2
Energy for Electricity

BACKGROUND

This chapter considers sources of energy used for the generation of electricity. The committee’s analysis includes utilities, independent power producers, and commercial, and industrial sources. The generation data that we used are available at the Web site of the Energy Information Administration (EIA) (www.eia.doe.gov) of the U.S. Department of Energy, and are the official energy statistics from the U.S. government.

The Current Mix of Electricity Sources

The total electricity generation1 in the United States during 20082 was 4.11 million gigawatt hours (GWh), down very slightly from 2007. In terms of usage, the residential sector consumed the most electricity (36.6% of the total), followed by the commercial sector (36.3%). The industrial sector (26.9%), and transportation (0.2%) accounted for the rest.

The energy sources and the amount of electricity they contributed are given in Table 2-1.

The two largest classes of “other renewables” were wind, which produced 52,026 GWh or 1.3% of the 2008 electricity-generation total; and

1

The amount of electricity used is less than the amount generated as a result of transmission losses. For 2007, EIA reported usage of 93.4% of the amount generated.

2

We provide the latest data available here to establish the most recent context. Our analyses of power plant damages, however, were based on 2005 data, the latest for which full emissions information was available.



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2 Energy for Electricity BACKGROUND This chapter considers sources of energy used for the generation of electricity. The committee’s analysis includes utilities, independent power producers, and commercial, and industrial sources. The generation data that we used are available at the Web site of the Energy Information Ad- ministration (EIA) (www.eia.doe.gov) of the U.S. Department of Energy, and are the official energy statistics from the U.S. government. The Current Mix of Electricity Sources The total electricity generation1 in the United States during 20082 was 4.11 million gigawatt hours (GWh), down very slightly from 2007. In terms of usage, the residential sector consumed the most electricity (36.6% of the total), followed by the commercial sector (36.3%). The industrial sector (26.9%), and transportation (0.2%) accounted for the rest. The energy sources and the amount of electricity they contributed are given in Table 2-1. The two largest classes of “other renewables” were wind, which pro- duced 52,026 GWh or 1.3% of the 2008 electricity-generation total; and 1 The amount of electricity used is less than the amount generated as a result of transmission losses. For 2007, EIA reported usage of 93.4% of the amount generated. 2 We provide the latest data available here to establish the most recent context. Our analyses of power plant damages, however, were based on 2005 data, the latest for which full emissions information was available. 64

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6 ENERGY FOR ELECTRICITY TABLE 2-1 Net Electricity Generation by Energy Net Electricity Generation Percent of Total Net Energy Source (GWh) Generation Coal 2,000,000 48.5 Petroleum liquidsa 31,200 0.8 Petroleum coke 14,200 0.4 Natural gas 877,000 21.3 Other gasesb 11,600 0.3 Nuclear 806,000 19.6 Hydroelectric 248,000 6.0 Other renewablesc 124,000 3.0 NOTE: Net electricity-generation numbers reported by the Energy Information Administration are rounded to three significant figures. aDistillate fuel oil, residual fuel oil, jet fuel, kerosene, and waste oil. bBlast furnace gas, propane gas, and other manufactured and waste gases derived from fossil fuels. cWind, solar thermal, solar photovoltaic (PV), geothermal, wood, black liquor, other wood waste, biogenic municipal solid waste, landfill gas, sludge waste, agricultural by-products, and other biomass. SOURCE: Data from EIA 2008, 2009a. wood and wood-derived energy sources (38,789 GWh, or 0.9%). Other renewable sources individually amounted to less than 0.5% each; the larg- est was other biomass, (16,099 GWh, or 0.4%. Generation from solar PV was approximately 600 GWh. Rationale for Choice of Fuel Sources to Analyze This chapter provides detailed analyses of electricity generation from coal, natural gas, nuclear fission, wind, and solar. The first three sources were chosen because they together account for 88% of all electricity gen- erated in the United States; moreover they feature prominently in current policy discussions about energy sources. Wind energy also is prominent in policy discussions concerning electricity, and it appears to have the largest potential among all renewable sources to provide additional electricity in the medium term according to current projections (see discussion later in this chapter). Solar energy for electricity (photovoltaics) also is discussed, although not in detail, because of recent legislative and public interest and because of the rapid increase in use over the past 10 years. For the above reasons, the committee concluded that analyzing the external costs and benefits associated with these sources would be of the greatest value to policy makers. We mention biomass (briefly) because it is such a dispersed source of

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66 HIDDEN COSTS OF ENERGY electricity (many very small generators). We did not focus on hydropower generation of electricity, even though its current contribution is far greater than that of all other renewable sources combined, because the potential use of hydropower to increase significantly is modest, and hydropower cur- rently receives little attention in energy-policy discussions. Describing the Effects Caused by Life-Cycle Activities In its analyses, the committee describes externalities—indeed, all effects caused by life-cycle activities—as being upstream or downstream. By “up- stream,” in the context of energy for electricity, the committee means effects that occur before electricity is generated at an electricity-generating unit (EGU) (such effects as EGU; steam turbine, wind turbine, and solar cell). For fossil-fuel and nuclear EGUs, the largest upstream effects are associated with obtaining and transporting fuel. They include effects of exploration, development, and extraction of geologic deposits of fuel or ore, refining and processing, and transportation of primary energy sources (for example, coal and natural gas). For solar, wind, and hydropower EGUs, the main upstream effects are associated with obtaining, fabricating, and transport- ing materials required for the EGU and with the construction of the EGU, including road building and other activities. Fossil-fuel and nuclear EGUs also have these effects, but they typically are smaller than those associated with the ongoing production and transportation of the primary energy sources. The committee’s upstream limit for consideration of effects was exploration for fuel. Although effects even further upstream can occur, such as reactions to the announcement of a lease sale for oil, gas, or even the announcement of a proposed mine (for example, see NRC 2003a), those effects are generally unquantified. By “downstream” the committee means effects that are associated with generation of electricity and the subsequent transmission and distribution of electricity to end users. In other words, effects associated with the operation of an electricity-generating facility or with electricity transmission and distribution (that is, delivery to the end user) are considered downstream effects. General Approach Taken The goal of this chapter is to describe and, when possible, to quantify the monetary value of the physical effects3 (that is, the “damages”) of electricity production. For electricity generation from nuclear fission, wind power, solar power, and biomass, our analysis summarizes effects reported 3 The committee uses the term “physical effects” broadly, to include biological and human health effects, in order to distinguish them from monetary effects.

