Building a New Energy Industry in Ohio Richard T. Stuebi BP Fellow for Energy and Environmental Advancement The Cleveland Foundation June 5, 2009
We Take Energy For Granted • Supplying the American energy diet by human power would require 58 slaves working hard 24/7/365 for each citizen • At a wage of $5. 00/hour, the human energy equivalent of a barrel of oil would cost $45, 000 • Each second, the world consumes 1000 barrels of oil • Try living without electricity or gasoline for a week!
We Take Energy For Granted • Supplying the American energy diet by human power would require 58 slaves working hard 24/7/365 for each citizen • At a wage of $5. 00/hour, the human energy equivalent of a barrel of oil would cost $45, 000 • Each second, the world consumes 1000 barrels of oil • Try living without electricity or gasoline for a week!
Two Major Challenges • Oil: Where will it come from? How much is left? What will be its price? What can replace it? • CO 2 emissions: How much/quickly are emissions changing the climate? How much/quickly do we need to reduce?
Tight Linkage: Oil Most oil for transportation Source: EIA Transportation Virtually all transport from oil
Most Remaining Oil in Middle East 100% = 1292. 6 billion barrels • Saudi Arabia • Iran • Iraq 56% • Kuwait • UAE • Qatar Source: Oil & Gas Journal, Vol. 102, No. 47 (Dec. 10, 2004), from U. S. EIA
Declining Global Oil Discoveries Source: Durango Bill Energy Analysis
Oil Production Peaking? Source: www. romaenergia. org
Oil Production: 1/04 -3/09 Only down <5%
Energy Use Per Capita million Btu, 2004 20 x 8. 7 x 4. 9 x World average Source: International Energy Annual, Energy Information Administration
Oil Prices (Brent) $/barrel At $68/barrel (June 1, 2009) • • Half of its peak in mid-2008 • Almost double its low in early-2009 Still considerably higher than average of last 20 years
What Should Oil Cost? Source: CERA Current demand
Oil Production The Age of Oil Ref. Colin J. Campbell 0 500 1000 1500 Anno Domini 2000. Source: J. E Naber and F. Goudriaan 2500
The Age of Climate Change “The vast majority of observers that are: (1) competent in the field of climatology, and (2) not financially supported by parties interested in preserving the status quo (3) are confident that climate change is: (a) occurring, (b) being driven significantly by human activity, and (c) likely to result in effects on the planet’s ecosystems that within decades will generate significant economic costs and environmental degradation. ” - Richard Stuebi
Increasing CO 2 Concentrations Source: Climate Central
Increasing Temperatures Source: Encyclopedia of Earth
Clear Linkage
Melting Polar Ice Caps Source: “Impacts of a Warming Arctic: Arctic Climate Impact Assessment”, Cambridge University Press. 2004.
Future Demand Growth ~50%
Future CO 2 Emissions Growth Million metric tons World total +75% China Europe U. S. Source: EIA International Energy Outlook under “business as usual”
Increasing Global Temperatures Remember: Temperature increases greater than average at the poles Temperature lags CO 2 concentrations by about 50 years CO 2 emissions remain in the atmosphere for about 100 years Source: Wikipedia
-54%
Twin Energy Challenges • Oil supply uncertainty: – Virtually 100% of all transportation needs met by petroleum-fuels – Developing economies (e. g. , China, India) rapidly seeking mobility levels of U. S. – Increasing evidence of arrival of “peak oil” production, beyond which…. ? – ~2% of remaining resources in U. S. , vast majority in countries of questionable allegiance • Climate change: – Strong evidence and consensus of expert community that humans having impact on climate, with uncertain long-term effects on planet – Fossil fuel consumption: main contributor to climate change – Major reduction in greenhouse gas emissions to avoid possible “tipping point” into global climate chaos
Opportunity: Advanced Energy • Multi-trillion dollar “conventional” energy paradigm increasingly unlikely to meet the twin challenges of increasing oil scarcity and climate change • To cope with these challenges, enormous “advanced” energy industry will need to be built in coming decades • Increasing investment – private and public sector – targeted to building the advanced energy industry • Accelerating the transition to advanced energy locally not only represents economic opportunity, but also prospect for improving local performance on energy and environmental metrics
Investments: 2007 -2030 100% = $26. 3 trillion Delivery To meet global energy supply and environmental challenges Exploration & production Generation Refining Exploration & production Transmission & distribution Source: International Energy Agency World Energy Outlook 2008
Increasing Energy VC Activity
2008 Cleantech VC Activity Through Oct. 9, 2008 Source: Cleantech Group, LLC
Federal Action on Energy • American Recovery and Reinvestment Act – Tax reductions – Grant programs – Loan guarantees • Climate change – Waxman-Markey bill to impose cap-and-trade on carbon emissions – December negotiations in Copenhagen on international treaty to supersede Kyoto • Federal renewable portfolio standard (RPS): • Tighter fuel efficiency standards for vehicles • Etc.
