Energy & Technology

New Brief Tracks DOE Recovery Act Spending

In February 2009 Congress passed the American Recovery and Reinvestment Act (ARRA or the stimulus package) providing the largest single investment in clean energy in American history.  About $84 billion of the $787 billion in stimulus funds targets energy, transportation, and climate investment in the form of grants, tax cuts, and loan guarantees.  Given the magnitude of this investment and its anticipated role of laying the groundwork for American leadership in a global clean energy economy, it is beneficial to follow how these funds are spent.   

We recently published the first installment of a  brief on the spending of ARRA funds by the U.S. Department of Energy (DOE), the agency with jurisdiction over the majority of energy expenditures.  The brief specifically examines how the funds have been appropriated, awarded, and spent as a way to track how quickly the money is moving out the door along with the impact of this spending on job creation.  We plan to keep tabs on the use of ARRA funds over time and update this brief accordingly.

On the whole, ARRA money is moving at a slower pace than expected – as of November 13, 2009 only 3.9 percent of the DOE’s total appropriated ARRA funds had been spent. But ARRA is leveraging private investment and, as Vice President Biden noted in a recent memo to President Obama, “jumpstarting a major transformation of our energy system.”  For example, with these funds and additional leveraged private investment, renewable energy generation is expected to double from 27.8 GW in January 2009 to 55.6 GW by 2012.1

ARRA funds will also lead to significant growth in the manufacturing capacity for clean energy technology, advanced vehicle and fuel technologies, components of a smarter electric grid, home weatherization, and carbon capture and storage technologies.  New industry and funding for programs already in existence will create and save jobs in the clean energy sector.  At the end of October 2009, the Bureau of Labor Statistics reported nearly 10,000 jobs created from the DOE’s use of Recovery Act funds.  This number is expected to grow considerably as more of the ARRA money is committed to and spent by recipients (Biden’s memo predicts 253,000 jobs will be supported from new renewable generation and advanced energy manufacturing alone).         

Stay tuned for updates as we continue to follow the spending progress and impacts of DOE ARRA funds. 
Olivia Nix is the Innovative Solutions intern


1. Biden, Joseph. Memorandum for the President from the Vice President. Subject: Progress Report: The Transformation to A Clean Energy Economy. 15 December 2009.

Smart Grid Boosts Efficiency, Renewables, and Reliability

The smart grid is a hot topic these days. President Obama touted the smart grid during his campaign and continues to be a booster. The 2009 stimulus bill (the American Recovery and Reinvestment Act, ARRA) provided nearly $4.5 billion to the Department of Energy (DOE) for smart grid investments. In October, DOE made $3.4 billion in awards under the Smart Grid Investment Grant Program, and, in November, DOE announced awards totaling $620 million as part of the Smart Grid Regional and Energy Storage Demonstration Project.

Last month, we added a smart grid factsheet to its Climate Techbook. While it’s not easy to give a short definition of the smart grid, one can think of it as the application of digital technology to the electric power sector to improve reliability, reduce cost, and increase efficiency. Smart grid technologies—including communication networks, advanced sensors, and monitoring devices—provide new ways for utilities to generate and deliver power and for consumers to understand and control their electricity consumption.

The smart grid has several anticipated benefits unrelated to climate change, such as improving electricity reliability (e.g., fewer power outages) and reducing utilities’ operating costs (e.g., by eliminating meter reading). Much of the buzz around the smart grid, however, has to do with the ways that smart grid technology can facilitate greenhouse gas emission reductions.

Efficiency, renewables, and  plug-in hybrid electric vehicles (PHEV) are three of the primary climate solutions the smart grid can enable. Initial evidence suggests that giving consumers direct feedback on their electricity use via smart meters and associated display devices can by itself lead to energy savings of 5-15 percent. One of the challenges that will become increasingly important as the United States relies more on renewable electricity from wind and solar power is that these resources are variable (i.e., they only generate electricity when the wind blows or the sun shines) rather than schedulable like traditional fossil fuel power plants. Smart grid technology makes it easier to add energy storage to the grid and to exploit demand response (e.g., cycling air conditioners on and off) to more easily balance electricity supply and demand as output from variable renewables fluctuates. Finally, smart grid technology would facilitate charging PHEVs during periods of low electricity demand (when generating costs are lowest and existing capacity is underutilized) so that PHEV charging can be done most cost-effectively.

Achieving greenhouse gas emission reductions at the lowest cost will require deploying a portfolio of energy efficiency measures and low-carbon energy technologies, several of which can build upon smart grid technology.

Steve Caldwell is a Technology and Policy Fellow


Quick Facts

  • In 2011, biopower provided 5.7 percent of total U.S. renewable electricity generation at 27.7 billion kilowatt hours. This is greater than the contribution of solar power but considerably less electricity than wind or hydropower.[1]
  • The United States led biopower capacity globally with 11.5 gigawatts (GW) of generating capacity in 2011, a 1.6 percent increase from 2010. More rapid increases in biopower occurred in developing countries including India with an 8 percent increase in 2010[2] and China with a 25 percent increase in 2011.[3]
  • Globally, an estimated 72 GW of biomass power capacity was in operation at the end of 2011, a 9 percent increase from 2010.[4]
  • In 2011, the electric power sector produced 51 percent of biopower capacity and 49 percent of biopower generation while commercial and industrial biopower made up the remaining percentage.[5]
  • The International Energy Agency found that biopower produced through gasification with carbon capture and storage (BECCS) could result in GHG emission reductions of more than 6.5 gigatons (Gt) per year by 2050.[6]


Before fossil fuels like coal and petroleum transformed the world’s energy landscape, biomass, especially wood, was a primary source of energy for most of human history. Today, biomass provides 10.2 percent of global primary energy consumption, with 61 percent attributed to traditional uses of biomass – primarily domestic cooking, lighting, and heating in the developing world.[7] Additional applications of biomass include combined heat and power (CHP) and in transportation fuels. Biopower, the production of electricity from biomass, holds significant potential as a major renewable energy source in a low-carbon energy future.

Biopower uses biogenic fuels to create electricity through various technologies and fuels including woody biomass, biogenic municipal solid wastes, agriculture wastes, and black liquor burned for industrial sector CHP. Globally, an estimated 72 GW of biopower capacity was in operation at the end of 2011, a 9 percent increase from 2010.[8] In 2011, the United States generated 57 terawatt hours (tWh) of biopower, a 1.6 percent increase from 56.1 in 2010 (see Figure 1).[9]

Figure 1: Biopower Capacity and Generation in the United States, 1980-2011

Source: EIA 2012.[10]

If grown in a sustainable manner, biomass is considered a carbon-neutral energy source – meaning that the greenhouse gas (GHG) emissions, namely carbon dioxide (CO2), released from converting biomass to energy are equivalent to the amount of CO2 absorbed by the biomass plants during their growing cycles. If coupled with future carbon capture and storage (CCS) technology (see Climate TechBook: CCS), biopower could even be a net carbon-negative energy source by permanently removing carbon from the atmosphere.[11]

If grown in a sustainable manner, biomass is considered a carbon-neutral energy source – meaning that the greenhouse gas (GHG) emissions, namely carbon dioxide (CO2), released from converting biomass to energy are equivalent to the amount of CO2 absorbed by the biomass plants during their growing cycles. If coupled with future carbon capture and storage (CCS) technology (see Climate TechBook: CCS), biopower could even be a net carbon-negative energy source by permanently removing carbon from the atmosphere.[12]


Biopower uses biogenic materials to produce electricity for industrial and commercial consumption. In the United States, woody biomass produces 67 percent of electrical power while biogenic municipal solid waste (MSW), landfill gas, and agricultural and other byproducts produce the remaining 33 percent (see Figure 2).[13] Regional fuel sources, ecologic variation, and productivity levels strongly influence biomass production and markets, such as with agricultural waste biopower production development closest to areas with strong agriculture markets (see Figure 3).[14] Recent improvements in biomass collection and storage, and in the development of feedstock markets, have reduced the economic and logistical constraints that limited biomass growth in the past.[15] Increased production, sales, and shipments of wood pellets is one example of a growing biomass market. Overall, biopower is widely distributed across the United States with power plants in all regions, though primary fuel sources vary regionally.[16]

Figure 2: U.S. Biopower Generation by Fuel (2010)[17]

Source: EIA 2011.

A recent projection from the U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL) found that United States use of biomass for dedicated biopower as well as co-firing (the burning of biomass alongside other fuels such as coal or natural gas) would require an estimated 259.8 million dry metric tons of biomass by 2035.[18] NREL recently estimated the short-term United States biomass supply range between 270 to 460 million dry metric tons while the long-term potential is more than 1,200 million dry metric tons.[19]

Biopower is primarily produced through combustion from either biomass alone (referred to as direct combustion) --- or co-firing (with other fuels such as coal or natural gas) of solid biomass, biogas, renewable municipal solid waste (MSW), or liquid biomass (pyrolysis). Approximately 300 commercial-scale power plants around the world have undergone conversions to incorporate biomass to diversify fuel sources and lower carbon emissions.[20] New markets for biomass, particularly through wood pellets, have allowed for an increase in average generation capability of biopower facilities. The world’s largest biomass power plant, located in the United Kingdom, is 750 megawatts (MW) and fueled largely with imported pellets. [21]

Biomass for biopower is typically sourced from six categories: mill residues, urban wood waste, forest harvesting residues, agricultural waste material, dedicated herbaceous crops, and specified woody crops.[22] Woody biomass, the primary feedstock for commercial-scale electricity and heat generation, consists mainly of residuals from timber harvesting, sawmilling, and pulp and paper production. Future supply may come from increasingly specific “dedicated” energy crops such as hybrid poplar or willow trees.