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6 ENERGY FOR ELECTRICITY from previous studies, but does not monetize damages from externalities. For electricity generation from coal and natural gas we are able to quantify and monetize the externalities associated with local and global air pollu- tion, both upstream and downstream. We express these externalities in costs per kWh of electricity generated and also in costs per ton of pollution generated. As summarized in Chapter 1, this study is preceded by a large literature on the social cost of electricity. Two notable studies are those by Oak Ridge National Laboratory and Resources for the Future (ORNL-RFF) (1992- 1998) and the ExternE project (EC 2003). The goal of each study was to estimate the life-cycle externalities associated with electricity production from various fuel types. Externalities were expressed in monetary terms per kWh to permit comparisons across fuel types. The social costs of electricity generation, together with the private costs of electricity generation, could thus be used to inform choices among fuel types when expanding or replac- ing generation capacity. Both studies conducted their analyses using repre- sentative plants in two geographic locations. Both studies were exhaustive in their descriptions of, and attempts to quantify, various categories of externalities throughout the fuel cycle. In addition to literature on social costs of electricity, there have been studies on the environmental effects of electricity production. The National Research Council recently (2007b) reported on environmental effects of wind-energy projects, and the New York State Energy Research and Devel- opment Authority recently (NYSERDA 2009) reported on effects and risks to vertebrate wildlife in the northeastern United States from six types of electricity generation.4 Both reports included assessments of all life-cycle stages, but did not quantify or monetize the effects. This chapter builds on and extends these studies. We have attempted to describe externalities and other effects broadly, and to analyze them wher- ever possible. However, we have focused our efforts to monetize external costs for the categories of externalities that earlier studies found to be a significant component of damages. We extend the studies by measuring the externalities associated with local and global air pollution—a significant component of the costs of electricity generation—for individual coal-fired and gas-fired power plants in the United States. This allows us to charac- terize the diversity in the damages of electricity generation from fossil fuel across plants and to relate damages per kWh to the pollution intensity of the plant (that is, to pounds of sulfur dioxide [SO2] or particulate matter [PM] emitted per kWh) and the location of the plant, which affects the size of the human and other populations exposed to pollution generated by the plant. We also express damages per ton of pollution emitted. While 4 The six types were coal, oil, natural gas, nuclear, hydro, and wind.

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68 HIDDEN COSTS OF ENERGY a comparison of damages per kWh may (together with information about private costs) help inform the choice of fuel type, it is not particularly useful if the goal is to internalize the externalities associated with pollution emis- sions.5 Economic theory suggests that the most economically efficient policy to address air-pollution externalities is a policy that targets the externality itself rather the output associated with it. We therefore present informa- tion on damages per ton of emissions from coal and natural gas plants that contribute to the concentrations of criteria pollutants.6 The core of our analysis of local air-pollution damages uses an inte- grated assessment model (the Air Pollution Emissions Experiments and Policy, or APEEP model) (Appendix C), which links emissions of SO2, oxides of nitrogen (NOx), PM2.5, PM10,7 ammonia (NH3), and volatile organic compounds (VOCs) to ambient levels of SO2, NOx, PM2.5, PM10, and ozone (see Box 2-1). The model calculates the damages associated with population exposures8 to these pollutants in six categories: health, visibil- ity, crop yields, timber yields, building materials and recreation. Health damages include premature mortality and morbidity (for example, chronic bronchitis, asthma, emergency hospital admissions for respiratory and cardiovascular disease), and are calculated using concentration-response functions employed in regulatory impact analyses by the U.S. Environmen- tal Protection Agency (EPA). Damages to crops are limited to major field crops, and recreation damages are those associated with pollution damages to forests. A description of the concentration-response functions used in the model is in Appendix C, which also provides details on the choice of unit values used to monetize damages. Damages associated with carbon dioxide (CO2) emissions are computed based on a review of the literature, and are described in Chapter 5. Not all impacts and externalities associ- ated with electricity production have been quantified and monetized in this study. Table 2-2 summarizes which impacts are quantified, monetized, or qualitatively discussed within this chapter. 5 An electricity tax equal to the marginal damage per kWh is a blunt instrument for internal- izing the social costs of air pollution because it does not target the pollutants (for example, SO2 or PM2.5) that are the sources of the problem. 6 As part of the U.S. Clean Air Act, the U.S. Environmental Protection Agency (EPA) estab- lishes National Ambient Air Quality Standards PM, SO2, NOx, ozone, lead (Pb), and carbon monoxide (CO). These are referred to as criteria pollutants, which were established by the Clean Air Act as pollutants that are widespread, come from numerous and diverse sources, and are considered harmful to public health and the environment and cause property damage. 7 PM 2.5 refers to particulate matter with an aerodynamic diameter less than or equal to 2.5 microns; PM10 refers to particles less than or equal to 10 microns in diameter. Ultrafine parti- cles—those less than 100 nanometers—were not treated as a separate category in this study. 8 “Population exposure” is an aggregate figure derived from measurements or estimates of personal (individual) exposures that are extrapolated—based on statistical, physical, or physical-stochastic models—to a population (Kruize et al. 2003).