Why Ohio for Advanced Energy? • Materials science leadership • Significant manufacturing resources • Geographic location distribution advantages • Research institutions and universities • Water • Ohio market requirements
Building Advanced Energy Industry “The Market” Outside forces shaping “The Market” Technology developers Product suppliers Energy providers End-use customers • Government agencies: set policies and enforce laws that promote technology development/adoption and market structures (e. g. , electricity/gas regulation) • Universities/research institutions: conduct basic research (often with private sector partners) for future commercialization of technologies and products • Industry/trade groups: self-organize to shape the emergence/growth/structure of the market and supply chain • Facilitating organizations: help the parties in various targeted ways to promote the health of the market
Role of Foundation Government agencies Non-profit organizations (NGOs) • • Private sector companies The Cleveland Foundation Academia Respected convener of parties Funder of not-for-profit activities No concerns about profitability or popularity Keeper and speaker of the general interest (no special interests)
Developments in Last 12 Months • Ohio legislation: – New Ohio energy law, including significant requirements for energy efficiency and renewable energy adoption – Significant grant program for advanced energy • Regional efforts in Northeast Ohio: – Significant activities to attract and expand manufacturing of products for wind, solar and fuel cell sectors – $1 million feasibility study to investigate demonstration project and research center for offshore wind in Lake Erie – Cleveland-Toledo collaboration to establish “green energy corridor” for Northern Ohio – Numerous energy efficiency, waste-to-energy and renewable energy projects by various developers and hosts – New energy research centers at Case Western Reserve University and University of Akron – Technology development underway at many corporations, ventures, universities, colleges, research institutions
Ohio Advanced Energy Market • Ohio utilities must obtain 25% of power from advanced energy sources by 2025: – At least ½ (12. 5%) from renewables (of which 0. 5% must be solar) – At least ½ from plants installed in Ohio • Renewable requirements begin by end of 2009, ramp-up to 2025: – 4, 500 estimated MW wind installed – 450 estimated MW solar installed • 22% reduction in electricity demand also required by 2025
Other Ohio Financial Support • $150 million (grants and lowinterest loans) over next 3 years to deploy advanced energy projects in Ohio – $66 million for advanced coal – $84 million for other • $24 million in technology development grants in 2009 for advanced energy – $11 million for fuel cells – $13 million for other • $3000 per student intern per year to support workforce development Many local (city/municipal and county) incentives also available
Primary Examples of Advanced Energy in Ohio • Fuel cells: recognized as a leader in fuel cell technology development • Wind: strong industrial/supply chain base, good wind resource (especially in Lake Erie) • Solar photovoltaics: world leader in thin-film technologies
Closing Comments • Energy industry in crisis: oil supply scarcity and climate change • New energy industry must be built in coming decades, massive investment required • Accelerating transition to advanced energy in our region represents major economic opportunity, and will improve performance on key energy and environmental metrics • Each of you can play a role in inventing the advanced energy economy
Contact Information Richard T. Stuebi BP Fellow for Economic and Environmental Advancement The Cleveland Foundation 1422 Euclid Avenue, Suite 1300 Cleveland, OH 44115 -2001 Phone: 216. 685. 2011 Fax: 216. 861. 1729 rstuebi@clevefdn. org
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