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HomeMy WebLinkAboutSECTION 5 Summary of Environmental Impacts/Benefits The below flow sheet [FIG 1] illustrates all possible environmental impacts and benefits using tidal versus diesel energy generation at the proposed Angoon Alaska site. Angoon is located SSW below Juneau on Admiralty Island. The costs of the diesel fuel include shipping costs etc. and are explained below. The output of the twin 125kW (250 kW total) rated at a 60% capacity provides an average of 150 kW over each year. This is due to natural tidal fluctuations as described earlier in Section 4. Flow Sheet A – COST SAVINGS , GALLONS OF FUEL DISPLACED AND GHG TABLE 1 – ANNUAL AND TOTAL (30 YEAR LIFETIME) COSTS AND GHG EMMISSIONS – The first 4 are for comparison on GHG (CO2) emissions FUEL OR RESOURCE Kg CO2 Per kWh TONS CO2 PER YEAR TONS CO2 OVER 30 YEARS FUEL DISPLACEMENT PER YEAR IN US GALLONS AVERAGE $US COST/GALLON DIESEL AVERAGE ANNUAL SAVINGS SAVINGS OVER 30 YEARS $US NG 0.206 PETROL 0.253 COAL 0.346 PETROLEUM 0.361 DIESEL 0.263 1159 34,770 117,450 2.2 - 5.0 0.0 0.0 TIDAL 0.0 0.0 0.0 0.0 722,700 21.68 Million NOTE all the numbers used herein were validated by a number of reputable sources. Conversions, Assumptions and Calculations Used for TABLE 1 The fuel being displaced is diesel at the Angoon Alaska site. Conversions used are; a highly efficient 20kW diesel generator set (gen-set) operating at an efficiency of 33 % needs 0.239 kg diesel/kWh; therefore 0.8 kg CO2 is produced per kWh using diesel. For a 250 kW rated Davis tidal turbine operating at a capacity factor of 0.6 therefore produces an average of 150 kW over each year. The net CO2 savings over diesel is; (0.6 X 250 kW) X (0.8 kg CO2/kWh) X (365 days) X (24 hr/day) = 1,051,200.0 kg CO2 or 1159 tons US CO2. Per year An additional revenue stream can therefore be GHG credits or Carbon Credits Fuel Displacement Savings – Method 1 – Via savings on electrical costs The cost savings ($US) to produce an average of 150 kW over each year at Rangoon is calculated below and thus represents the savings incurred by introducing 150 kW tidal [A] (150 kW) X ( 0.55$/kWh) X (365 days) X 24 hr/day) = US $722,700.00/year This includes transportation costs. The cost of electricity at Rangoon is around $0.55/kWh. Diesel Fuel prices offset by 150kW Tidal Annually - Method 2 – Using Diesel Rather Than Electrical Costs The annual fuel replacement in gallons of diesel is calculated as follows; 1 gallon = 3.785 Litre 1 Litre = 1/3.785 gal = 0.2642 gal Density of diesel = .85 kg diesel/Litre 1 kg diesel = 1/0.85 Litre/kg diesel =1.176 Litre X 0.2642 gal/Litre = 0.3107 gal In summary 1 kg diesel = 0.3107 gal A modern diesel plant will consume between 0.28 and 0.4 litres of fuel per kilowatt hour at the generator terminals which is 0.073 - 0.106 gallons/kWh. The cost of diesel varies by region from 2.2 -5.0 $US/gallon within easily accessible regions across the USA. The amount of fuel consumed is given by; 150 kW X 365 Days/year X 24 hours/day = 1,314,000 kWh/year Range of fuel consumption [B] 1,314,000 kWh/year X (0.073 – 0.106)gal/kWh = 95,900 to 139,000 gal/year Range of fuel price offset by 150 kW tidal using an average fuel consumption of 117,450 gal diesel/year is [C] 117,450 gal diesel/year X (2.2 – 5.0) $US/gal diesel = 258,400 to 587,000 $US The difference in annual cost between [A] and [C] is the cost of shipping and transporting costs not accounted for in [C] which can be significantly greater (>3 times) for more remote locations that abound in Alaska. Hence, [A] is a more accurate amount for Rangoon and is shown in Table 1 above. IMPORTANT NOTE The above analysis is based on the current cost of diesel which trends show is already rising sharply every year. As well the costs saved are based on the customer cost rather than the production cost (which is less due to a profit margin). CLEAN AIR ACT (CA) Many Governments have established a Clean Air Act to help protect human health and the environment by taking an integrated approach to reducing emissions of both air pollutants and