Municipal waste produces biopower by utilizing landfill gas as fuel or by incinerating solid, nonhazardous, biogenic waste in waste-to-energy facilities. In the United States, there is approximately 3.7 GW of biogenic municipal waste capacity producing 16.4 billion kWhs of electricity – 60 percent of the total electricity produced by biomass materials. [23] Landfill gas produced 14.3 billion kWhs of electricity in 2011.[24] Because opportunities exist to utilize a greater percentage of municipal solid and gas wastes, this has the potential to increase to 9.88 GW by 2030.[25] In 2010, only 12 percent of solid biogenic U.S. trash was diverted from the waste stream and combusted for energy.[26]

When coupled with plug-in electric vehicles PEVs, which include hybrid electric or electric vehicles, or PEVs, biopower can complement biofuels and even serve as an alternative to liquid transport fuels derived from biomass. For example, a study comparing the use of biopower to charge PEVs and the use of cellulosic ethanol to fuel vehicles with internal combustion engines estimated that the biopower/PEV scenario allows for 81 percent more miles driven and 108 percent more emission reductions per unit of land devoted to growing biomass.[27]

Figure 3: Biomass Resources in the United States by County

Source: National Renewable Energy Laboratory (NREL), Biomass Maps, 2009.[28]

Biopower Methods

Conversion Processes convert biomass into biogenic fuels. There are four predominant processes:

  • Gasification, which processes feedstock in a hot, oxygen-starved environment to produce a synthesis gas, or syngas, composed mostly of carbon monoxide and hydrogen. This gas then fuels a gas turbine to produce electricity. In biomass-integrated combined cycle plants (BIGCC), the exhaust from the first cycle runs through a steam turbine in a second cycle, similar to a natural gas combined cycle power plant. While still a developing technology, BIGCC plants are expected to attain efficiencies of up to 60 percent.[29] A study by the International Energy Agency found that the cost of incorporating CCS into BIGCC was lower than for other biopower technologies.[30]
  • Torrefaction is a process in which the feedstock is dried and heated in a special process, allowing it to become pelletized. This process improves the energy density, grindability, and the storage life of the fuel.[31]
  • Pyrolysis, in which biomass is converted into a liquid product by thermal decomposition through processing without oxygen. This is the first step for most biomass processing. Depending whether this process is slow or fast, typically a thirty second difference, the resulting products have different compositions for use in different capacities. Following a rapid heating in fast pyrolysis, the main resulting product is a biomass-derived crude bio-oil. This bio-oil is then substituted for fuel oil or diesel in furnaces, turbines, and engines for electricity production.[32]
  • Anaerobic digestion, in which bacteria decompose organic matter from waste processing methane-rich biogas, landfills, or a dedicated system, which is then purified and used for electricity generation (see Climate TechBook: Anaerobic Digesters). This process does not use traditional biomass feedstocks; rather, it typically captures and utilizes the biogas emitted from the plentiful waste found at landfills (landfill gas) and farms.

Combustion is the processes of creating energy from the biogenic fuels, which then creates electricity for consumer consumption.

  • Direct-firing. In direct-firing, biomass is the only fuel used in a power plant. These plants have efficiencies up to 40 percent, though the norm is often much lower.[33] The feedstock is burned in a boiler to create steam, which is then used to power a steam turbine and produce electricity, similar to a traditional coal power plant. In producing only electricity, the steam remains in the turbine cycle while in a CHP system it used for heat production after extraction.[34] Direct firing power generators include various stoker boilers and fluidized bed boilers.[35]
    • Repowering. An existing fossil fuel power plant can undergo extensive retrofitting, known as repowering, and function as a direct firing facility by fully substituting biomass for fossil fuel. This is a relatively expensive option because it requires substantial modifications.
  • Co-firing. In a co-fired system, biomass substitutes a portion of the fossil fuel source used in a power plant. This technology is readily available and at commercial scale today. In general, a coal plant can be modified to accommodate biomass constituting up to 20 percent of its fuel.[36] Because biomass has much lower sulfur content than coal, this allows coal-fired plants to dramatically lower sulfur dioxide emissions.[37] The feedstock is blended with coal either before entering the boiler through a blended delivery system, or within in the boiler through a separate feed system, a process that requires more extensive plant retrofitting. Biomass co-firing attains efficiencies of 33 to 37 percent, equivalent to that of the average coal plant and typically greater than direct firing biopower plants.[38] Most plants that co-fire are older and smaller (<25 megawatts of electricity capacity, MWe) than the average coal plant.[39]
  • Combined heat and power (CHP, or cogeneration). CHP is a system that produces both electricity and useful heat from various fuels (see Climate TechBook: Combined Heat and Power). CHP combusts fuel to produce steam that powers a turbine generator and the exhaust is used onsite for another electricity generation cycle or directly for industrial uses, such as heat for district heating.[40] CHP plants have efficiencies as high as 75 to 90 percent by reducing energy losses typical in conventional separate heat and power generation by nearly half.[41] Biomass CHP makes up a third of the existing U.S. biopower generating capacity.[42]

Environmental Considerations/Emission Reduction Potential

Biomass can be an effective option to address long-term climate change goals and to meet related regulatory emissions targets. Biopower mitigates greenhouse gas emissions by replacing some or all of the fossil fuels in power production. Because biomass feedstock has lower sulfur content than coal, replacing coal with biomass also reduces sulfur dioxide emissions, the cause of acid rain and health problems.[43] One DOE study found that co-firing reduces CO2 and SO2 emissions by about one to one – 10 percent co-firing with coal reducing CO2 and SO2 emissions each by about 10 percent.[44] A different study found that 15 percent co-firing urban waste biomass with coal could reduce the overall greenhouses gas emissions by 19 percent, due the diversion of methane that would be released had the waste organic matter decomposed naturally.[45] Despite improvements relative to coal systems, biopower still emits particulate matter, carbon monoxide, volatile organic compounds, and nitrogen oxide emissions.[46] Additionally, land-use changes (LUC) from biomass crops and fossil fuel use in biomass harvesting, transporting, and processing all have an effect on total emissions.[47]

Biopower also emits CO2 directly, but one of the most compelling aspects of biopower is the possibility of zero, or even negative, life cycle emissions of CO2. Energy activities that release carbon into the atmosphere are carbon-positive (like burning coal) while energy activities that remove carbon from atmosphere are carbon-negative (like CCS). Biopower’s carbon neutrality is under scrutiny because of questions about how policymakers should address the timing of emissions vs. sequestration and because of concerns about biomass sustainability. However, studies have shown that biopower can boast lower carbon emissions over the long term than traditional fossil fuels, even when fossil fuel systems use carbon sequestration.[48]

Sustainable biopower sources refer to electricity from biomass that limits LUC, limits pollution, prioritizes waste materials, and regrows quickly. Without actions to ensure sustainability, an increase in dedicated crops could result in undesirable impacts in natural settings, such as LUC and pesticide use.[49] Moreover, biomass results in a ‘carbon debt’ by releasing existing carbon accumulated in forests and natural settings. Recovering the released carbon is equivalent to the time required to regrow the biomass, referred to as a ‘payback’ period.

The Manomet Biomass Sustainability and Carbon Policy Study found that when using harvested forest biomass in electricity generation, the payback period ranges from 21 years when replacing coal to more than 90 years when replacing natural gas.[50] Instead, using logging and forest waste residues – tops and limbs – requires a 10-year payback period for coal and 30-year payback period for natural gas.[51] Dedicated grassland crops replacing coal repay the carbon debt in as little as one year.[52] Using biogenic MSW and landfill gas systems do not have a payback period because of the difference in fuel source. They can even be considered to avoid methane emissions that would have otherwise occurred, has the gas been allowed to escape. Besides changes in CO2, removing biomass can also temporarily disturb surface reflectivity, or albedo, which can impact the local climate and biophysical balance. This is particularly true when sourcing biomass from forested areas that typically experience seasonal snow cover.[53] ­

Life cycle emissions from biopower depend on a range of factors including the type of biomass, technology used, feedstock production (cultivating and harvesting), transportation, and power plant operating standards.[54] An in-depth greenhouse gas life-cycle analysis (LCA) for biopower incorporates a broad scope of important characteristics including the fossil fuels replaced, the impact on global LUC, and the sustainability of the biomass sources.[55] Importantly, meta-analysis of existing LCAs by NREL found GHG emissions per kWh were lower for biopower when compared with fossil-based systems (LUC was not included due to inconsistencies in accounting and a lack of information) (see Table 1).

Table 1: Life Cycle GHG Emissions of Electricity Generation Technologies (g CO2e/kWh)

Energy source



Lowest 25% of plants

Plant average

Highest 25% of plants





Natural gas




Biopower (average)








Direct combustion








Gasification Engine




Source: Avoided GHG are primarily from using methane from landfill and biomass wastes NREL 2012. [56] *Note: NREL is only reporting the biomass portion for co-firing estimates.

Reducing CO2 emissions from biopower with CCS (BECCS) can create a carbon-negative cycle by removing atmospheric carbon (see Climate TechBook: CCS). BECCS can be applied in direct-firing or in co-firing with natural gas or coal. However, using unsustainable biomass sources with a long payback period, such as with forest removal as described above, could counterbalance the benefits of BECCS, at least in the short-term, making sustainable biomass essential for maximizing climate benefits of GHG emission reductions. [57] The International Energy Agency found that BECCS via gasification has the potential to reduce GHG global emissions by more than 2.5 Gt per year by 2050.[58]

Overall, biopower is a promising option to meet future energy needs from a renewable energy source and with reduced greenhouse gas emissions. Large-scale deployment of biopower will likely require an increase in energy crops to meet fuel demands. these crops will need to be carefully selected and in order to avoid negative externalities such as LUC, high water demand, pollution, degraded natural places, and food crop displacement.[59] With sustainable biomass and by utilizing new technology such as CCS and landfill methane capture, biopower can act as a carbon-negative energy source.


