On a warm summer night in Chicago, thousands gathered in Millennium Park to watch the new documentary Carbon Nation. Recycled Energy Development’s own Sean Casten is featured in the film discussing energy recycling as a profitable way to mitigate climate change. “I don’t know of any bigger opportunity to make more money reducing more C02 than this one. So, if you don’t give a damn about the environment, do it because you’re a greedy bastard and just want cheap power,” says Casten.

The much buzzed-about film attracted a Who’s Who of Chicago media, government and business leaders, including journalist Bill Kurtis, Illinois Governor Pat Quinn and producer/businessman Craig Sieben.

This solutions-based, “big tent film” about tackling climate change while boosting the economy inspired the audience.  Let’s hope other cities embrace it as warmly as our hometown has.

RED Chairman Tom Casten has a new piece in the Chicago Tribune about the need for a sensible energy policy that rewards efficient, clean power generation like energy recycling.

He writes: “The dramatic images of the oil spill in the Gulf of Mexico serve as a stark reminder that America needs to transition to a new clean energy economy… For the last 30 years, I have watched America increase our energy dependence and lose our competitive edge, in part because of a grossly inefficient energy system… Despite its potential to cut energy costs and greenhouse emissions while preserving manufacturing jobs, energy recycling languishes in the U.S. because of outdated and badly misguided energy policies… By enacting meaningful clean energy legislation, the federal government can finally unleash a wave of American innovation, cutting our dependence on fossil fuels while we develop both cleaner and cheaper domestic power.”

Read the full op-ed here.

Photo courtesy of NOAA.

Two — count ‘em, two — new documentaries have premiered featuring RED founders Tom and Sean Casten. The first is Dirty Business: “Clean Coal” and the Battle for our Energy Future, which investigates the true cost of using coal. Rolling Stone reporter Jeff Goodell tells the story, taking viewers to the West Virginia silicon plant where RED is developing a waste heat recovery project. Jeff said recently that this scene, which features the Castens and lots of hot, fiery, blazing images, is one of his favorites in the film.

The second is Carbon Nation, a “positive, solutions-based, non-preachy, non-partisan, big tent film about tackling climate change while boosting the economy.” That’s our kind of movie. The Castens appear in the film to lend their expertise about energy recycling.

Momentum is building for recycled energy. I believe it was Martin Luther King Jr. who said “The arc of the moral universe is long, but it bends toward efficient use of energy at industrial facilities.” Or something to that effect.

Experts on technology and the environment gathered in New York last week to save the world. In a daylong summit hosted by TIME Magazine and the World Technology Network, various clean energy gurus “explored long-term, short-term and game-changing technologies and strategies that can re-shape our lives, our businesses, our policies, our planet, our future.” The theme? “Reality check: Technologies Putting Us on the Path to Sustainability.”

Reality-based thinking may seem novel these days, but it was in abundance at this summit. Our own Tom Casten joined a panel on alternative energies moderated by TIME’s Bryan Walsh. Although Tom’s beat is combined heat and power, improving our world’s energy predicament will require creative solutions from all quarters. It needs them urgently.

A new coalition wants Congress to crack down on greenhouse gas emissions. Sound like no big deal? Before you start yawning, take note: this coalition isn’t made up of the usual suspects in the environmental movement. This coalition is made up of businesses.

American Businesses for Clean Energy (ABCE) launched four months ago with a simple goal: to demonstrate the vast amount of business support that exists for climate change legislation. Already, about 2500 businesses in 41 states have signed onto the initiative.

The lesson is that being pro-planet can also be pro-profit. We can’t have sustainable businesses in an unsustainable world. Even better, we can ensure that slashing greenhouse gas emissions reduces energy costs rather than increasing them. All we need is the creativity and political will to undertake real reform.

With the business community starting to holler, the chances for such reform just got better.

Our own Tom Casten will lead a symposium on energy recycling at the annual meeting of the American Association for the Advancement of Science (AAAS). Although conventional wisdom assumes that mitigating climate change will raise the cost of energy, this symposium will present a contrary view: that many proven technologies can substantially increase the efficiency of generating heat and power, cutting energy costs and greenhouse gas emissions simultaneously.

The event is entitled Gray Is the New Green: How Energy Recycling Curbs Both Global Warming and Power Costs. It will take place February 21 at 8:30am in San Diego.