greenhouse gases. Worldwide, Governments have shown concern about air quality, including indoor air, and climate change. Many activities that cause smog and acid rain also contribute to climate change. By taking a comprehensive and integrated approach for both air pollutants and greenhouse gases, the governments are maximizing the benefits to the health of all citizens and the environment. A Clean Air Act is part of a real, results-oriented action plan to clean up the environment and protect the environment Typically a Clean Air Act will allow the government to:  Move industry from voluntary compliance to strict enforcement;  Replace the current ad hoc, patchwork system with clear, consistent, and comprehensive national standards; and  Institute a holistic approach that doesn’t treat the related issues of pollutants and greenhouse gas emissions in isolation. Hydro (dams) and hydro-kinetic (river and tidal currents), Wave, Solar, Wind and Hydrogen (dependant on source) etc. have no GHG or toxic emissions. High temperature geothermal holds considerable promise which may rival all others but is still at the developmental stage. GHG, toxic and particulate emissions abound in current, conventional energy sources. The worst being bio-mass with coal leading them all. Nuclear may have no emissions but there are considerable risks associated with accidents and spent fuel storage. B – ANTICIPATED ANNUAL REVENUE FROM PPA AND INCENTIVES BASED ON CARBON CREDITS (GHG) TABLE 2 – ANNUAL AND TOTAL (30 YEAR LIFETIME) REVENUES TONS CO2 FOR AVERAGE 150 kW DIESEL PRODUCED ANNUALLY ANTICIPATED VALUE OF CARBON CREDITS $US ESTIMATED ANNUAL REVENUE FOR CARBON CREDITS (CURRENT) $US CARBON CEDIT REVENUE FOR FIXED CURRENT COST OVER 30 YEARS LIFETIME $US 11591 16 – 20 PER TON CO22 18,544 – 23,1803 556,320 - 695,4004 NOTES 1 – From Table 1 2 – Value assigned currently and traded mostly in Europe. The USA and other countries have not complied yet but anticipate it soon. 3 and 4 – These values are based on the current European set market but will increase over time 4 – With increasing value this number may increase dramatically. Conversions, Assumptions and Calculations Used for TABLE 2 The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions. The IPCC (Intergovernmental Panel on Climate Change) has observed that: Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation. While noting that a tradable permit system is one political incentive that has shown to be environmentally effective in the industrial sector as long as there are reasonable levels of predictability over the initial allocation mechanism and long-term price. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Marrakesh Accords. The mechanism adopted was similar to the successful US Acid Rain Program to reduce some industrial pollutants. Hydro (dams) and hydro-kinetic (river and tidal currents) and wave are the most promising immense natural resource to meet our future energy needs. Solar, Wind and Hydrogen etc. can only play a much more minor role. These alternative energy sources have no GHG emissions. C – ANTICIPATED ENVIRONMENTAL IMPACTS Fuel spills of any kind are highly toxic to the environment and can affect aquatic life particularly for ocean spills. Land based spills can also contaminate other hydrological and ecological systems such as rivers, streams, lakes, oceans etc. Diesel fuel is one of the worst since it is less viscous than oil. Tidal energy has only a possible environmental impact with respect to aquatic life. This is discussed elsewhere in this proposal. D – COMPARISON BETWEEN ENERGY SOURCES TABLE 3 – COMPARISON OF ENERGY SOURCES ENERGY SOURCE COST ASSUMPTION FOR PRODUCTION $US/kWh AVERAGE COST TO CONSUMER $US/kWh AVERAGE INSTALLED COST $US/kW NUCLEAR .03 - .081 0.12 - 0.161 3,500 and up1 NG 0.03 – 0.062 0.05 - 0.082 Around 552 COAL 0.03 – 0.063 0.05 – 0.083 Around 553 GEOTHERMAL 0.06 - .154 0.10 – 0.304 3,500 and up4 WIND 0.14- 0.205 0.20 – 0.305 1,800.005 7,500 – 95005 For Residential Around 2,0005 for Large Scale Power plants SOLAR 0.18 FOR LARGE SCALE SOLAR POWER PLANTS3 0.25 – 0.753 10,000 – 120005 HYDRO-KINETIC AND TIDAL6 WILL DECREASE AS THE INDUSTRY EXPANDS LESS THAN WIND AND SOLAR Notes(there are also considerable hidden cost not reflected in Table 3) 1- Source USNRC. Costs will become increasingly more competitive with expansion of the industry. The lower cost is reflected by new advanced reactors. 