Biopower costs depend on several factors including feedstock type and source, boiler technology, plant generating capacity, and services provided (heat and/or electricity). Because of the wide range of fuel sources and technologies available, there is a significant range of costs and system flexibility.

Fuel Costs

Biomass fuel prices depend on moisture content, processing level, transportation expense, and acquisition difficulty of the material. Compared with fossil fuels, biomass has lower energy density, meaning that each ton of biomass produces less energy. This leads to significant transportation costs, up to 50 percent of the feedstock cost, making proximity an important factor of cost-effectiveness.[60] Agriculture residues are typically the least expensive biomass source for biopower followed by mill residues and foresting wastes. The most expensive feedstock is dedicated energy crops.[61] In 2011 in the United States, coal averaged $2.39 per million Btu, [62] natural gas averaged $3.98 per million Btu,[63] and biopower had a high cost estimate of $5.00 per million Btu, based on the availability of 473 million dry tons at $60 per dry ton or less.[64]

Power Plant Costs

As with many large power projects, high capital costs can be a limitation to implementing biopower technology solutions. However, because of the range of technologies available, including incorporation into existing systems, biomass configurations may be more readily available than other types of renewables that require independent infrastructure. For example, capital costs for co-feed, a type of co-firing plant that mixes biomass with coal prior to grinding, are the least expensive of all biopower options.[65] ­To more accurately compare costs of various technologies and fuel sources, the levelized cost of electricity (LCOE) takes into account equipment costs, discount rate, economic life, feedstock costs, operating and maintenance, and efficiency. Recent LCOE analyses performed by the U.S. Energy Information Administration found that when comparing levelized biopower to traditional fuel sources, biomass costs are competitive (see Table 2 for a comparison between biopower and traditional fossil fuels).

Table 2: Comparison of New Power Plants Entering Service in 2017 (USD/MWh)


Levelized Capital Cost

Variable O&M (including fuel)

System Levelized Cost



Conventional Coal




Advanced Coal (IGCC)




Advanced Coal with CCS




Natural Gas


Natural Gas Combined Cycle (NGCC)




Advanced NGCC




Advanced NGCC with CCS










Source: USD Annual Energy Information Administration of the Department of Energy 2012.[66] Note: Because many biomass technologies are combined to produce this number, a high degree of variability is hidden. See Table 3 for more information on specific technologies.

While average total system costs are higher, it is important to note that there is variation between biopower systems (see Table 3). Moreover, clean energy incentives may encourage investment. In the near term, biomass co-firing is likely to remain the most economically feasible technology for biopower today. Other biopower technologies also have great potential to meet energy and climate goals in the medium and long term. For example, the most advanced gasification technology is still in an early commercialization stage of development in the United States, though it is in operation in European countries.[67]

Table 3: Capital and Operating Costs of Select Biopower Technologies


Overnight Capital Cost (2010 $/kW)

System Levelized Cost (2010 $/MWh)

Co-firing, co-feed



Co-firing, separate feed



Landfill Gas (MSW)*

1917 – 2436

90 – 120




Stoker Combustion



Source: National Renewable Energy Laboratory 2012IRENA, 2012.

Current Status of Biopower

Biopower crosses a wide range of policy arenas including agriculture, land management, air emissions, industrial processing, and power production. Policy discussions concerning biopower are likely to intensify as the United States continues to seek renewable and clean energy options, particularly with the possibility to classify biopower as carbon-negative. The definition of ‘sustainable’ biomass will shape this classification and influence biopower development in upcoming years.

A range of policies can affect biopower, such as renewable electricity standards, clean energy standards, or extension of the Farm Bill.[68] The proposed 2012 Clean Energy Standard considered electricity produced from biomass as a fully creditable clean energy source, alongside other traditionally recognized renewable energy sources.[69]

Of importance, the EPA has authority to regulate greenhouse emissions under the Clean Air Act (CAA) following the Supreme Court case Massachusetts v. EPA (2007).[70] In 2010, the EPA set out rules for permitting of new large stationary sources to regulate emissions – the Prevention of Significant Deterioration (PSD) and the Title V Operating Permit Programs – but did not exempt biopower emissions.[71] However, on July 1, 2011, the EPA announced it would defer permitting requirements for biomass-fired and biogenic-sourced energy facilities for three years.[72] This deferment allows time for the regulatory authority to analyze the issues surrounding biopower’s potential for carbon neutrality outlined in the environment section.[73] While relieving requirements for the time being, there is concern that regulatory uncertainty may deter biopower investment.[74]

Biopower also needs to overcome difficulties in acquiring a consistent feedstock, which could limit the ability to achieve economies of scale in biopower production.[75] Financing and siting for projects often require long-term fuel supply projections – still an undeveloped market in some geographic areas – and can limit project scale.[76] There is also potential increasing fuel competition between the power and fuel sectors and between geographic regions. To date, no policy encompasses both power and fuel production from biomass.[77]

Policy Options to Help Promote Biopower

Government support could significantly encourage biomass-fueled electricity and other low-carbon energy technologies. Much of the existing biopower capacity is a result of synergies between industrial waste disposal (forest, agriculture, and municipal) and energy needs. With appropriate climate and energy policies, biopower could be a primary renewable resource in a portfolio of low-carbon energy technologies.

  • Price on carbon emissions and sinks. Currently, fossil fuel power plants face no direct financial consequences for emitting CO2. Policies placing a price on carbon, such as cap-and-trade, would discourage traditional fossil-fuel use and spur investments in clean energy technologies, including biopower. A carbon pricing policy could also value carbon sinks that absorb emissions, like carbon sequestration in plants and geological formations.
  • Market and regulatory barriers. Removing or softening market barriers at the local, state, and federal levels can remove investment uncertainty, improve understanding, and reduce differentiation between policy and incentive programs among governmental entities and regions.[78]
  • Loan guarantees. Loan guarantees make funding large projects more feasible and relieve project developers from a degree of risk. Until a better understanding of the market risks and barriers is established, loan guarantees will allow for more demonstration projects and develop a better understanding of overall market behaviors.
  • Government funding for RD&D. Government funding or financial incentives for RD&D can advance biopower technology (e.g., BIGCC and BECCS). Additional scientific research can also improve understanding of net GHG impacts of large-scale biomass production and build consensus on the life cycle GHG emissions of biopower.
  • Production tax credit. The American Recovery and Reinvestment Act of 2009 extended the federal production tax credit (PTC) to generators for biomass electricity as well as other renewable electricity generation through 2013. This incentive makes investments in biopower more cost-competitive with traditional fossil fuel.
  • Renewable portfolio standard (RPS). Ensuring inclusion of biopower as a renewable energy source can ease implementation. Currently 30 states and the District of Columbia have renewable portfolio standards (RPSs), requiring a certain level of electricity production to come from renewable resources.[79] Many of these include biopower as a qualified renewable energy source.[80] Additionally, Congress has considered proposals for a national RPS.[81]
  • Development and adoption of Certifiable Standards for biomass production. An independently certifiable standard, focusing on supply chain and feedstock production, can provide information on biomass sources and support development of a sustainable biomass market. A certification system would monitor and guarantee biomass is sustainable by addressing undesirable LUC, pollution, and degradation. Sources that have smaller risk for LUC, such as waste materials or utilizing marginal or degraded land, could be identified and encouraged.[82]

Related Business Environmental Leadership Council (BELC) Company Activities


Duke Energy


Johnson Controls, Inc.



Related C2ES Resources

C2ES Renewable Energy Resource Page

Climate Change 101: Technological Solutions

State Renewable Portfolio Standards Resource Map

C2ES A Performance Standards Approach to Reducing CO2 Emissions from Electric Power Plants, 2009

C2ES TechBook: Agriculture Overview

C2ES TechBook: Carbon Capture and Storage

Further Reading / Additional Resources

International Energy Agency (IEA) / Global Bioenergy Partnership (GBEP)

U.S. Department of Energy / National Renewable Energy Laboratory

Combined Heat and Power Resources

Manomet Center for Conservation Sciences

Renewable Energy Policy Network

U.S. Environmental Protection Agency

Intergovernmental Panel on Climate Change (IPCC)



[1] .U.S. Energy Information Association (EIA AER), Annual Energy Review 2011, (U.S. Department of Energy, 2012),

[2] NREL, Indian Renewable Energy Status Report, NREL/TP-6A20-48948 (2010)

[3] Renewable Energy Power Network (REN21), Renewables 2011: Global Status Report, (Paris: United Nations Environment Program, 2012),

[4] In 2010, worldwide biopower capacity was estimated to be 66 GW. REN21 2012.

[5] National Renewable Energy Laboratory (NREL), “Chapter 6: Biopower Technologies,” Renewable Electricity Futures Study: Renewable Electricity Generation and Storage Technologies, Vol 2., (2012),

[6] Refers to the technical and economic potential of BECCS. IEAGHG, Potential for Biomass and Carbon Dioxide Capture and Storage (2011),

[7] Chum, H., et al, Bioenergy. In IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation Cambridge University Press, (2011),

[8] In 2010, worldwide biopower capacity was estimated to be 66 GW. REN21 2012.

[9] EIA AER 2012.

[10] EIA, "Annual Energy Review" (2012),

[11] OECD/IEA, Combining Bioenergy with CCS: Reporting and Accounting of Negative Emissions under UNFCC and Kyoto Protocol, (2011),

[12] OECD/IEA, Combining Bioenergy with CCS: Reporting and Accounting of Negative Emissions under UNFCC and Kyoto Protocol, (2011),

[13] EIA, Renewable Energy Consumption and Electricity Preliminary Statistics 2010, (2011),

[14] REN21 2012.

