According to Casten, energy waste is pervasive and endemic throughout our electrical system but invisible in our policy discussions.  The average US power plant operates at 33% efficiency and throws away 66% of the energy it produces through waste heat, transmission and distribution losses, and other inefficiencies.  There are even greater losses before you get to the end use of that electricity.  For instance, an incandescent light has an end use efficiency of about 3%.  Furthermore, the level of electricity efficiency stagnated in 1960.  For the last 50 years, there has been no growth in average efficiency in our power plants and the conversion of energy to useful work (exergy, exergy, exergy) actually began declining in 2000.

This is not how it has to be.  In fact, Thomas Edison's first power plants operated at 50% efficiency because they used the waste heat from generation, an early example of combined heat and power (CHP), a technology that he tried to introduce on the household scale in a failed joint venture with Henry Ford in 1914.  More recently, Denmark has increased its electrical generation efficiency from 33% to 60% over the last two decades.  Our power plants today could save the US $70 billion annually merely by returning to the efficiencies we achieved in the 1920s.

Electricity generation accounts for 42% of CO2 emissions in the US today, up from 12% in 1950.  Thermal energy production, the heat used in industrial, commercial, and residential buildings, is 27% of our CO2 emissions.  Thus 69% of our CO2 emissions are attributable to heat and power yet we spend almost all of our time discussing the CO2 footprint of cars, only 19% of those emissions.  The opportunity to reduce CO2 from improving the efficiency of heat and power generation, of combining heat and power are enormous but essentially ignored.

Casten's company has captured waste heat and improved efficiency on an industrial scale.  In a steel smelter in northwestern Indiana, his company converted the waste heat from coke ovens to generate 220 MW of electricity and 400 MW of thermal energy, process heat and steam.  He calls this clean energy as it doesn't burn any additional fuel or emit any additional pollutants but simply captures what was once waste.  This saves 916,000 metric tons of CO2 annually, the equivalent of removing 166,000 cars from the road.  This also results in lower energy costs for the plants involved and a saving of almost $100 million annually.

Another project involved recapturing waste energy from an 80 year old silicon processing plant in Alloy, West Virginia.  Recycled Energy is investing $84 million to turn the furnace heat into 45 MW of clean energy, reducing CO2 emissions by 290,000 metric tons per year and lowering energy costs so that this plant will become the world's lowest cost producer of silicon.  The silicon manufacturer will use the savings to open another furnace and add 30 more industrial jobs.  This attention to reducing CO2 reduces costs, increases productivity, and creates jobs.  Somebody please tell that to Senator Imhofe.

Why haven't we increased our electricity efficiencies?  Casten believes that we have developed a regulatory system which selects against efficiency.  Utilities have not been rewarded for efficiency since 1920.  In fact they've been penalized for it.  In addition, the 1970 Clean Air Act ignored efficiency and increased parasitic loads in order to reduce pollution.  New Source Review has resulted in delaying the updating of equipment.  1970 coal plants were on average 10 years old and by 2007 were 35 years old.  Regulation also blocks local generation.  If you want to send electricity (or heat?) across a city street, you have to go through the utility.  A business which has a factory on one side of the road cannot distribute waste heat or power to its offices on the other side of the road without paying the utility to distribute the energy it has produced itself.  In addition, only 8 states count cogeneration, clean energy, as part of their Renewable Portfolio Standards.

[Casten specifically noted that he was not against the Clean Air Act or against other environmental regulation.  He is a passionate environmentalist and a leading industrial ecologist.  He is merely pointing out the unintended negative consequences of some of our laws and regulations.  He firmly believes that "Efficiency is a pollution control device."]

Thomas Casten proposes that we remove the regulatory barriers to efficiency by

1.  allowing recycled energy and CHP, "clean energy," to qualify for Renewable Portfolio Standards
   
2.  adopt Clean Energy Standard Offer Programs (CESOP) - long-term contracts for the purchase of clean energy at 85% of the cost of building the best new electric-only central power plants
   
3.  convert the Clean Air Act to an Output Pollution Standard where each emitter has an allowance equal to the production of their annual emission of pollution, to be lowered over time, and create a market to trade those pollution permits between polluters on an equal basis, one carrot of clean energy equalling one stick of dirty power
   
4.  allowing local generators to recoup the value of the benefits they create such as avoiding new wires and line losses
   
5.  have the federal government purchase all of its power from clean energy sources

Casten is not in favor of carbon taxes as "Losers always scream louder than winners cheer."  He doesn't believe that politicians can determine the long-term price of carbon accurately nor allocate the funds generated by a carbon tax effectively.  As an inveterate viewer of CSPAN, I tend to agree.

These regulatory reforms could generate $400 to $800 billion of investment in clean heat and power, cut US CO2 emissions by 20%, and save consumers $70 to $150 billion per year.  It would increase the demand and use of local, decentralized combined heat and power.  Casten believes we should remove monopoly protection for electrical generation but keep it for distribution as all local power producers should be able to feed into the grid on an equitable basis.

These regulatory reforms would be zero dollar cost and do a great deal toward reducing our carbon footprint, increasing our efficiency and global competitiveness, and revitalizing our economy.

Casten is featured in a recent Forbes article and Grist interviewed him in 2007.

More information on his policy proposals is available from dmunson@recycled-energy.com with supporting papers at Recycled Energy Development.  The World Alliance for Decentralized Energy is an international clearinghouse for information on local generation and CHP.

PS:  I wasn't going to go to this lecture as it came the day after a talk by the Danish ambassador to the US on energy and the day before a panel discussion with Ray Kurzweil and others on energy innovation.  I thought there was already too much on my plate.  Then my friend Marsha Gorden recommended Tom Casten and his expertise.  I am so glad she kicked me in the shins.  This was one of the best presentations on practical solutions for the climate and energy problems I've ever seen.  Casten makes more sense than just about anybody I've seen in the thirty years I've followed this issue.  It was a privilege to be part  of his audience.  Thanks, Thomas Casten and thanks, Marsha.

crossposted to dailykos