue for recent efforts in the debate on renewable energy
portfolio standard (RES) legislation. There are at least two purposes of such a cap. One purpose is
to provide flexibility to regulated entities that may have a limited amount of clean energy
resources. Another purpose is to limit the amount of efficiency resources that could have lower
costs, in order to avoid diluting the main CES focus on developing new higher-cost forms of
power supply.
Policy questions for energy efficiency as a qualifying CES energy source could include
the following:
•
Do potential benefits of energy efficiency, such as lower power costs and
reduced pollution, justify its inclusion as an eligible resource under a CES?
Many energy efficiency measures are capable of rapid implementation and are
available at costs well below those for supply-side resources. In this regard,
efficiency may be seen to have less need for new incentives and regulatory
policies, such as the CES.
•
If energy efficiency measures were included in a CES, would the relatively
low costs inhibit the development and implementation of some clean energy
and other supply-side power generation options? Could a cap on the
maximum contribution from efficiency measures help avoid such a concern?
Some previous proposals for an RES (i.e., §101 of H.R. 2454 in the 111th
Congressional Research Service
21
Clean Energy Standard: Potential Qualifying Energy Sources
Congress) included energy efficiency as a qualified source, but with a cap that set
a maximum for its contribution. A key purpose for including efficiency was to
increase flexibility for those states or regions that had limited renewable energy
resources.
•
If energy efficiency measures were included in a CES, would additional
federal funding and regulatory policies (e.g., to help realign utility incentives
for profitability) still be needed to help overcome barriers to broader use of
energy efficiency measures to defer or displace power plants? The NAPEE
study suggests that efficiency could make a major contribution, effectively
providing the equivalent of up to 20,000 mw of new generating capacity over 10
to 15 years, conditioned on a major increase in efficiency program funding and
alignment of the utility profitability incentive.
CES Legislative Initiatives in the 112th Congress
Congress has discussed a clean energy standard and its role in the larger national energy debate.
At least two bills pertaining to a clean energy standard were introduced during the 112th
Congress—the Fulfilling U.S. Energy Leadership Act of 2011 (S. 1220) and the Clean Energy
Standard Act of 2012 (S. 2146).
S. 1220
S. 1220 directs the Secretary of Energy to establish a CES, but gives few details about which
sources to include, the time frame for implementation, and compliance measurements.
S. 2146
S. 2146 proposes a national market-oriented standard that would require certain utilities to
generate or purchase clean energy.101 The primary goal of S. 2146 is to reduce CO2 emissions
from the U.S. electric power sector. The bill would require that non-exempt utilities obtain a
minimum annual percentage of the electricity they sell to consumers, less certain deductions,
from clean energy sources, starting at 24% in 2015 and increasing by an additional 3% each year
to 84% in 2035.102 The CES proposal aims to encourage the development of electric power
resources with low (or zero) CO2 emissions. Utilities would be able to demonstrate compliance
by acquiring credits that recognize the generation, or purchase, of electricity from qualified clean
energy facilities, by making alternative compliance payments, or by employing a mix of those
two options.103 Depending on the CO2 emission intensity (metric tons of CO2 per megawatt-hour)
of the clean energy generated, partial credits could be issued. Certain utilities would be exempt
from the standard using a sliding scale based on the amount of electricity sold to consumers in
101
The standard does not apply to utilities located in Alaska or Hawaii.
For additional details about S. 2146, see CRS Report R42522, Clean Energy Standard: Summary and Analysis of S.
2146, by (name redacted).
103
The alternative compliance payment starts at 3 cents per kilowatt-hour in 2015. Alternative compliance payments
increase by 5% each year thereafter.
102
Congressional Research Service
22
Clean Energy Standard: Potential Qualifying Energy Sources
each calendar year.104 The bill requests two reports and the commissioning of one study.105 The
bill defines clean energy as electricity generated
•
at facilities placed in service after 1991 that use renewable energy,106 qualified
renewable biomass, natural gas, hydropower, nuclear power, or qualified wasteto-energy;
•
at facilities placed in service after the bill is enacted that use qualified combined
heat and power, or a source of energy, other than biomass, that has an annual
carbon intensity lower than 0.82 metric tons of CO2/MWh;
•
as a result of qualified efficiency improvements or capacity additions to certain
hydropower and nuclear power facilities; or
•
at a facility that captures CO2 and prevents its release into the atmosphere.
Unresolved Issues
Legislative examination of a CES could raise multiple questions, including similar questions
posed during the renewable fuel standard (RFS) debate.107 Which sources should be included?
Should legislation account for other sources and technologies that are not yet developed? How
much clean electricity can be generated in the time frame specified from each qualifying energy
source? Should a carbon accounting factor be assigned to each qualifying energy source? Will a
time come when some resources (e.g., wind, solar) used to generate clean electricity cease to be
considered a “free” resource? If so, what impact might this have on using that resource to meet
the CES mandate? Will certain clean energy sources (e.g., natural gas) force out or significantly
lower electricity generation from renewable resources? Should energy efficiency be included in a
CES, and if so, how should it be included? How would a CES interact with state renewable
electricity requirements? Who would assume the costs of new transmission capacity? These
questions and other concerns require further exploration to ensure that, if established, a CES
would work as intended.
104
The standard starts by exempting utilities that sell less than 2 million MWh of electricity to consumers in 2015,
gradually decreasing over 10 years (by 100,000 MWh per year) to exempt utilities that sell less than 1 million MWh of
electricity to consumers in 2025 and remaining at this 1 million MWh level.
105
The Secretary of Energy is to commission the National Academy of Sciences (NAS) to issue a report within one
year of the bill’s enactment on the net greenhouse gas emissions associated with generating electricity from significant
sources of qualified renewable biomass. Furthermore, the Secretary of Energy is to submit a report to Congress
regarding clean energy resources that do not generate electricity and a report on natural gas conservation.
106
Renewable energy includes solar, wind, ocean, current, wave. tidal, or geothermal energy.
107
For more information on the RFS, see CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues,
by (name redacted) and (name redacted).
Congressional Research Service
23
Clean Energy Standard: Potential Qualifying Energy Sources
Author Contact Information
(name redacted), Coordinator
Specialist in Agricultural Conservation and Natural
Resources Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy and Natural Resources Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy Policy
/redacted/@crs.loc.gov, 7-....
Congressional Research Service
24
EveryCRSReport.com
The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the
Library of Congress, charged with providing the United States Congress non-partisan advice on
issues that may come before Congress.
EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The
reports are not classified, and Members of Congress routinely make individual reports available to
the public.
Prior to our republication, we redacted names, phone numbers and email addresses of analysts
who produced the reports. We also added this page to the report. We have not intentionally made
any other changes to any report published on EveryCRSReport.com.
CRS reports, as a work of the United States government, are not subject to copyright protection in
the United States. Any CRS report may be reproduced and distributed in its entirety without
permission from CRS. However, as a CRS report may include copyrighted images or material from a
third party, you may need to obtain permission of the copyright holder if you wish to copy or
otherwise use copyrighted material.
Information in a CRS report should not be relied upon for purposes other than public
understanding of information that has been provided by CRS to members of Congress in
connection with CRS' institutional role.
EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim
copyright on any CRS report we have republished.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.