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6 ENERGY FOR ELECTRICITY BOX 2-1 Airborne Particulate Matter PM is a heterogeneous collection of solid and liquid particles that can be directly emitted from a source (primary pollutants) or can be formed in the atmo- sphere by interaction with other pollutants (secondary pollutants). Secondary PM can be formed by oxidation of NOx and SOx to form acids that can be neutralized by ammonia to form sulfates and nitrates. Organic PM may be chemically trans- formed by oxidants in the air to form secondary pollutants. Soot particles can be altered by adsorption of other pollutants on their surface. PM is monitored for both mass and size. Ultrafine particles (less than 0.1 micron in aerodynamic diameter) can be emitted from combustion sources or can be formed by nucleation of atmospheric gases, such as sulfuric acid or organic compounds. Fine particles (less than 2.5 microns) are produced mainly by combustion of fossil fuels, either from stationary or mobile sources. Coarse particles (sometimes called PM102.5) are mainly primary pollutants that may come from abrasive or crushing processes or the suspension of soil. PM larger than 10 microns is not of great concern for this report because they are not readily respirable and do not have a long half-life in the atmosphere. Current research on PM is exploring the influence of particle composition (in addition to mass and size) on its toxicity, as recommended by the National Research Council (NRC 1998, 1999, 2001, 2004b). However, enough data are not yet available from this research to inform the estimation of damages in this report. Regulations As noted in Chapter 1, the externalities examined in this study are those that have not been eliminated by regulation. Most stages of electricity production are subject to regulations at the federal, state, and local levels. Surface mining of coal, for example, is regulated under the 1977 Surface Mining and Control Act. Air-pollution emissions from electricity-generating facilities are regulated under the Clean Air Act. The U.S. Nuclear Regula- tory Commission regulates and licenses nuclear power plants. Relevant regulations for upstream and downstream activities related to electricity generation are varied and extensive. Their details are not neces- sarily of great import for this study, although they obviously are important for other reasons. For this study, though, the existence of regulations is of great importance, because in large part regulations are an attempt to reduce upstream and downstream damages from electricity generation, and they have substantially reduced these damages over time. We discuss only those damages that remain, with emphasis on those that can be quantified and monetized. Most of the committee’s quantitative analyses of damages in

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0 HIDDEN COSTS OF ENERGY TABLE 2-2 Energy for Electricity: Impacts and Externalities Discussed, Quantified, or Monetized Energy Sources for Electricity Natural Impact or Burden Coal Gas Nuclear Wind Biomass Solar Upstream Air pollutant emissions (SOx, q q q ✓ ✓ NOx, PM) CO2-eq (carbon dioxide q q q ✓ ✓ equivalent) emissions Metals, radionuclides, and q q q q q other air pollutants Effluents q q q Solid wastes q q q Land cover/footprint q q q q q Ecological effects q q q Occupational and transport ✝ ✝ injuries Downstream Air pollutant emissions (SOx, $ $ ✓ ✓ ✓ NOx, PM) CO2-eq emissions ✓ ✓ ✓ ✓ ✓ Metals, radionuclides, and q q q ✓ other air pollutants Effluents q q q Solid wastes q q q q Land cover/footprint q q q q q Ecological effects q ✝, q q = qualitative discussion. ✓ = emissions quantified. ✝ = impacts quantified. $ = impacts monetized. this chapter focus on emissions from electricity-generating facilities that are fired by coal or natural gas. Under the Clean Air Act, electric utilities are regulated at both the state and federal levels. The Clean Air Act requires states to formulate state implementation plans (SIPs) to pursue achievement of the National Ambient Air Quality Standards (NAAQS) (NRC 2004c). Under SIPs, electricity-generating units (EGUs) are assigned emissions lim- its for SO2, NOx, PM, and other pollutants, usually stated as performance standards (for example, maximum annual average tons of SO2 that may be emitted per million British thermal units [MMBtu] of heat input). These performance standards vary widely across states. In addition, EGUs are subject under the Clean Air Act to “new source review,” a series of regula-