2 and 3 -Taken from Berkley National Lab (BNL). These prices will continue to soar. 4 - Taken from the GEA. High temperature supercritical geothermal being developed is very promising. 5- Taken from PV Resources. 6 - Hydro-kinetic and tidal energy promise to be the most competitive energy source in terms of the cost of electricity, reliability and low maintenance costs. This will become apparent within the decade as the industry expands globally. FUTURE TRENDS ACCORDING TO USDOE PROJECTIONS The above was all based on current prices as of 2009. However, these prices will increase considerably in the future. This is inevitable but difficult to quantify. The USDOE has made some projections as shown below. Bear in mind that the USDOE continues to push oil sales. The Bush administration ratified the energy bill a few years ago to not include any funding towards alternative energy. President Obama fortunately changed it to include renewables etc. Global Energy Price Forecast - 2010 through 2040 The US DOE predicts global energy demand to increase about 2% annually, or 33% in total from 2010 through 2030, from 508 to 678 quadrillion BTU, based on energy supply coming from primarily petroleum liquids, coal, and natural gas. A similar trend can be expected through 2040, although that new regulations and technologies to reduce carbon dioxide emissions will increase energy supply from non-oil and gas sources. During the same period, the World Gross Domestic Product is predicted to grow at an average annual rate of about 3.5%, from $69 to $137 Trillion dollars (2005 USD). In May, 2009 the DOE predicted future oil (energy) pricing using 2007 dollars and 3 price scenarios: Use of USD as the pricing currency and the availability of meeting demands as sources/reservoirs are depleting and becoming more costly to extract represents the greatest risks in the above forecasts. Explained below are World energy and commodity prices that are likely to reflect foreign exchange adjustments, particularly related to anticipated USD devaluation against all major currencies. Demand will fluctuate moderately (see Figure 23 above) but USD energy pricing will adjust (increase) with future foreign exchange rates. US DOE - USD Energy Price Forecasts* 2010 2020 2030 2040 Annual Change Transport Diesel (2007 $/US gal) $2.75 $3.57 $3.92 $4.59 1.4% Transport Diesel (nominal $/US gal) $2.90 $4.61 $5.68 $7.63 3.0% Nat Gas - Industrial (2007 $ / kCF) $7.10 $7.69 $9.33 $10.10 0.8% Nat Gas - Industrial (nominal $ / kCF) $7.48 $9.93 $13.52 $17.31 2.5% *2040 is analyst estimate using US DOE 2010 – 2030 projections as trend USD - Risk US national debt is currently estimated to be around 12 trillion dollars and growing. US federal budget deficits are expected to add another 9.4 trillion to the debt through 2020. The US debt is currently 100% of its GDP. The Peterson Institute for International Economics reports that the net international investment (US debt held by foreign entities) will rise from over 30% presently to about 70% by 2030, and that net US foreign debt will rise to 175% of GDP. They predict significant weakness for USD and argue that current USD foreign exchange rates are unsustainable. In USD terms, world energy and commodity price increases during 2009 were a result of : 1. increasing global economic demand (since 2008) , and 2. weakening USD compared to other currencies. USD lost over 10 per cent of its value on a global trade-weighted basis during a six month period ending in October 2009, its biggest drop since 1991. The chief US currency strategist at Barclays in New York recently stated that international central banks are now backing away from the US dollar. As a portion of new additions to central bank foreign exchange reserves, during the fall of 2009, the