[15] REN21 2012.

[16] NREL 2012.

[17] Note: MSW biogenic is that portion of municipal solid waste consisting of paper and paper board, wood, food, leather, textiles and yard trimmings. Wood residuals and derived fuels include black liquor and mill byproducts in solid and liquid form. Other biomass includes agriculture byproducts/crops, sludge waste, and other biomass solids, liquids and gases. EIA 2011.

[18] NREL 2012.

[19] NREL 2012.

[20] REN21 2012.

[21] A decade ago, plants averaged around 20 MW, but today these are steadily increasing. REN21 2012.

[22] NREL 2012.

[23] Prior to 2000, the EIA included all solid waste in calculations of biopower. However, since that year, non-biogenic waste was no longer included. This document is also intends to cover only MSW biogenic in nature. EIA, Annual Energy Review - Total Energy. (2012),; NREL 2012.

[24] REN21 2012.

[25] NREL 2012.

[26] US EPA. Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figure for 2010s, (2011),

[27] Campbell, J., Lobell, D., Field, C. “Greater Transportation Energy and GHG Offsets from Bioelectricity than Ethanol,” Science (324) 22 May (2009), 1055-1057.

[28] NREL, Total Biomass by County (2009)

[29] Wright et al. 2006; Krister Ståhl, Lars Waldheim, Michael Morris, Ulf Johnsson, and Lennart Gårdmark, “Biomass IGCC at Värnamo, Sweden – Past and Future,” Global Climate and Energy Project: The Global Climate and Energy Project Energy Workshop. Stanford, CA. (2004). It must be noted, however, that the only BIGCC demonstration plant in the world operated at half of the 60 percent potential efficiency.

[30] EIAGHG, Potential for Biomass and Carbon Dioxide Capture and Storage (2011),

[31] Levine, E. Utility-Scale Biomass: Co-Firing and Densification, Public Meeting of the Biomass R&D Technical Advisory Committee, US Department of Energy (2011),

[32]Bridgwater, T.” Task 34: Biomass Pyrolysis,” IEA Bioenergy (2007),

[33] Wright et al, 2006.; Richter, D., “Wood Energy in America,” EESI briefing on 2 June. (2009).

[34] NREL 2012.

[35] EPA, Biomass Conversion Technologies, Combined Heat and Power Partnership (2010)

[36] Comer, K., “Background and Policy Issues for Biomass Co-firing and Repowering,” EESI briefing on 21 August (2008).

[37] NREL 2012.

[38] Wright et al. 2006.

[39] Levine, E., “Utility-Scale Biomass: Co-Firing and Densification.” Public Meeting of the Biomass R&D Technical Advisory Committee. US Department of Energy (2011),

[40] District heating refers to a network for distributing hot water or steam through insulated pipes to serve commercial, residential, institutional, or industrial demand for space heating and process heat.

[41] Low estimate from IEA, Combined Heat and Power: Evaluating the benefits of greater global investment (2008); High estimate from IEA, Energy Technology Perspectives (2008).

[42] Lemar, P., “CHP and Biopower: Market Drivers and Outlook,” Resource Dynamics Corporation, EPA CHP Partnership Partners Meeting (2008); EPA, Biomass Combined Heat and Power Catalog of Technologies (2007),

[43] Mann, M.K., Spath, P.L., “A life cycle assessment of biomass co-firing in a coal-fired power plant,” Clean Products and Processes, 3 (2) August, p. 81-91 (2001).

[44] DOE, Biomass Cofiring in Coal-Fired Boilers. Federal Energy Management Program: Federal Technology Alert. DOE/EE-0288 (2004).

[45] This figure is assuming the biomass is produced from urban waste sources that would have otherwise been allowed to break down and produce methane, Spath & Mann 2004.

[46] NREL 2012.

[47] Bracmort K., “Is Biopower Carbon Neutral?” Congressional Research Service: R41603 (2012),; Wirsenius, S., et al. How much land is needed for global food production under scenarios of dietary changes and livestock productivity increases in 2030? Agr. Syst. (2010), doi:10.1016/j.agsy.2010.07.005

[48] Spath, P. and Mann, M., Biomass Power and Conventional Fossil Systems with and without CO2 Sequestration—Comparing the Energy Balance, Greenhouse Gas Emissions and Economics, U.S. DOE NREL/TP-510-32575 (2004),

[49] NREL 2012.

[50] This study relies on the use of whole trees from harvested forest stands. Manomet Center for Conservation Sciences, Massachusetts Biomass Sustainability and Carbon Policy Study: Report to the Commonwealth of Massachusetts Department of Energy Resource,. Walker, T. (Ed.). Contributors: Cardellichio, P., Colnes, A., Gunn, J., Kittler, B., Perschel, R., Recchia, C., Saah, D., and Walker, T. Natural Capital Initiative Report NCI-2010-03 (2010).

[51] Bracmort 2011.

[52] NREL 2012.

[53] Cherubini, F., Bright, R., Stromman, A., Site Specific global warming potentials of biogenic CO2 for bioenergy: contributions from carbon fluxes and albedo dynamics. Environmental Research Letters. (2012)

[54] Bracmort 2012.

[55] Manomet Center for Conservation Sciences, Massachusetts Biomass Sustainability and Carbon Policy Study: Report to Massachusetts Department of Energy Resources, Walker, T. (Ed.). Contributors: Cardellichio, P., Colnes, A., Gunn, J., Kittler, B., Perschel, R., Recchia, C., Saah, D., and Walker, T. Natural Capital Initiative Report NCI-2010-03 (2010).

[56] NREL, Life Cycle Assessment Harmonization Results and Findings (2012),; Figures for specific biomass technologies from personal correspondence with NREL’s Ethan Warner.

[57] OECD/IEA 2011.

[58] The report refers to the realizable potential of IBCC and BIGCC and takes into account energy demand, capital turnover, and deployment rate. IEAGHG. Potential for Biomass and Carbon Dioxide Capture and Storage (2011),

[59] Beringer, T., Lucht, W. and Schaphoff, S. 2011. Bioenergy production potential of global biomass plantations under environmental and agricultural constraints. Global Change Biology Bioenergy 3: 299-312

[60] Biomass Research and Development Board, The Economics of Biomass Feedstocks in the United States: A Review of Literature. (2009),

[61] NREL 2012.

[62] EIA, Short-term Energy Outlook – Prices (2012),; Haq, Z., Biomass for Electricity Generation, EIA (2012),

[63] IEA, Natural Gas Year in Review (2012),

[64] U.S. Department of Energy, U.S. Billion-Ton Update (2011)

[65] IRENA 2012.

[66] In this case, the assumed discount rate is 10 percent and the life of the biomass plants to be between 20 to 25 years. EIA AEO, Levelized Cost of New Generation Resources (2012),

[67] Department of Energy, Energy Efficiency and Renewable Energy, Biopower Technical Strategy Workshop, (2010) f

[68] As of this writing, the updates to the 2008 Food, Conservation, and Energy Act of 2008, or the Farm Bill, that would have extended mandatory funding for rural energy programs failed to move by the last active legislative session.

[69] C2ES, Bingaman Clean Energy Standard Act of 2012, (2012)

[70] Cornell University Law School, MASSACHUSETTS v. EPA (No. 05-1120),

[71] EPA, Clean Air Act Permitting for Greenhouse Gas Emissions – Final Rules (2012); C2ES, BACT Guidance,

[72] U.S. Environmental Protection Agency, “Biogenic Factsheet: Final Rule - Deferral for CO2 emissions from Bioenergy and Other Biogenic Sources under the Prevention of Significant Deterioration (PSD) and Title V Programs”(2011),

[73] Bracmort, K., Is Biopower Carbon Neutral? (2013),; See C2ES source on the EPA’s Tailoring Rule:

[74] Bracmort, K., “Biomass Feedstocks for Biopower: Background and Selected Issues,” Congressional Research Service R41440 (2010),

[75] IRENA 2012.

[76] Lemar 2008.

[77] NREL, 2012.

[78] NREL 2012.

[79] C2ES, Renewable and Alternative Energy Portfolio Standards Map,

[80] Ashton, S. “Renewable and Energy Efficiency Portfolio Standards.” in Sustainable Forestry for Bioenergy and Bio-based Products: Trainers curriculum notebook, eds. Hubbard, W.; l. Biles; C. Mayfield; S. Ashton. (Athens, GA: Southern Forest Research Partnership, Inc., 2007).

[81] EIA, “Analysis of Clean Air Standard Act of 2012” (2012),

[82] Council of Sustainable Body Mass, Developing Sustainability Standards for the Second Generation Cellulosic Bioenergy Industry (2012),

Using wood and crops to generate electricity

Using wood and crops to generate electricity

Greenhouse Gas Emissions from Aviation and Marine Transportation: Mitigation Potential and Policies

Download the report (pdf)

Greenhouse Gas Emissions from Aviation and Marine Transportation: Mitigation Potential and Policies

December 2009

David McCollum
Gregory Gould
David Greene

Combined, aviation and marine transportation are responsible for approximately 5 percent of total greenhouse (GHG) emissions in the United States and 3 percent globally and are among the fastest growing modes in the transportation sector. Controlling the growth in these emissions will be an important part of reducing emissions from the transportation sector. A range of near-, medium- and long-term mitigation options are available to slow the growth of energy consumption and GHG emissions from aviation and marine shipping. Implementation of these options could result in reductions of more than 50 percent below BAU levels by 2050 from global aviation and more than 60 percent for global marine shipping. For these reductions to be realized, however, international and domestic policy intervention is required. Developing an effective path forward that facilitates the adoption of meaningful policies remains both a challenge and an opportunity.