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1 ENERGY FOR ELECTRICITY tions that pertain to newly constructed facilities and to modifications of ex- isting facilities.9 Coal-fired power plants built after 1970 are also subject to “new source performance standards” (NSPS), which impose strict limits on emissions that contribute to the formation of criteria air pollutants. For ex- ample, the 1978 NSPS for coal-fired power plants requires the installation of flue gas desulfurization units (scrubbers) on all new coal-fired EGUs. Emissions of SO2 and NOx are also regulated under various cap-and- trade programs. The goal of Title IV of the 1990 amendments to the Clean Air Act was to reduce SO2 emissions from EGUs to 8.95 million tons by 2010. That goal has been achieved by issuing SO2 permits (allowances) to EGUs equal to 1.2 pounds of SO2 per MMBtu (based on 1985-1987 heat input) and allowing utilities to trade allowances, which may not violate the NAAQS. In 1998, EPA issued a call for SIPs to reduce emissions of NOx. The rule provided the option for states to participate in a regional NOx Budget Trading Program. This program operated from 2003 to 2008, when it was replaced by a NOx ozone season trading program. The net effect of the environmental regulations described above, as well as others, is that emissions per megawatt-hour (MWh) that contribute to criteria air pollution vary greatly among plants. Newer power plants have, on average, much lower emissions rates. As discussed later in this chapter, SO2 (and NOx) emissions per MWh are much lower for units installed after 1979 than for units installed before that date. ELECTRICITY PRODUCTION FROM COAL Current Status of Coal Production Coal, a nonrenewable fossil fuel, accounts for approximately one-third of total U.S. energy production, and nearly half of all electricity produced. Coal is classified into four types based upon the relative mix of carbon, oxygen and hydrogen: lignite, sub-bituminous, bituminous, and anthracite (Table 2-3). The greater the carbon content, the greater the energy (heat- ing) value of coal. Sub-bituminous and bituminous coal account for more than 90% of coal produced in the United States. Sub-bituminous coal has as much lower sulfur content but also as much lower energy content than bituminous coal. In electricity generation, replacing a ton of bituminous coal requires about 1.5 tons of sub-bituminous coal (NRC 2007c). The United States has more than 1,600 coal-mining operations that pro- 9 New source review applies to facilities in areas of pristine air quality where the goal is to prevent significant deterioration of air quality and also to facilities in areas that have not attained the NAAQS. Regulations governing each facility are determined on a case-by-case basis. See the regulatory overview in Chapter 2 of NRC 2006a.

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2 HIDDEN COSTS OF ENERGY TABLE 2-3 Coal Classification by Type Heating Value Type Carbon Content (%) (Thousand Btu/lb) U.S. Production (%) Lignite 25-35 4.0-8.3 6.9 Sub-bituminous 35-45 8.3-13.0 46.3 Bituminous 45-86 11.0-15.0 46.9 Anthracite 86-97 ~15.0 <0.1 ABBREVIATION: Btu/lb = British thermal unit per pound. SOURCE: EIA 2008a, Table 7.2; NEED 2008; EIA 2009b. duced more than 1.18 billion short tons10 in 2008. Major coal-producing regions are shown in Figure 2-1. The EIA estimates that 70% of coal pro- duction comes from surface mines, the majority of which are in Wyoming, Montana, West Virginia, Pennsylvania, and Kentucky. Large mining opera- tions in the Powder River Basin (PRB) in Wyoming and Montana accounted for more than 50% of surface-mine coal production and 40% of nationwide coal production in 2007. Coal in the PRB is mainly sub-bituminous; coal in Appalachia is mainly bituminous (NRC 2007c). The top five coal-producing states in 2007 are listed in Table 2-4. On average, more coal is produced in the United States than is con- sumed. The EIA estimates that nearly 95% of U.S.-mined coal is consumed domestically. In 2008, the United States exported 23.0, 7.0, and 6.4 million short tons to Canada, the Netherlands, and Brazil, respectively. U.S. coal production is focused in a relatively small number of states, but coal is consumed throughout the country. As a result, coal is trans- ported by all major surface transportation modes (Figure 2-2). Once mined, coal is typically transported to power plants, steel mills, and other commer- cial and industrial companies by rail. In 2007, approximately 70% of coal production was distributed by rail. The remaining 30% was transported by barge, tramway and pipelines, or truck. Looking forward, it can be expected (barring shifts in current coal con- sumption trends) that western states will increase their production relative to other states (EIA 2008a). Table 2-5 below lists the ten states with the largest Estimated Recoverable Reserves (ERR). The ERR is derived by the Energy Information Administration (EIA) for each state by applying coal mine recovery and accessibility factors to the Demonstrated Reserve Base (NRC 2007c). 10 A short ton is 2,000 pounds, or 907.2 kilograms.

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3 ENERGY FOR ELECTRICITY FIGURE 2-1 Major coal-producing regions in the United States (million short tons and percent change from 2006). SOURCE: EIA 2009c, p. 2. Figure 2-1 TABLE 2-4 Five Leading Coal-Producing States, 2007, by Mine Type and Production (Thousand Short R01631 Tons) uneditable Mines Number of bitmapped image State Production Wyoming 20 453,568 Underground 1 2,822 Surface 19 450,746 West Virginia 282 153,480 Underground 168 84,853 Surface 114 68,627 Kentucky 417 115,280 Underground 201 69,217 Surface 216 46,064 Pennsylvania 264 65,048 Underground 50 53,544 Surface 214 11,504 Montana 6 43,390 Underground 1 47 Surface 5 43,343 Total, Top Five States 989 830,766 Underground 421 210,483 Surface 568 620,284 Total, United States 1,358 1,145,480 SOURCE: Adapted from EIA 2009c, p. 11, Table 1.

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4 HIDDEN COSTS OF ENERGY FIGURE 2-2 Methods of U.S. coal transport. NOTE: Data exclude a small un- known component. SOURCE: EIA in AAR 2009. Brief History of Coal Production Coal was the predominant source of U.S. energy from the late 19th century through the mid 20th century. Coal was used for electricity, space heating, industrial process heating for iron, steel, and other commodities, and fuel to power ship and train steam engines. During the latter 20th TABLE 2-5 Estimated Recoverable Reserves for the 10 States with the Largest Reserves by Mining Method for 2005 (million short tons) Underground Surface State Minable Coal Minable Coal Total Montana 35,922 39,021 74,944 Wyoming 22,950 17,657 40,607 Illinois 27,927 10,073 38,000 West Virginia 15,576 2,382 17,958 Kentucky 7,411 7,483 14,894 Pennsylvania 10,710 1,044 11,754 Ohio 7,719 3,767 11,486 Colorado 6,015 3,747 9,762 Texas — 9,534 9,534 New Mexico 2,801 4,188 6,988 Total, Top 10 States 137,031 98,896 235,927 Total United States 152,850 114,705 267,554 SOURCE: EIA 2006a. Adapted from NRC 2007c, p. 51, Table 3.2.