US dollar fell to 37 per cent of new additions from a 63 per cent average recorded since 1999. Most notably, China’s central bank presently has a fixed rate policy for its currency against the USD, and is the largest holder and buyer of USD debt. If China changes either policy (i.e. to buy and to hold US debt), the effect on USD will be a dramatic weakening of USD against all currencies. This specific risk should NOT be underestimated. As USD continues to weaken going into 2010, and especially if a USD currency crisis occurs, global commodities could experience a very large USD inflation effect. It is also likely that global economic activity would experience a contraction, as economies adjust and international financial risk rises during the adjustment period as economies re-price their inputs and outputs using other currencies. Importantly, the above DOE energy and pricing scenarios DO NOT include this anticipated USD risk. Energy demand may weaken if economic activity contracts as a result of a global currency adjustment. it is highly likely that energy prices in USD will dramatically rise through 2030, compared to DOE forecasts, as anticipated USD weakening occurs relative to global currencies, but particularly China’s and other robust Asian nations. Another point is that rising environmental concerns are likely to push the growth of the alternative energy sector considerably above the USDOE /EIA forecast shown (green line in Fig. 14 above). FUTURE ENERGY COSTS At Blue Energy we believe that the official DOE projection of diesel fuel costs included above is completely unrealistic based upon the history of the past decade and the trends in the world energy markets. Three years ago a poll of 10,000 economists would have uncovered only a handful who correctly predicted the collapse in the US financial system. False assumptions always lead to false conclusions. Linear growth projections based upon pie in the sky assumptions about resource availability are highly questionable. Currency fluctuations are but a short-term reflection of the underlying real capital of industrial society--- energy. The following is a short list of the trend factors that will determine the cost of energy over the next 30 years. 1) FACTORS TRENDING TOWARD INCREASED COSTS a) Continued worldwide population growth. b) Exploding demand in China & India led by economic modernization. c) USA & North America lack crude oil resource base to ever be self sufficient again. d) US peak production was in 1970. e) Worldwide production of liquid fuels probably peaked at 87 mbd in 2007. f) Peak volume of new discoveries worldwide was over 30 years ago. g) All new fields have exponentially higher extraction costs. h) New field discoveries tiny in comparison to super-giant fields in Saudi Arabia and Mexico. i) Accelerating depletion rates in super-giant fields. i) Cantarell Mexico -12% per year. ii) Increasing water cut from Saudi majors. iii) North Sea & Prudoe Bay played out in only 15 years. iv) Horizontal drilling of new wells increases depletion rate. j) Low EROI for tar sands ---1 barrel of energy needed for every three produced k) Political instability in the major producing regions—Middle East, Venezuela, Nigeria, Mexico. l) War in the Middle East. m) Loss of world reserve currency status by US. 2) FACTORS TRENDING TOWARD DECREASED COST a) Decreased worldwide demand in the case of total world economic collapse i) Even this eventuality might increase prices in Alaska because of the impossibility of replacing the 70% of liquid fuels currently being imported if the US dollar is no longer the world reserve currency. 3) HISTORICAL EXPERIENCE: Any generating plant decision taken a decade ago, based upon the assumption that diesel fuel costs would remain at their then-current level would have underestimated prices by at least 500%. We should not repeat that error. So the real question is simple: would Alaskan’s rather rely upon the predictability of the moon and sun or the belief that a resource that took millions of years for the earth to manufacture will remain infinitely available?