“Aviation and Marine Transportation: GHG Mitigation Potential and Challenges” presents an introduction to aviation and marine transportation and a discussion of the determinants of GHG emissions from transportation; gives overview of current emissions and trends and growth projections; explains the technological mitigation options and potential GHG emission reductions; and discusses policy options at both the domestic and international level to achieve deep and durable reductions in emissions.

Press Release

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David L. Greene
David McCollum
Gregory Gould

Press Release: Aviation and Marine Transportation Offer Big Potential Emissions Reductions

Press Release
December 22, 2009

Contact: Tom Steinfeldt, (703) 516-4146

Report Finds Extensive Options Currently Available

WASHINGTON, D.C. – The potential for reducing greenhouse gas (GHG) emissions from global aviation and marine transportation is considerable — reductions of more than 50 percent below business-as-usual (BAU) levels by 2050 are possible, according to a new report from the Pew Center on Global Climate Change.

The report, Aviation and Marine Transportation: GHG Mitigation Potential and Challenges, examines growth projections for emissions from both aviation and marine transportation and options to reduce those emissions.  Aviation and marine transportation combined are responsible for approximately 5 percent of total GHG emissions in the United States and 3 percent globally and are among the fastest growing modes in the transportation sector. Under business-as-usual forecasts, CO2 emissions from global aviation are estimated to grow 3.1 percent per year over the next 40 years, resulting in a 300 percent increase in emissions by 2050.International marine transportation emissions are estimated to grow by 1 to 2 percent per year, increasing by at least 50 percent over 2007 levels by 2050. Controlling the growth in aviation and marine transportation GHG emissions will be an important part of reducing emissions from the transportation sector.

A range of near-, medium- and long-term mitigation options are available to slow the growth of energy consumption and GHG emissions from aviation and marine shipping. These options include improvements in operational efficiency, improvements in the energy efficiency of engines and the design of air and marine vessels, and transitioning to less carbon-intensive fuels and transportation modes. Implementation of these options could result in reductions of more than 50 percent below BAU levels by 2050 from global aviation and more than 60 percent for global marine shipping. For these reductions to be realized, however, international and domestic policy intervention is required. Developing an effective path forward that facilitates the adoption of meaningful policies remains both a challenge and an opportunity.

 “Aviation and marine shipping are two of the fastest growing modes of transportation,” said Eileen Claussen, President of the Pew Center on Global Climate Change.  “Their greenhouse gas emissions are growing rapidly as well. To protect the climate, we need to reduce emissions across the entire economy. Aviation and marine shipping are part of the climate problem, and this report shows that they can be part of the solution.”

Aviation and Marine Transportation: GHG Mitigation Potential and Challenges also examines policy options for achieving reductions in GHG emissions from these transportation modes. The paper, authored by David McCollum and Gregory Gould of the University of California at Davis and David Greene from Oak Ridge National Laboratory, explains the challenges, examines policy efforts to date, and explores both domestic and international policy options for addressing emissions from aviation and marine transportation.  

Key sections of the paper include:

  • An introduction to aviation and marine transportation and a discussion of the determinants of their GHG emissions;
  • An overview of current emissions trends and growth projections;
  • An explanation of the technological mitigation options and potential GHG emission reductions; and
  • Policy options at both the domestic and international level to achieve deep and durable reductions in emissions.

For more information about global climate change and the activities of the Pew Center, visit


The Pew Center was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Residential End-Use Efficiency

PDF Version

Quick Facts

  • Energy use in residential buildings accounts for about 17 percent of U.S. greenhouse gas emissions. Half of these emissions are due to two of the largest energy end uses--heating, ventilation, and air conditioning (HVAC) equipment and lighting. This factsheet focuses on the remaining 50 percent of emissions that are due to a variety of appliances, such as water heaters and refrigerators.
  • An investment in end-use energy efficiency increases the availability of system-wide electricity generation and transmission capacity for other uses; as such, end-use efficiency can be considered a resource, often described in terms of “negawatts,” that provides energy savings comparable to the electricity generated by power plants.
  • U.S. residential per household electricity consumption has increased 39 percent since 1970, reflecting the overall trend toward larger homes and a greater variety of appliances and electronics in each home. However, there is evidence of recent trends towards more energy efficient new homes and stabilization of home sizes. 


Residential buildings account for about 17 percent of U.S. greenhouse gas (GHG) emissions measured in carbon dioxide equivalents (CO2e) (including both direct emissions, such as from residential furnaces, and the indirect emissions from generating the electricity consumed in these buildings).1 The large share of residential building energy consumption attributable to space heating and cooling varies with climate conditions.2 Energy consumed by the roughly 110 million residential buildings3 in the United States is used to power various end uses, each of which require different technological improvements or behavioral changes to increase energy efficiency and conservation. Improving residential end-use energy efficiency is a challenge given the long lifetimes of appliances, such as refrigerators and ovens, and the preferences and usage patterns of households.4

An investment in end-use energy efficiency increases the availability of system-wide electricity generation and transmission capacity for other uses. Thus, end-use energy efficiency can be considered a resource, often referred to as a “negawatt,” available to balance electricity supply and demand, just as is done with other resources such as coal or wind power generation. Like these other resources, “negawatts” from end-use energy efficiency are available in varying amounts at different levels of investment.  When considering costs over the lifetime of an investment, end-use energy efficiency can be one of the lowest-cost means of meeting energy demand and of reducing GHG emissions.


Four options for increasing energy efficiency and reducing greenhouse gas emissions from the residential sector include (1) incorporating high-efficiency or renewable on-site power generation to displace less efficient and/or more carbon-intensive grid power; (2) reducing whole building energy consumption through well-designed energy codes and standards including, but not limited to, those involving the building’s “envelope,” which consists of the structural materials,  fenestration (e.g. windows and doors), air sealing, and insulation (see Climate TechBook: Building Envelope);(3) improving end-use appliance energy efficiency; and 4) educating homeowners about their home’s operation and maintenance as related to energy. As Figure 1 shows, two of the largest residential end-uses – heating, ventilation, and air conditioning (HVAC) equipment and lighting – are responsible for just under 50 percent of direct and indirect residential GHG emissions. The remaining residential energy end uses are the focus of this factsheet and are described below.


Figure 1: Greenhouse Gas Emissions by End Use in the Residential Sector, 2007

Source: Energy Information Administration (EIA) Annual Energy Outlook, 2009
*Note: “Other Energy Uses” includes small electric devices, heating elements, and motors; such appliances as swimming pool and hot tub heaters, outdoor grills, and outdoor natural gas lighting; wood used for primary and secondary heating in wood stoves or fireplaces; and kerosene and coal. “Other Electric Uses” includes color TVs (6%), PCs (2%), furnace fans (2%), dishwashers (1%), freezers (1%), and clothes washers (1%).
  • Hot water heaters are the second largest end use of electricity in households, contributing 13 percent of total residential GHG emissions. Water heating efficiency can be improved through the use of technologies such as heat pumps, integrated HVAC-water heating systems which make use of waste heat, and tankless water heaters.5
  • Electric plug loads (other electric uses) include a variety of devices such as: personal computers and peripherals (e.g., printers, scanners, and speakers); television and other audiovisual equipment; personal care appliances such as hair dryers and electric toothbrushes; and kitchen appliances such as coffee makers, toasters, and microwaves. Energy use by these devices has historically accounted for about 10 percent of total residential GHG emissions, but this share is increasing. Means to improve the energy efficiency of these devices include energy efficiency standards for the power supplies of these devices, or the devices themselves.
  • Refrigeration and Freezers are responsible for about 7 percent of GHG emissions from the residential sector, and are among the biggest success stories for energy efficiency standards (see Figure 2). Since the 1970s, refrigerators and freezers have increased in size by a third while consuming two-thirds less energy at one-third the price.  
  • Dishwashers, clothes washers, and dryers contribute 6 percent of residential GHG emissions. For these appliances, optimal usage patterns such as running full loads and using efficient settings can improve energy efficiency. In terms of technology, appliance research has led to the development of modern dishwashers which consume about half as much energy as models from the 1970s,6 and front-loading (horizontal axis) clothes washers which use 60 percent less energy and 40 percent less water than top-loading washers.7 There is little variation among the efficiencies of clothes dryers, but natural gas-powered dryers tend to be cheaper to operate than electric clothes dryers because natural gas has usually been cheaper than electricity.8   
  • Cooking through the use of electric or natural gas ovens and ranges contributes about 3 percent of residential GHG emissions. Self-cleaning, convection, natural gas, and models without pilot lights tend to be the most efficient ovens, with possible energy savings of as much as 20 percent with convection ovens.9 However, cooking practices such as using copper, flat-bottomed cookware on ranges and glass or ceramic pans in ovens, matching cookware size to range top size, and using smaller appliances to cook small dishes are more important than technology advances to achieve further gains in energy efficiency.10
  • Other energy uses include miscellaneous consumption in the household through small electric devices, heating elements, and motors; such appliances as swimming pool and hot tub heaters, outdoor grills, and natural gas outdoor lighting; wood used for primary and secondary heating in wood stoves or fireplaces; and kerosene and coal. These end uses are responsible for as much as 13 percent of residential GHG emissions.
Figure 2: Household Refrigerators/Freezers Average Electricity Use by Year of Purchase

Source: National Research Council, 200911

Environmental Benefit/Emission Reduction Potential

In 2003, researchers estimated that residential end-use energy efficiency standards for appliances and HVAC systems could achieve 8-9 percent reductions in primary energy12 consumption and associated CO2 emissions13 by 2020 compared to a “business-as-usual” scenario which extrapolated historical market-induced energy efficiency improvements from the mid-1980s.14 These cumulative reductions translate to 1.4 gigatons (Gt) of CO2-e by 2020, equivalent to the lifetime emissions from four-and-a-half 1000 megawatt (MW) coal power plants, or 4.4 Gt of CO2-e by 2050, equal to the lifetime GHG emissions from fourteen 1000 MW coal power plants.15

A 2009 analysis by McKinsey and Company estimated that a 27 percent reduction in residential primary energy consumption and associated GHG emissions in 2020 is possible with profitable (positive net present value) energy efficiency investments in lighting, end-use appliances, and building envelop upgrades in new, existing, and low-income homes.16  McKinsey calculated that about 30 percent of total residential primary energy reductions could be achieved through more efficient electronics and end-use appliances, equal to 1.8 quadrillion BTUs of primary energy.