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143 ENERGY FOR ELECTRICITY sand, is the most commonly used material to make solar panels. However, emerging thin-film technology, which allow use of solar panels as roof tiles and other building features, can be made of a variety of materials, includ- ing amorphous silicon, gallium arsenide (GaAs), cadmium-telluride (CdTe), and copper indium gallium selinide (CIGS). With the exception of silicon and arsenic (for arsenide), the metals required for thin-film technologies are rare, and their use may depend on foreign imports. Materials for both CdTe and CIGS can be obtained from waste streams of zinc and copper smelting (USGS 2008). Manufacturing these panels is a very high-technology, material- and energy-intensive process. A number of the metals for thin-film PV technol- ogy are toxic (for example, arsenic and cadmium), thus raise environmental and public health concerns about metal emissions during the extraction, material upgrading, and manufacturing activities associated with PV sys- tems. The intense energy requirements for upstream PV activities are an- other concern. Various studies have considered the relevant life-cycle flows of materials, energy, and resources for PV systems. Most studies have focused on the life cycle of solar photovoltaic (PV) systems, specifically on crystalline silicon systems, and on energy and GHG emissions. Fewer studies have considered life-cycle material and substance use, or emerging thin-film technologies like cadmium-tellurium (CdTe) PV panels (Fthenakis and Alsema 2006). Unlike other energy-generation technologies, for which the underlying technology has not changed significantly over 30 years, the manufacture of PV panels has undergone significant efficiency improvements and material shifts over that time (for example, the cost/watt decreased from $6 to $2 from 1990 to 2005). Studies in Europe that focused on previous generation technology estimated that producing solar power had 30% higher health impacts than natural gas, and GHG emissions of 180 g/kWh—an order of magnitude higher than nuclear (EC 2003). Follow-on studies, including CdTe systems, showed lower but nonzero life-cycle health impacts from PV of about 0.1-0.2 cents per kWh, primarily caused by GHG, lead, and particulate matter emissions (Fthenakis and Alsema 2006). The life-cycle GHG emissions are estimated to be 20-60 g/kWh, comparable to those of nuclear power (Fthenakis and Kim 2007), while NOx and SO2 emissions are estimated at 40-180 and 50-450 mg/kWh respectively, far less than other generation methods (Fthenakis et al. 2008). Fthenakis and colleagues (2008) also evaluated heavy metal emissions (that is, Ar, Cd, Cr, Pb, Hg, and Ni), and found that that they are greatly reduced in comparison to emissions from fossil fuels, even with PV technology that makes direct use of the emitted compounds. Generally excluded from LCA studies are transport considerations of

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144 HIDDEN COSTS OF ENERGY raw materials to panel manufacturers in the United States. Transport con- siderations are important depending on type of PV system. For example, the United States has very little or no domestic production of arsenic, gallium, or indium, and must rely upon imports for these materials (USGS 2008). Because of intense energy requirements for upstream activities, research has begun to evaluate the “energy payback”—the amount of time a PV system must operate in order to recover the energy used to produce a PV system (DOE 2004). Downstream life-cycle activities include electricity generation, storage, and disposal or recycling of worn-out panels. As with wind power, the pro- duction of electricity with PV systems does not emit air pollutants, includ- ing GHGs. Externalities associated with downstream PV activities may arise due to intermittency, that is, the need for grid electricity when sunlight is not available. Chapter 6 further discusses grid interruptions associated with renewable energy sources. Other externalities may arise from the disposal of worn-out PV systems. Worn-out solar panels have potential to create large amount of waste, a concern exacerbated by the potential for toxic chemicals in solar panels to leach into soil and water. Many components of solar panels can be recycled, but the United States currently does not have or require a solar PV recycling system. To capture enough solar energy to produce large amounts of electric- ity requires a certain amount of land. Much of the United States receives enough solar energy to produce around 1 kWh per square meter of PV panel per day in the summer, less in winter, but more if the panel is tracked to follow the sun. The economic and other values of the land that would be needed to capture enough solar energy to provide substantial amounts of electricity would depend on a host of factors, including the land’s loca- tion, ownership, and proximity to population centers, and other potential uses for the land. However, other factors also could affect solar-powered electricity at such a scale. Future Considerations for Solar Energy While solar PV and CSP are still developing technologies, they will be an increasing, but still small, part of electricity generation through 2020. Although solar power represents a very small fraction the U.S electricity generation, the energy potential of solar power is enormous. A 2009 NRC report, Electricity from Renewable Resources: Status, Prospects, and Im- pediments, notes that current domestic solar power potential is 13.9 TWh, more than 3,000 fold greater than current electricity demand (NAS/NAE/ NRC 2009b, p. 4). If solar energy for electricity were to become a significant part of the