The panelists include several renowned energy experts:

• Tom, who will discuss the economics of clean energy by comparing the costs of 14 clean energy options such as wind, solar, nuclear, and cogeneration. Casten will argue that improving “generation efficiency” has the greatest potential to benefit the economy while reducing greenhouse gas pollution.
• Lester Lave, professor at Carnegie Mellon University and co-director of the Carnegie Mellon Electricity Industry Center. He will report on the work of a committee on energy efficiency that he recently chaired for the National Academy of Sciences. Among other things, Lave will report that the U.S. could bring total energy use back to mid-1980s levels simply through energy efficiency.
• Marilyn Brown, professor at the Georgia Institute of Technology and former leader at Oak Ridge National Laboratory. She will discuss the many policy barriers to energy efficiency and present policy suggestions to help overcome these barriers. Her recommendations will be based on her own research and emphasize the imperative of serving current economic needs without blocking efficiency investments.
• Lawrence Ambs, professor at the University of Massachusetts at Amherst and co-director of the Northeast Regional Combined Heat & Power Application Center. He will serve as the symposium’s discussant, or moderator.

Those who are familiar with RED’s work know the basic contours of Tom’s argument, which is this. The U.S. energy system is grossly inefficient. The typical power plant throws away two-thirds of its energy, largely in the form of waste heat, when producing electricity. This abysmal rate, while tragic, presents an opportunity: increasing the efficiency of our energy system would help enable us to stave off the catastrophic effects of climate change while increasing national income and improving the quality of life.

Tom has never before presented to the AAAS, so this is an exciting opportunity.

Melissa Mullarkey, a public policy associate here at RED, argues in Trends that capturing waste energy would help the U.S. transition into a carbon-free future. Yes, we eventually need to wean ourselves off of fossil fuels entirely. But that can’t happen overnight.

In the meantime, we have to start making big reductions in our greenhouse gas emissions so we can avoid the worst effects of catastrophic climate change. Energy efficiency, Melissa says—especially through technologies like combined heat and power (aka cogeneration)—is the best way to get here.

In the latest issue of The Nation, Lisa Margonelli makes the case for increased use of “gray power” sources, especially waste heat, across the Midwest and South. Calling these regions “the Colossus of Carbon,” she cites a RED analysis revealing the immense amounts of electricity that could be generated from waste energy at manufacturing plants in places like Ohio. “All those smokestacks,” she says, “hold the potential for a lower-carbon renaissance.”

The nature of the magazine publishing this piece bears reflection. The Nation, the journalistic standard-bearer of American progressivism, is extolling the virtues of energy recycling about two weeks after Chief Executive, one of the country’s ultimate capitalist publications, has done the same. Two publications with very different views of the world are coming to similar conclusions on one issue, at least: that by generating energy more efficiently, we can fight global warming while bolstering the economy.

These two magazines aren’t the only unlikely pairs to point out the benefits of this work. The moderate-liberal New Republic has highlighted the potential of energy recycling, as has the business-friendly Forbes. So have the libertarian Lynne Kiesling and the environmental lion Al Gore. So, indeed, have apolitical science outlets ranging from Nature to Orion to American Scientist.

I recite this list not simply to advertise good writing about the issues near and dear to my heart, though there is that. My point is that energy recycling is an issue that could transcend our nation’s partisan divide and provide a path forward on finally tackling climate change. It’s not the only solution. But it’s a big one. It’s what makes the RED team get up in the morning. And I believe it’s an idea whose time has come.

The Oak Ridge National Laboratory released its CHP report in December 2008, but it’s worth reviewing again. CHP, it says, helps the United States enhance energy efficiency, ensure environmental quality, promote economic growth, and foster a robust energy infrastructure. Using CHP today, the U.S. already avoids more than 1.9 quadrillion British thermal units of fuel consumption and 248 million metric tons of carbon-dioxide emissions, enough to remove more than 45 million cars from the road.

In 2006, CHP produced more than 12 percent of total U.S. power generation. The report calls for high-deployment policies that would generate $234 billion in new investments and create nearly 1 million new highly-skilled, technical jobs throughout the U.S. In this scenario, more than 60 percent of the projected increase in CO2 emissions between now and 2030 would be avoided.

Read more about how CHP can help create jobs and decrease global warming.

1. 50% of U.S. power generation (in MWh) comes from coal, while only 20% comes from natural gas.
2. 32% of total U.S. power generation capacity (in MW) is coal-fired, while 42% is gas-fired.

When it runs, the natural gas fleet emits just 50% of the CO2 of the coal fleet, which raises a rather interesting question: what would we have to do to make it run harder? And how big a difference would that make in our national CO2 footprint?

MW vs. MWh

So why, if we have more natural gas generation capacity, do we get more of our power from coal?

Simple: we have a lot of gas-fired generation (449 GW, as of 2007), it doesn’t run very often. The coal fleet is comparatively smaller (336 GW), but runs a lot more frequently. It is as if our vehicle fleet were dominated by Priuses, but they stayed parked while we drove our Escalades to work.