Since 2003, two energy bills (the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007) have imposed new energy efficiency standards.  The 2009 federal economic stimulus bill (American Recovery and Reinvestment Act) also included funding for state energy efficiency programs and assistance for low-income homeowners, which may accelerate the pace of energy efficiency improvements. In addition, climate change bills considered by the U.S. Congress also include appliance efficiency provisions. The net effect of these recent pieces of legislation will be to realize a significant portion of the potential GHG emission reductions possible from residential energy efficiency.


When considering costs over the lifetime of an investment, residential end-use energy efficiency can be one of the lowest-cost means of meeting energy demand and of reducing GHG emissions. For example, analysts from McKinsey and Company estimated that energy efficiency improvements in residential electronics would have a net savings of $101 per metric ton of CO2 (tCO2) avoided and that improvements in water heater efficiency would have a net savings of $11/tCO2 when considering lifecycle costs.17 These analysts argue that incremental capital costs are minimal for energy efficiency improvements in residential appliances.18 These estimates consider the economic potential for energy efficiency investments, and do not take into account behavioral changes, or regulatory, market or demographic factors that may affect the levels of energy efficiency practically achievable through appliance investments in the residential sector.

A 1998 report from researchers at the Lawrence Berkeley National Laboratory estimated that the cost of energy savings19 for many efficient appliances mandated by standards was below residential market electricity rates of 5-9 cents per kilowatt-hour (kWh), from as low as 0.15 cents per kWh for energy saved with clothes washers, 3.5-4.9 cents per kWh for dishwashers, and 5.0-5.8 cents per kWh for refrigerators, to as high as 7.3 cents per kWh for clothes dryers using a 7 percent discount rate.20

Energy efficiency cost estimates are highly dependent on the choice of household discount rate. Consumers have been observed to use 20-100 percent discount rates in making residential appliance purchases.21  The social discount rate is usually much lower than the private discount rate, meaning that more projects appear socially beneficial than privately beneficial. Other researchers argue that the cost-efficiency relationship for appliances is unclear, and that the incremental costs are substantial for efficient appliances, especially when bundled with other costly premium features.22

Current Status

U.S. residential per household electricity consumption has increased 39 percent since 1970, reflecting the overall trend toward larger homes and a greater variety of appliances and electronics in each home.23 However, there is evidence of recent trends towards more energy efficient new homes and stabilization of home sizes. The U.S. Department of Energy Smart Home Scale shows today’s new homes are 30 percent more energy efficient than the existing housing stock, and U.S. Census data show that their median size stabilized between 2005 and 2007 and subsequently has been trending downward.24,25 Efficient residential end-use appliances are becoming more common in the market through the use of energy efficiency standards and the ENERGY STAR® voluntary labeling program. Energy efficiency standards increase the average efficiency of products sold on the market by banning the sale of products that are less efficient than the standard. Minimum energy efficiency standards for residential end-use appliances are regularly updated at the federal and state levels as technology advances or with new legislation. The Energy Independence and Security Act of 2007 (EISA) established higher energy efficiency standards for refrigerators, freezers, dishwashers, and power supplies for electric plug loads. The U.S. Department of Energy is also currently updating standards for water heaters and clothes washers and published new standards for cooking ranges in 2009. ENERGY STAR® labels are applied to the appliances in different categories that rank in the top 25 percent of those available on the market in terms of energy efficiency. The market penetration of ENERGY STAR® products varies by end use, from as high as 95 percent for new LCD screens to as low as 16 percent for battery charger systems sold in 2007.26

Obstacles to Further Development or Deployment

  • Lack of a price on GHG emissions
    Electricity prices that do not reflect the full societal cost of GHG emissions from traditional fossil fuel power generation limit the incentive to invest in energy efficiency by reducing the cost savings possible with efficient appliance upgrades and increasing payback periods for such investments. Without a price on GHG emissions, the private benefits of investing in energy efficiency are less than the societal benefits of such investments.
  • Lack of Awareness and Information
    Many consumers and building developers are unaware of the energy efficiency of the appliances in their buildings, and do not have knowledge about the best-in-class technology available for many end uses or the potential cost and energy savings from such devices. 
  • Behavioral Barriers
    Households do not always make rational choices about appliance investments.  They may use simplistic financial measures such as payback periods which ignore the possibility of future fuel price increases, they choose from a subset of appliances which may not contain the optimal appliances because of time- or resource-constraints, they are biased toward the status quo, and they are more willing to take risks to avoid losses than to achieve gains in making economic decisions. Behavioral economics research points to monetary and non-monetary/information-based interventions that can address this barrier.27
  • Split Incentives
    In the highly fragmented buildings industry, those who pay energy bills may not make decisions about the specifications and purchase of large household appliances. For example, in the market for newly constructed homes, builders may not install the most efficient appliances if they are not sure that the incremental cost of the appliance will be reflected in the selling price of the house, while buyers must pay the higher lifetime energy bills from less efficient appliances. In the rental market, which accounts for almost a quarter of residential energy use,28 owners may have the capital to invest in energy efficient appliances, but have limited incentive to do so because tenants pay electricity bills.  This effect varies by appliance; for example, 90 percent of buyers of new homes obtained their dishwashers and cooking ranges through their builders, while 60 percent of buyers purchased their refrigerators themselves through a retailer.29
  • Ownership Transfer Issues
    Residential end-use energy efficiency improvements often yield savings and payback periods longer than most homeowners are likely to stay in a particular house. Since residential housing markets do not always capitalize energy efficiency investments in home prices,30 benefits accrue to future owners through lower energy bills. This factor mainly affects purchasing decisions for less portable appliances with long lifetimes such as refrigerators, laundry equipment, and ovens.
  • Capital Constraints
    Residential homeowners often apply high discount rates of 20-100 percent or higher for energy efficiency improvements, higher than rates of return for most financial investments.31  Compared to commercial or industrial decision-makers, residential households tend to be more risk-averse and have greater sensitivity to initial capital costs because they lack liquidity and have a higher cost of capital or limited access to capital. This effect is more pronounced in lower-income and capital-constrained households. Streamlined loan approval processes, favorable loan terms, and direct rebates can help to address this barrier.
  • Rebound Effects
    Rebound effects describe the partial increases in energy consumption due to energy efficiency investments that can occur either by making an appliance less expensive to use and thereby encouraging greater use of it, or by reducing overall electricity prices in wholesale markets, leading to greater electricity consumption in general. The rebound effect may erode some of the estimated energy savings and emission reductions possible with residential end-use energy efficiency. Researchers have estimated that 10-40 percent of water heater efficiency gains are negated by increased water heater usage, but little to no increase in energy consumption is seen in other appliance markets, though indirect effects due to the purchase of larger appliances with premium features were not measured.32
  • Additionality
    A danger with energy efficiency programs is that the financial incentives for energy efficiency are partially captured by individuals who would have made these investments even in the absence of policy interventions.  If this occurs, it limits the extent to which programs improve energy efficiency and decreases the cost-effectiveness of the program
  • Unequal Treatment of Energy Efficiency and Supply-Side Resources
    In general, utilities have more incentive to invest in power generation or transmission upgrades than in energy efficiency because their profits are often tied to electricity sales and capital cost recovery. 