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14 ENERGY FOR ELECTRICITY U.S. energy mix, more attention would need to be paid to damages result- ing from the manufacture, recycling, and disposal of equipment. Land-use issues also would probably be a concern. ELECTRICITY PRODUCTION FROM BIOMASS The nature of electricity generated from biomass feedstock is difficult to quantify and, for its externalities, even more difficult to obtain reason- able numbers. This is because the production and utilization of biomass for electricity production is inherently localized, resource-specific, and small scale. In addition, the term “biomass” can refer to a variety of feedstocks. The following discussion addresses issues associated with biomass use for electricity generation; because different feedstocks often are used for etha- nol production for transportation fuel, the issues associated with them are somewhat different as well (see Chapter 3). Feedstock Production Feedstock comes from forestry and agricultural residues and from har- vesting of forest and agricultural products. Some electricity generation uses either industrial biomass residues or municipal solid waste. In the case of energy crops, land could be used for other activities. For agricultural residues, farming practices and the viability of the land for farming could be affected. In some cases, changes in land use can increase carbon emissions. Other uses can enhance terrestrial carbon sequestration. Sufficient water is needed to raise crops, forest products, and their residues. Non-point-source runoff can impact surrounding surface-water systems. Use of pesticides can affect water quality through non-point-source runoff. Energy use can have impacts through life cycles for growing biomass feedstock and the related harvesting of crops or agricultural residues. Use of fertilizers, particularly petroleum-based, constitutes an addi- tional life-cycle issue, since much fertilizer is produced using natural gas. Additionally, there could be an increase in GHG emissions from energy use in the treatment of the fields and emissions of nitrous oxide from the fertilizers. Labor and related societal issues are related to changes in farming and forestry practices and in harvesting residues. Ecological effects, primarily destruction of habitat, mainly involve taking marginal lands for energy crops and forest products. Most impacts from the use of municipal solid waste as a feedstock for electricity are expected to be positive, since the need for landfilling waste and the related potential for runoff to surface waters from landfills is

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146 HIDDEN COSTS OF ENERGY minimized. However, concerns remain about atmospheric emissions from conversion facilities and land use (siting). Emissions from the combustion of biomass can include polychlorinated biphenyl compounds, although the focus of recent analysis has been primar- ily on enclosed systems, such as cook stoves (Gullet et al. 2003). Although damages from biomass-generated electricity on a per-kWh basis might equal or even exceed those from other sources in some cases, the committee has not provided detailed analyses because this technology probably will have only limited market penetration in 2030. Transportation Similar to the harvesting of biomass feedstock, transportation of feed- stocks has localized impacts. Many facilities use biomass as a feedstock, derived from processes and residues generated on site. Where energy crops or biomass residues are collected away from the location of the power plant, the cost of transportation limits how far from the power plant these low-energy-density feedstocks can be obtained. The impacts associated with transportation are similar to standard transportation impacts associated with vehicle miles driven in terms of air quality impacts, energy penalties, and accidents. Power Generation In 2008, not quite 40,000 GWh were generated from wood and wood waste, about 0.9% of the total (see Table 2-1 and associated text). Biomass accounted for about 16,000 GWh (0.3%). The National Electric Energy Data System indicates that in 2003 there was less than 1.6 GW capacity of biomass-fired power plants in the United States (EPA 2004b). This is a small amount compared with overall generat- ing capacity. Many of the issues facing biomass combustors are similar to issues faced by larger-scale fossil-fuel generation, although they typically are more localized, because the generators are small, which may limit the control technologies placed on the system. In addition, many of these systems have been in operation since 1937, and therefore presumably “grandfathered” in on some environmental rules. Air quality is a local issue, particularly for particulate matter from smaller, older combustors. Facility health and safety are important for older facilities. Siting issues, such as aesthetics, are significant for newer facilities, such as those utilizing municipal solid waste. Citizens can be concerned about aesthetics and possible odors from atmospheric emissions.

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14 ENERGY FOR ELECTRICITY For potential new technologies such as biogasifiers and use of liquid fuels derived from bio-oils, other environmental issues are unlikely to be a large factor, but there could be a public perception that these facilities will use feedstock from land that has been clear cut for energy crops, such as tropical oils. TRANSMISSION AND DISTRIBUTION OF ELECTRICITY Here, we briefly discuss effects and damages associated with electric- ity transmission lines. Chapter 6 provides a discussion of security issues associated with interruptions or intermittencies in transmission/transport and distribution systems for electricity and for fuels such coal, oil, and natural gas. Perceptions exist that high-voltage power lines and substations pose health risks (for example, of childhood leukemias and adult cancers, as well as acute effects) through their emission of extremely low frequency (ELF) electromagnetic radiation, but despite many studies, adverse health effects of transmission lines have not been conclusively established. The World Health Organization recently assessed this issue in detail (WHO 2007), and WHO’s International Agency for Cancer Research addressed it further in 2008 (IARC 2008). The reports conclude that the evidence on some impacts of ELF on human health is inconclusive, including childhood leukemias; and that on other aspects the information leads to the conclu- sion that there are no adverse effects. The IARC report further concludes that if there are any excess cancer cases the number is very small, and that more than 99% of people are not exposed to enough ELF radiation from transmission lines for there to be a possibility of their suffering increased incidence of cancer. Transmission lines also have raised concerns—as have various electricity- generating facilities—about loss of property values along and near them due to visual impairment and perceived or actual health risks, as well as possible land-use effects. The loss of property values is not an externality, being instead a market-mediated reflection of real or perceived physical damages. However, the visual impairment or any health risks associated with transmis- sion lines are an externality. Some renewable sources of energy, especially wind and solar, often need to be sited far from end users, thus requiring more new transmission lines than some other sources would need. For these reasons, proposals for new transmission lines often have been controversial, and managing the need for transmission lines and building new ones is thus a significant policy issue. However, because externalities associated with them appear to be very small by comparison with other aspects of electricity generation, the committee has not considered them in detail.