We have a huge resource that is already built that could massively lower CO2 emissions. Taking a page from the NRA, what if the problem isn’t that we need to build more low-carbon generation, but that we just need to make better use of what we have?

Environmental potential

To understand the opportunity, let’s look at a bit of simple math.

In 2006, the gas fleet generated 816,441,000 MWh, or 20% of what it could have produced if it had run 24/7/365.

The coal fleet, by contrast, generated 1,990,551,000 MWh, or 68% of what it could have generated if it had run 24/7/365.

If we never built another gas-fired power plant, but simply increased the annual capacity factor of the gas fleet up to the coal fleet’s 68% capacity factor, it would generate an additional 1,845,485,000 MWh, effectively displacing 93% of our coal fleet without the construction of a single new power plant.

Looking at the comparative CO2-signatures of those two fleets, that would reduce total power sector CO2 emissions by 37%. Since the power sector is responsible for 42% of U.S. CO2 emissions, that implies a 16% reduction in total U.S. CO2 emissions, just from changing generator dispatch order.

That’s a massive opportunity. What would it take to get there?

Economic considerations

There is an obvious limitation to the Prius/Escalade analogy: it’s cheaper to drive a Prius per mile, but it’s more expensive to generate a MWh of power from a gas plant than a coal plant. That, after all, is why the gas fleet doesn’t run as often.

But historic dispatch choices were made in a world in which the costs of CO2 pollution were not monetized. So the real question becomes: how big a CO2 price would be required to change dispatch order?

Intriguingly, while the environmental potential is huge, the economic cost to realize that potential turns out to be quite small.

The great economic disadvantage of gas-fired generation relative to coal is that gas is more expensive per unit of energy. The great economic advantage of gas-fired generation relative to coal is that it is more fuel efficient: while the U.S. coal fleet has an average generation efficiency of about 27%, the gas fleet has an average efficiency of about 38%.

The gas fleet also tends to have much lower non-fuel operating costs (less $ for fuel handling, fewer moving parts, etc.). Taking these factors into consideration—and assuming $2.50/MMBtu coal vs. $6/MMBtu natural gas—the variable costs (e.g., exclusive of capital recovery) of a coal plant are about $18/MWh lower than a gas plant (1.8 cents/kWh). Obviously, that is very sensitive to fuel price assumptions, but this range is hardly unreasonable for current markets.

But remember, the gas fleet has a much lower CO2 signature than the coal fleet. On a fleet average basis, every MWh shifted from coal to gas reduces CO2 emissions by 0.56 tons. So if we look at a $18/MWh cost differential to achieve 0.56 tons/MWh of CO2 reduction, that implies a (18/.56) = $32/ton CO2 price would be sufficient to tip the scales. That’s not insignificant—but not implausible either. And—here’s the key point—massively less than what any reasonable person might think it would take to shutter most of the coal industry.

Finally, note that this doesn’t require a carbon price of $32/ton to happen; it simply requires a net change in the relative costs of coal and gas-fired generation equal to $32/ton. You could get there by giving the gas guys nothing and hitting the coal plants with a $32 fine, but you could also get there by giving the gas guys $10 and hitting the coal guys with a $22 fine. A functioning cap-and-trade with bilateral rights will allow some sort of transaction between those two parties and—without speculating on those specific rules—one can assert with confidence that a $32 delta between coal and gas does not need anyone to buy or sell carbon credits at a $32/ton price.

Practical constraints

To be sure, we’re never going to shut down 93% of the coal fleet just by running gas harder. There are parts of the grid (like West Virginia) so devoid of gas assets that there’s no way to maintain voltage stability if you rely on far-away gas. And of course, there is the supply and demand issue (booming gas demand + slumping coal demand is almost certainly incompatible with $6 gas and $2.50 coal).

On the other hand, the gas fleet is hardly capped out at 68% capacity factor. Moreover, if we started the switch, we’d start by running the most efficient gas plants harder and the least efficient coal plants less so the first 20% is much cheaper, per ton of CO2 reduction, than the last 20%.

Of course this isn’t a panacea. You can’t get to the end game only with gas any more than you can get to the end game only with solar. It’ll take a lot of steps. But what’s fascinating about this analysis is that the gas fleet is uniquely able to quickly and—at least initially—quite cheaply make a huge dent in our CO2 emissions. It’s a tool we ought to use, and we ought to examine our proposed CO2 regulations carefully to make sure it gets put to use. Free allowances to coal plants don’t get you there …

Note: This first appeared on Grist.