Policy Options to Help Promote Residential Energy Efficiency

  • A Carbon Price
    A price on carbon, such as that which would exist under a GHG cap-and-trade program (see Climate Change 101: Cap and Trade), would make energy efficiency a more cost-effective option compared to electricity from traditional fossil fuel generation.
  • Energy Efficiency Resource Standards (EERS)
    An EERS is a market-based mechanism to encourage more efficient generation, transmission, and use of electricity and natural gas. State public utility commissions or other regulatory bodies set electric and/or gas energy savings targets for utilities, often with flexibility to achieve the target through a market-based trading system. All EERS’s include end-use energy savings improvements. 19 states have an EERS (see C2ES’s EERS web page).
  • Policies to Promote Smart Grid Deployment
    Smart grid technologies, including communication networks, advanced sensors, and monitoring devices, form the foundation of new ways for utilities to generate and deliver power and for consumers to understand and control their electricity consumption at the building level and at the level of individual electronic appliances (see Smart Grid factsheet).
  • Appraisal Practices
    Appraisal practices and standards should accurately reflect the financial benefits provided by more energy efficient homes and buildings.
  • Innovative Financing and Subsidies
    Financing mechanisms whose rates and limits reflect the benefit of more energy homes or buildings and leasing arrangements – such as loans with favorable terms, rebate programs, and green mortgages – would lower the up-front capital required for consumers to invest in end-use energy efficiency. For example, in 1995, Congress mandated a national energy efficiency mortgage program which insures loans for energy efficiency investments incorporated into new or refinanced mortgages administered through the U.S. Department of Housing and Urban Development.33
  • Low-Income Weatherization Assistance
    Subsidies for energy efficiency investments can share the welfare benefits of energy efficiency improvements among all segments of society.
  • Point of Sale and Rent Interventions
    These policies can address ownership transfer issues. Information dissemination or requirements and incentives for energy audits or appliance upgrades during home sales or new rental contracts can encourage households to improve residential end-use efficiency.34
  • Decoupling of Utility Profits from Electricity Sales
    By ensuring cost-recovery for initial incremental capital costs and a rate of return for energy efficiency investments equal to returns on power generation and transmission investments, state regulators can make utilities indifferent between energy efficiency investments and power generation investments.35,36 Decoupling programs can also serve to adjust electricity rates periodically to maintain stable utility revenues despite increases or decreases in electricity consumption (see C2ES factsheet on Decoupling).
  • Utility-Based Incentive Programs
    Several states have adopted different models of utility-based direct energy efficiency incentive programs which disseminate efficiency information, subsidize energy audits, provide incentives for energy efficient new residential construction, or offer rebates for efficient equipment. For example, electricity consumers in northern California face a “systems benefit charge” which is pooled and administered by distribution utilities for system-wide energy efficiency investments. Vermont has created an independent energy efficiency utility to administer energy efficiency projects. States such as New York, Wisconsin, and Ohio administer energy efficiency investments through state agencies.
  • Energy Efficiency Standards
    Efficiency standards have been mandated at the federal level for a wide variety of residential products.37 Industry associations often develop voluntary energy efficiency standards as a way to stay ahead of federal regulations and identify premium products.38 Energy efficiency standards have been one of the two largest sources of CO2 emission reductions in the buildings sector.39 Some analysts argue that efficiency increases due to energy standards are modest compared to energy efficiency gains that can be realized through higher energy prices, which can be achieved through a price on carbon. For example, in an econometric study, researchers found a 5 percent increase in water heater efficiency due to high prices during the oil crises in the 1970s, compared to a 2 percent increase due to energy standards in 1990.40
  • Voluntary Labeling
    Labeling systems such as the ENERGY STAR® program can lower information gaps in the residential sector. The ENERGY STAR® program is one of the two largest sources of CO2 emissions reductions in the buildings sector.41 Voluntary labeling and information dissemination programs can provide clear financial and technical information useful for household decision-making, such as simple financial analyses and identification of a subset of best-in-class products from which consumers can choose.
  • Non-Monetary Interventions
    Programs such as the Sacramental Municipal Utility District (SMUD)’s ) “smiley face” experiment may help to address behavioral barriers. SMUD included smiley faces on bills of customers whose usage was low relative to nearby households, and frowning faces on households with high usage. This induced an energy savings of approximately 2 percent relative to households with standard bills. These and other interventions which increase access to information, or use framing, social pressure, or default options can help to change behaviors to improve end-use energy efficiency.42,43
  • Behavioral Response Research
    There is limited empirical data on the behavioral response to policy interventions to improve energy efficiency; such data can be used to design better policies to lower behavioral barriers to energy efficiency.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

10-50 Workshop Energy Efficiency Papers

Gilbert Metcalf, Tufts University (Overview) (pdf)

Lynn Price and Ernst Worrell, Lawrence Berkeley National Laboratory (pdf)

Vivian Loftness, Carnegie Mellon University (pdf)

Richard Newell, Resources for the Future (pdf)

Appliances and Global Climate Change: Increasing Consumer Participation in Reducting Greenhouse Gases, 2000 

Brown, M. A., Southworth, F., and Stovall, T. K.  2005.  Towards a Climate-Friendly Built Environment.

The U.S. Electric Power Sector and Climate Change Mitigation, 2005 

What’s Being Done in the States:
Appliance Efficiency Standards,   
Energy Efficiency Resource Standards

Further Reading/Additional Resources

American Council for an Energy-Efficient Economy (ACEEE).  Consumer Guide To Home Energy Savings

U.S. Department of Energy (DOE), Energy Efficiency and Renewable Energy Program. 
-    Appliances and Commercial Equipment Standards

Dubin, J. A.  1992.  “Market Barriers to Conservation: Are Implicit Discount Rates Too High?” California Institute of Technology Working Paper.

Electric Power Research Institute. 2009. Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the U.S. Technical Report # 1016987.  January.

Gillingham, K., Newell, R., and Palmer, K.  2009.  Energy Efficiency Economics and Policy.  Resources for the Future Discussion Paper # 09-13.  April. 

Greening, L. A., Greene, D., Difiglio, C.  2000. “Energy efficiency and consumption - the rebound effect - a survey.”  Energy Policy. Vol 28, p. 389-401. 

Howarth, R. B., Haddad, B. M., Paton, B. 2000. “The economics of energy efficiency: insights from voluntary participation programs.”  Energy Policy. Vol. 28, page 477-486.

Koomey, J. G., Mahler, S. A., Webber, C., and McMahon, J. 1998. Projected Regional Impacts Of Appliance Efficiency Standards For The U.S. Residential Sector. LBNL-39511.

Kushler, M., York, D., Witte, P. 2006. Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Incentives.  ACEEE report # U061. October.

McKinsey and Company, 2007. Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? December. 

McKinsey and Company, 2009. Unlocking Energy Efficiency in the U.S. Economy.  July. 

Meyers, S, McMahon, J. E., McNeil, M., and Liu, X.  2003. “Impacts of US Federal Energy Efficiency Standards for Residential Appliances,” Energy. Vol 28, June: 755–67.

Newell, R., Jaffe, A. and Stavins, R. 1998. “The Induced Innovation Hypothesis and Energy-Saving Technological Change,” Resources for the Future, Discussion Paper, October.

Train, K. 1985.“Discount Rates in Consumers’ Energy-Related Decisions: A Review of the Literature.” Energy Vol. 10, No. 12: 1243-1253.

1 U.S. Environmental Protection Agency.  2009 U.S. Greenhouse Gas Inventory Report.
2 In contrast, commercial building electricity consumption is largely driven by the size of lighting, computer, and other electronic loads.  Brown, M. A., Southworth, F., and Stovall, T. K.  2005.  Towards a Climate-Friendly Built Environment. page ES-iv. 
3 U.S. Census Bureau. American Housing Survey.
4 Brown et al. 2005.
5 Brown et al. 2005, page 31.
6 American Council for an Energy-Efficient Economy (ACEEE).  Consumer Guide To Home Energy Savings.
7 U.S. Department of Energy.  Appliance Success Stories.
8 Flex Your Power.  2009. Clothes Dryers Product Guides
9 ACEEE. 2007. Consumer Guide to Home Energy Savings: Cooking.
10 ACEEE, Cooking, 2007.
11 NRC (National Research Council). 2009. Realistic Prospects for Energy Efficiency in the United States. Washington, D.C.: National Academies Press.
12 Primary energy is defined as the energy contained in the fuels (e.g., coal, natural gas, and petroleum) consumed directly or indirectly by the household. The delivered energy is the energy actually consumed by the household and will reflect conversion and transmission losses from the primary energy. The delivered energy from natural gas used directly in a household is about the same as the primary energy from natural gas, except for any losses from transportation. In contrast, the primary energy of electricity is often 2-3 times higher than the delivered energy of electricity used by the household, depending on the resource mix (of coal, natural gas, nuclear, renewable, etc.) used to produce the electricity and taking into account the energy losses that occur during the generation and grid transmission of electricity. For example, in the case of coal-fueled electricity, the primary energy is the energy value of the coal used in the power plant. The delivered energy is the energy value of electricity delivered to a home, which will be less than the primary energy because power plants convert only a fraction of the primary energy to electricity and then electricity is lost during transmission and distribution.
13 The GHG emissions associated with a unit of primary energy (measured in quadrillion British thermal units (Btus) or quads) depends on the fuel mix. For example, as U.S. electricity generation becomes less carbon-intensive through the use of more renewables, nuclear, and natural gas instead of coal, the GHG emissions per unit of primary energy will decrease.
14 S. Meyers, J. E. McMahon, M. McNeil and X. Liu, “Impacts of US Federal Energy Efficiency Standards for Residential Appliances,” Energy 28 (June 2003): 755–67. See also S. Meyers, J. E. McMahon, M. McNeil and X. Liu, “Realized and Prospective Impacts of U.S. Energy Efficiency Standards for Residential Appliances,” Lawrence Berkeley National Laboratory, LBNL-4950, June 2002.
15 Assumes a 73.8 percent capacity factor (source: EIA), and 50-year lifetime for a coal power plant, and a CO2 emissions rate equal to the U.S. coal fleet average emissions rate, calculated from the EPA Emissions Inventory and the Energy Information Administration’s Electric Power Annual 2007 report.
16 McKinsey and Company, 2009. Unlocking Energy Efficiency in the U.S. Economy.  July. 
17 Costs and emission reductions assessed from present to 2030 with a 7 percent discount rate (cost/savings in 2009$). McKinsey and Company, 2007. Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? December: p. ES-xiii.  The GDP deflator was used to convert 2005 dollars to 2009 dollars.
18 McKinsey and Company, 2009.
19 Cost of conserved energy is an energy efficiency cost metric defined as the ratio between the incremental levelized annual cost for the efficient appliance and the annual electricity savings in comparison with a baseline appliance. Levelized annual costs are the sum of annual electricity and maintenance costs (if any) and amortized capital costs at a given discount rate. 
20 Koomey, J. G., Mahler, S. A., Webber, C., and McMahon, J. 1998. Projected Regional Impacts Of Appliance Efficiency Standards For The U.S. Residential Sector. LBNL-39511. Cost of conserved energy in 2009 calculated by escalating rates from 1995 by the GDP deflator. All prices are in 2009 dollars.
21 Train, K. 1985. “Discount Rates in Consumers’ Energy-Related Decisions: A Review of the Literature. ”Energy 10(12):1243-1253.
22 McKinsey and Co., 2009
23 Calculated from residential end-use electricity consumption data from the Energy Information Administration’s Annual Energy Review 2008, table 8.9: Electricity End Use, and the U.S. Census Bureau number of households data.
24 U.S. Department of Energy Smart Home Scale
25 U.S. Census. New Residential Construction: Quarterly Starts and Completions by Purpose and Design.
26 U.S. Environmental Protection Agency. 2008. ENERGY STAR® Unit Shipment and Market Penetration Report: Calendar Year 2007 Summary.
27 Gillingham, K., Newell, R., and Palmer, K.  2009.  “Energy Efficiency Economics and Policy.”  Resources for the Future Discussion Paper # 09-13.  April.
28 EIA, Residential Energy Consumption Survey (RECS), Total Energy Consumption, Expenditures, and Intensities, 2005, Table US1.
29 J.D. Power and Associates.  Press Release.  9 November 2005.
30 Dubin, J. A.  “Market Barriers to Conservation: Are Implicit Discount Rates Too High?” in Economics of Energy Conservation.
31 Azevedo, I. L.  “Energy Efficiency and Conservation: Is Solid-State Lighting A Bright Idea?”  ECEEE paper, 2007.
32 Greening, L. A., Greene, D., Difiglio, C.  2000. “Energy efficiency and consumption - the rebound effect - a survey.”  Energy Policy. Vol 28, p. 389-401. 
33 U.S. Department of Housing and Urban Development. Energy Efficient Mortgages and FHA Mortgage Insurance.
34 McKinsey and Co, 2009, page xi-Exhibit F.
35 Kushler, M., York, D., Witte, P. 2006. “Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Incentives.”  ACEEE report # U061.
36 Solar Electric Power Association (SEPA).  2009.  “Decoupling Utility Profits From Sales.” SEPA Report # 03-09. February.
38 Examples of industry-led appliance standards programs include the Association of Home Appliance Manufacturers’ (AHAM) Standards program, and the 80 Plus Program for 80% greater efficiency power supplies for plug loads developed by electric utilities,
39 Brown et al., 2005, page vi.
40 Richard Newell, Adam Jaffe, and Robert Stavins, “The Induced Innovation Hypothesis and Energy-Saving Technological Change,” Resources for the Future, Discussion Paper, October 1998, and Quarterly Journal of Economics 114, no.3, pp. 941–75.
41 Brown et al., 2005, page vi.
42 Kaufman, L. “Utilities Turn Their Customers Green, With Envy.” New York Times. 30 January 2009.
43 Ayres, Ian et al., 2009, Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage, NBER Working Paper 15386.