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148 HIDDEN COSTS OF ENERGY SUMMARY This chapter has examined information on burdens, effects, and dam- ages associated with electricity generation from coal, natural gas, nuclear power, wind energy, solar energy, and biomass. In the case of fossil fuel and nuclear power, this discussion includes consideration of the exploration, extraction, and processing of fuel, and the transportation of fuel to gener- ating facilities (upstream externalities) as well as electricity generation and distribution (downstream externalities).52 Some burdens and effects have been discussed in qualitative terms, and others have been quantified and, when possible, monetized. Our main goal is to examine the uncompensated external costs (and benefits) associated with electricity production. Many external costs have been reduced through regulation: For example, the criteria-air-pollutant damages associated with electricity generation from fossil fuel have been substantially reduced by federal and state regulations over the past 30 years. We examine only those damages that remain. Occupational injuries and deaths are of importance to society, but they do not constitute external costs associated with coal mining and oil and gas production. We therefore do not monetize them and do not add them to external costs, such as the health costs associated with air-pollution emissions. There are at least two reasons for examining the externalities associated with electricity generation. One is to inform the choice among fuel types when increasing electricity production or replacing existing plants. This is typically done by comparing the external cost per kWh of electricity genera- tion across fuel types. Another reason for examining externalities is to help identify situations where additional regulation may be warranted to reduce the external costs produced by current electricity generation. Identifying sources with large aggregate air-pollutant damages can help identify facili- ties where further analysis of the costs and benefits of reducing emissions is warranted. This chapter helps to inform both issues. Electricity from Coal and Natural Gas In the case of electricity generation from coal and natural gas, we have described the upstream externalities associated with fuel extraction and processing and have quantified the air-pollution damages associated with 52 We have not conducted a fully comprehensive life-cycle analysis of the external costs of electricity generation. In particular, we have estimated the external costs associated with power plant construction. Those costs probably are small compared with all other life-cycle costs, because thermal power plants often last more than 50 years, so when annualized, the costs are small over the plant’s life span.

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14 ENERGY FOR ELECTRICITY electricity generation at 406 coal-fired and 498 gas-fired power plants in 2005. This is based on emissions data from the 2005 National Emissions Inventory and estimates of damages per ton of pollutant from the APEEP model. Damage estimates are based on emissions of SO2, NOx, PM2.5 and PM10 and include impacts on human health, visibility, agriculture and other sectors. The average damage associated with these emissions per kWh at coal plants, weighting plants by the electricity they generate, is 3.2 cents per kWh (2007 USD), using a value of a statistical life (VSL) of $6 million (2000 USD).53 The corresponding figure for gas facilities is 0.16 cents per kWh (2007 USD). However, the distribution of damages per kWh is wide for each set of plants, reflecting variation in the emissions intensity of plants and in their location. As a result, the coal plants with the lowest damages per kWh are cleaner than the natural gas plants with the highest damages per kWh. Specifically, the 9% of natural gas plants with the highest dam- ages per kWh exceed the damages per kWh for the 10% of coal plants with the lowest damages. The aggregate damages associated with emissions of SO2, NOx, PM2.5, and PM10 from coal generation in 2005 were approximately $62 billion (2007 USD), or $156 million per plant on average. The 50% of plants with the lowest damages per plant, which accounted for 25% of net generation, produced 12% of damages, and the 10% of plants with the highest dam- ages per plant, which also accounted for 25% of net generation, produced 43% of the damages. The situation for gas is similar, although damages per plant are lower: the 10% of natural gas facilities in our sample with the highest damages per plant produce 65% of the air-pollution damages associated with the 498 facilities that we examined. What are criteria air-pollution damages from coal and natural gas plants likely to be in 2030? To examine damages in 2030 we increase electricity generation at the plants analyzed in 2005 by amount consistent with EIA forecasts of electricity production from coal and natural gas. This implies, on average, a 20% increase in electricity produced from coal and a 9% increase in electricity produced from natural gas. We also assume that the emissions intensity of plants will fall in a manner consistent with EIA estimates of total emissions from fossil fuel plants. The APEEP model was used to estimate damages per ton from SO2, NOx, PM2.5, and PM10 in 2030. In spite of increases in damages per ton of pollutant, due to popula- tion and income growth, average damages per kWh (weighted by electric- ity generation) at coal plants are 1.7 cents per kWh (electricity-weighted), 53 Premature mortality constitutes over 94% of total damages. When a VSL of $2 million is used, premature mortality constitutes 85% of total damages and the cost per kWh (electricity- weighted) falls to 1.2 cents.