Options for reducing energy consumption in residential buildings

Options for reducing energy consumption in residential buildings

Embracing a Cleaner Coal Future

The role of coal in the future U.S. energy mix is a key issue in the Senate debate over climate legislation. Another senator has recently drawn attention to the importance of carbon capture and storage (CCS) technology to coal. On December 3, Senator Robert Byrd (D-WV) issued an opinion piece entitled “Coal Must Embrace the Future.”

West Virginia produces more coal than any state other than Wyoming and accounts for about 13.5 percent of total U.S. coal production. Coal-fueled power plants provide nearly 98 percent of West Virginia’s electricity. Coal mining accounts for about 6 percent of West Virginia’s state GDP and 3 percent of total state employment.

Senator Byrd’s opinion piece addresses issues related to mountaintop removal mining and climate change. Notably, on the question of climate change, Senator Byrd writes that:

To be part of any solution, one must first acknowledge a problem. To deny the mounting science of climate change is to stick our heads in the sand and say “deal me out.” West Virginia would be much smarter to stay at the table. The 20 coal-producing states together hold some powerful political cards.

Disinterested analyses (e.g, from MIT and EPRI) project coal with CCS to be a significant component of a least-cost portfolio of low-carbon energy technologies.  Coal currently provides nearly half of all U.S. electricity. Senator Byrd’s opinion piece reinforces the distinct importance of preserving a significant role for coal in a future U.S. energy supply in order to secure broad political support (i.e., at least 60 votes in the Senate) for action on climate change.

Senator Byrd earlier stated that he did not support the climate and energy bill passed by the House in June (H.R. 2454, the American Clean Energy and Security Act of 2009) “in its present form.” Our recent brief describes the significant investments the House energy and climate bill includes for demonstration and deployment of CCS with coal-fueled power plants. The senator does, however, highlight in his opinion piece that he has been working for the past six months with a group of coal state senators on provisions that could be included in a Senate climate and energy bill that would facilitate a transition to a low-carbon energy future for the coal industry.

In short, Senator Byrd’s opinion piece is a candid assessment of the situation as he sees it: the science supporting man-made climate change is clear; U.S. climate and energy legislation will pass eventually; cooperative, constructive engagement by coal state Senators in crafting such legislation is the best strategy for protecting the interests of their constituents.

Fittingly, one of the most advanced CCS projects in the world recently began operation in Senator Byrd’s home state—American Electric Power’s Mountaineer Plant Carbon Dioxide Capture & Storage Project.

Steve Caldwell is a Technology and Policy Fellow

Dorgan Delves Deeper into CCS

Not surprisingly, Senator Byron Dorgan (D-ND) is interested in carbon capture and storage (CCS) and its application to coal-fueled electricity generation. North Dakota gets almost 90 percent of its electricity from coal, and the state is the 10th largest producer of coal in the United States.

In mid-2008, Senator Dorgan convened a group of stakeholders with interest in CCS under the banner of a “Clean Coal and Carbon Capture and Sequestration Technology Development Pathways Initiative” (CCS Initiative) and asked them to provide input related to a number of key questions regarding CCS. Participants included representatives from the electric power industry, coal industry, manufacturing, labor, academics, and NGOs. The questions posed by the Senator focused on such issues as how much funding for CCS is required to ensure the technology is ready for broad deployment and how the United States can expand its cooperation with other key coal-producing and coal-consuming nations to accelerate international deployment of CCS.

On December 1, Senator Dorgan released a report prepared by the National Energy Technology Laboratory (NETL) that summarized input provided by the CCS Initiative participants.

Providing a Nuclear Boost

This week, Senators Lamar Alexander (R-TN) and Jim Webb (D-VA) released a bill intended, among other things, to dramatically expand the U.S. nuclear reactor fleet and, reportedly, to double the production of nuclear power in the United States by 2020.

In previous blog posts, we have highlighted what proposed climate and energy legislation in the House and Senate does for nuclear power. Many analyses, such as studies by the U.S. Environmental Protection Agency (EPA) and the Energy Information Administration (EIA), agree that the bulk of the most cost-effective initial greenhouse gas (GHG) emission reductions are found in the electricity sector and that nuclear power can play a key role in reducing GHG emissions from electricity generation as part of a portfolio of low-carbon technologies.

Putting a price on carbon, as a GHG cap-and-trade program would do, is likely the best option for expanding nuclear power generation since it makes the cost of electricity from nuclear and other low-carbon technologies more economical compared to traditional fossil fuel technologies. For example, in its analysis of the American Clean Energy and Security Act of 2009 (ACESA) passed by the House of Representatives in June of 2009, EIA projected that nuclear power might provide nearly twice as much electricity in 2030 as it does today.

A key challenge is cost. The construction of much of the existing nuclear fleet saw significant cost overruns and delays, which makes financing the first new plants after a hiatus of several decades difficult. Government loan guarantees can help the first-mover new nuclear power plants overcome the financing challenge. The demonstration of on-budget and on-time construction and operation by these first movers would facilitate commercial financing of subsequent plants.

Could the U.S. undertake a very large expansion of nuclear power? Nuclear power plants are massive undertakings, and a typical plant might cost on the order of $6 billion dollars and take 9-10 years to build from licensing through construction. Nonetheless, 17 applications for construction and operating licenses (COLs) for 26 new reactors are under review by the Nuclear Regulatory Commission (NRC)—all submitted since 2007. One can also look at the historical pace of nuclear power deployment in the United States for a sense of what might be reasonable once the nuclear industry ramps up. More than a third of the 100 gigawatts (GW) of nuclear generating capacity that provides a fifth of U.S. electricity came online in 1971-75, and more than 90 GW of U.S. nuclear power came online in the 1970s and 1980s.

One can see that putting a price on carbon, via cap and trade, will likely spur a significant expansion in U.S. nuclear power over the coming decades (as part of a portfolio of low-carbon technologies) facilitated by loan guarantees to support a few first-mover projects.

Steve Caldwell is a Technology and Policy Fellow

Deploying Our Clean Energy Future

By Eileen Claussen

Fall 2009

This article appears in the Innovations journal special edition, “Energy for Change: Creating Climate Solutions”, published by MIT Press.

Journal Launch Event: November 24, 2009 at the National Academy of Sciences in Washington, DC

Download the Article (pdf)

The United States and the rest of the world face a momentous choice. It is a choice that will determine the nature of our economies and our climate for generations to come. One option is to continue down our current energy path—relying to a substantial degree on fuels and technologies that will result in ever-increasing levels of atmospheric greenhouse gases(GHGs). The other option is to chart a new path—a path by which we protect the climate and rebuild our economies by developing and deploying clean energy technologies.

The choice is obvious: we must pursue a clean energy future.



Click here for more about how to obtain a copy of the entire special edition from MIT Press.




by Eileen Claussen, President--Appeared in the Innovations journal special edition, “Energy for Change: Creating Climate Solutions”, Fall 2009
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