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10 HIDDEN COSTS OF ENERGY compared with 3.2 cents per kWh in 2005 (also electricity-weighted). The fall in damages per kWh is explained by the assumption that pounds of SO2 per MWh will fall by 64% and that NOx and PM emissions per MWh will fall by approximately 50%. Average damage per kWh from gas generation falls to 0.11 cents (2007 USD) from 0.16 cents in 2005 (weighting plants by net generation). Electricity from Nuclear Power The committee did not quantify damages associated with nuclear power because the analysis would have involved power-plant risk modeling and spent-fuel transportation modeling that would have taken far greater resources and time than were available for this study. Notwithstanding that this modeling was not undertaken, previous studies suggest that the monetized value of these risks are small (ORNL/RFF 1992-1998; EC 1995b). The upstream damages result largely from uranium mining, most of which occurs outside the United States. With uranium mining in general, radiological exposure can occur through inhalation of radioactive dust par- ticles or radon gas, ingestion of radionuclides in food or water, and direct irradiation from outside the body. For surface mine workers, exposure to radon exposure is generally less important than direct irradiation or dust inhalation; however, exposure to radon can be important for underground miners. If radiological exposure is taken into account in the miners’ wages, it would not be considered an externality. For members of the public, the most significant pathways from an operating mine are radon or other radionuclide ingestion following surface water transport; from a rehabili- tated mine, the more significant pathways over the long term are likely to be groundwater as well as surface water transport and bioaccumulation in animals and plants located at the mine site or on associated water bodies. Upstream impacts also include air emissions, including GHG emissions, but they are one or two orders of magnitude smaller than the emissions from coal-fired plants. Downstream burdens are largely confined to the release of heated water used for cooling—such releases occur at any type of thermal plant—and the production of low-level radioactive wastes (LLRW) and high-level radioac- tive wastes (HLRW) from spent fuel; release of highly radioactive materials has not occurred on a large scale in the United States (but obviously has occurred elsewhere). Either LLRW is stored for decay to background levels and then disposed of as non-radioactive waste (a practice possible with slightly contaminated materials) or it is disposed of in near-surface landfills designed for radioactive wastes.

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11 ENERGY FOR ELECTRICITY For spent nuclear fuel that is not reprocessed and recycled, HLRW is usually stored at the plant site. No agreement has been reached on a geo- logic repository for HLRW in the United States, and therefore little HLRW is transported for long distances. LLRW has been transported for decades without serious incident. The issue of having a permanent repository is perhaps the most contentious nuclear-energy issue, and considerably more study on the externalities of such a repository is warranted. Electricity from Wind Because wind energy does not use fuel, no gases or other contaminants are released during the operation of a wind turbine. Upstream effects are re- lated to the mining, processing, fabrication, and transportation of raw ma- terials and parts; those parts are normally transported to the wind-energy plant’s site for final assembly. The committee concludes that these life-cycle damages are small compared with the life-cycle damages from coal and natural gas. Downstream effects of wind energy include visual and noise effects, the same kinds of land-use effects that accompany the construction of any electricity-generating plant and transportation of electricity, and the killing of birds and bats that collide with the turbines. Far more birds—by at least three orders of magnitude—are estimated to be killed by collisions with transmission lines, which are associated with all forms of electricity generation, than by collision with wind turbines. Therefore, although the detailed attribution of transmission-line-caused bird deaths by electricity source would be difficult, the committee concludes that bird deaths caused by wind-powered electricity generation are small compared with deaths from all other sources. Wind-energy installations often have larger footprints than nuclear or coal plants, but the land use within the footprint often is less intensive than within the smaller footprints of thermal plants. In most cases, wind-energy plants do not currently kill enough birds to cause population-level problems except perhaps locally, mainly affecting raptors. The numbers of bats killed and the population consequences of those deaths have not been quantified, but could be significant. If wind-powered energy generation continues to grow as fast as it has recently, bat and perhaps bird deaths could become more important. The committee has not quantified any effects of solar or biomass gen- eration of electricity, but has not seen evidence that, at current generation capacity, there are effects that are comparable to those from larger sources of electricity generation. However as technology and penetration into the U.S. energy market improves, the externalities from these sources will need to be reevaluated.

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12 HIDDEN COSTS OF ENERGY Research Recommendations Many of the significant externalities associated with electricity genera- tion can be estimated quantitatively, but there are several important areas where additional research is needed: • Although it appears that upstream and downstream (pre- and post-generation) activities are generally responsible for a smaller portion of the life-cycle externalities than the generation activities themselves for some sources, it would be useful to perform a systematic estimation and compilation of the externalities from these other activities, comparable in completeness to the externality estimates for the generation part of the life cycle. In this compilation, damages from activities that are locally or region- ally significant (for example, the storage and disposal of coal combustion by-products, in situ leaching techniques for uranium mining) need to be taken into account. • The “reduced-form” modeling of pollutant dispersion and transfor- mation is a key aspect in estimating externalities from airborne emissions, which constitute most of the estimated externalities for fossil-fuel-fired power plants. These models should continue to be improved and tested and compared with the results of more complex models, such as CMAQ. • The health effects associated with toxic air pollutants, including specific components of PM, from electricity generation should be quantified and monetized. Because of the importance of VSL in determining the size of air-pollution damages, further exploration is needed of how willingness to pay varies with mortality-risk changes and with such population char- acteristics as age and health status. • For fossil-fuel options, the ecological and socioeconomic impacts of coal mining, for example, of mountaintop removal and valley fill, are a major type of impact in need of further research in to quantify their damages. • For nuclear power, the most significant challenges in estimating externalities are appropriately estimating and valuing risks when the prob- abilities of accidents and of radionuclide migration (for example, at a high-level waste repository) are very low but the consequences potentially extreme, and whether the cost to utilities of meeting their regulatory re- quirements fully reflects these externalities. • The analysis of risks associated with nuclear power in the RFF/ ORNL study should be updated to reflect advances in technology and science. • For wind technologies, the major issues are in quantifying bird, and especially bat deaths; disturbances to both the local animal populations and landscape; and valuing them in terms comparable to economic damages.

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13 ENERGY FOR ELECTRICITY • For solar, an important need is a life-cycle analysis of the upstream activities that quantifies the possible releases of toxic materials and their damages; another is a better understanding of the externalities that would accompany dedicating tracts of land to solar panels. • For transmission lines needed in a transition to a national grid system, better estimates are needed of both the magnitude and the spatial distribution of negative and positive externalities that would accompany this transition.