Abundance by Design - Rocky Mountain Institute

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RMI Energy & Resources TeamLooking Forward to Carbon Limits?JUST TWENTY YEARS AGO, THE NOTION OFtrimming greenhouse gas (GHG) emissions, notablycarbon dioxide, was barely on a typical utility’s radarscreen. And if it was, it was generally a byproduct ofcalls to trim pollution and the acid rain, visual blight,and asthma that came from burning coal. In the mid-1980s, many utilities installed flue gas desulfurizationunits (a.k.a. “scrubbers”) and soot-capturing filters,then went back to business as usual. Global climatechange seemed to most an academic speculation.How things change. Today, every forward-thinkingutility is acutely aware that the electricity industry’semission of 39 percent of U.S. carbon dioxide is itssingle most important environmental challenge—andcarries a heavy price tag as fuel costs rise. With powergenerators a crucial part of the global fight to trimemissions, RMI’s broad energy expertise and engagementhave lately refocused on more climate-safe,clean, resilient, and cost-effective ways to provideelectrical services.Today’s increased awareness of climate change coincideswith the flowering of parallel revolutions in technology,business models, and public policy that RMIhas been helping for decades to create. Utilities todayenjoy a broad suite of creative and attractive newoptions: generating electricity moreefficiently, generating it at the rightplace and scale (distributed generation),using it more productively(end-use efficiency), balancing thepeaks and valleys of consumption(demand response), “firming” wind- and solar powerso they’re available when needed, estimating inventoriesand investing in reductions of greenhouse gasemissions, and even educating forward-thinking financiersand customers about emerging carbon taxes andtrading regimes.These days, RMI’s Energy & Resources Teamdraws on its longstanding thought leadership in theseareas to help utilities plan and manage energy supplyanddemand-side resources, and to understand thenew constraints and opportunities of greenhouse gaslimitations. During the past year, much of our energywork—complementing related “off-oil” work (pp.4–5)—applied cutting-edge thinking to utilities’unique challenges. This work has relied on researchand implementation grants from the Hewlett andLuce Foundations, as well as on consultancies forutility clients. With Hewlett and other foundationsupport, we have also developed important new intellectualcapital, including, in June 2005, the first compilationof the actual size and speed of deployingdecentralized low- and no-carbon power sourcesworldwide. (Surprisingly, they turned out to be biggerand far faster-growing than nuclear power.) We alsocompleted much of an in-depth assessment of the latestdemand- and supply-side opportunities in naturalgas; made RMI’s operations carbon-neutralthrough efficiency and trading (as an AssociateMember of the Chicago Climate Exchange);and advised some major energy users, such asthe Stanford Linear Accelerator Center, oncutting their energy costs and GHG emissions.Those emissions will long remain a majorglobal challenge, but RMI’s innovative strategiesand technologies are already showing newpaths to practical, advantageous solutions forutilities and other major energy firms.During mid-2004 to mid-2005, highlights of theEnergy & Resources Team’s work included:• Assisting the implementation of Energy ResourcePortfolio Planning for the City of Palo Alto Utilities.RMI’s ongoing role in the CPAU planning processinvolves reviewing the current electric resource plan,designing economic criteria for efficiency programs,prioritizing efficiency program strategies, evaluatingthe potential for local energy resource options, and6
helping to integrate supply and demandsideoptions into risk-managed, least-cost portfolios.The local resource evaluation includesdetailed modeling and economic analysis of thepotential for distributed tri-generation of cooling,heat and power at specific large customer sites.• Helping Great Plains Energy develop the businesscase for demand response and distributed generationprograms with commercial and residential customersof Kansas City Power & LightCompany. RMI evaluated the available technologiesand available products, reviewed a rangeof proposed program designs, prioritized the programsin terms or potential impact, and analyzed the customercash flows and utility economics of a portfolioof programs. RMI also provided demand-side managementtechnology and program reviews and designed astrategy to collect data to support evaluation of futureload management and distributed generation programs.• Developing an approach for defining the futurevalue of GHG emissions as part of the CaliforniaCalifornia Public Utilities Commission’s avoidedcost methodology for demand-side management programs,under subcontract to Energy andEnvironmental Economics (E3). This valuation wasdefined as future cost values (albeit uncertain), whichare a foundation of orthodox utility financial planning,rather than as externalities, which had been previouslyestimated but carried little legal weight. The methodwas adopted in April 2005 for all long-term utilityresource planning and procurement decisions.• Performing a supply risk analysis for theNebraska Public Power District cooperative, comparingthe reliability and economic impacts of extreme riskscenarios on supply portfolios augmented by coal,nuclear, natural gas, and renewable resources. Severalscenarios included carbon dioxide emissions limits andcosts. The analysis involved modeling the price interactionsbetween electric, natural gas, coal, and emissionsmarkets under each scenario, as well as identification ofstrategies to mitigate risks related to carbon dioxideemissions and other impacts of each resource.• For a leading information technology firm,identifying and evaluating a range of potential investmentsin clean energy technology and other GHG mitigationmeasures. Based on the evaluation results, weare prioritizing these measures to assemble arobust portfolio ofcarbon offsets to balancecorporate emissions to meet thefirm’s economic, environmental, social andpractical criteria.• Helping San Diego Gas and Electric managementrealign its demand-side programs with the latesttechniques for integrative design (which make savingslarger but cheaper) and for making markets in savedelectricity (so more market actors are rewarded forfaster savings).• Conducting a series of briefings for the investmentbank Crédit Lyonnais S.A.’s clients in the financialservices industry. The briefings—in Europe, Asia, andNorth America—are ongoing, and they cover corporatecarbon management strategies, technical options forcarbon dioxide emission reductions, and implicationsof present and future carbon constraints for shareholdervalue in a range of industries and firms.• Our work with fossil fuel producers also offersopportunities to shift their strategies. For example, atleast one large coal-mining firm we work with isstarting to view its coal assets through the lens of thehydrogen value chain—potentially the highest andbest use of coal in a carbon-constrained world.Rocky Mountain Institute Annual Report: 2004–057
Page 1 and 2: Abundance by DesignRocky Mountain I
Page 3 and 4: From the Executive DirectorRMI’s
Page 5: “trimtabs” in heavy trucks, mil
Page 9 and 10: ing their persistent inefficiencies
Page 11 and 12: erature on how they do it, research
Page 13 and 14: National Solutions CouncilSolutions
Page 15 and 16: BALANCESHEET - AUDITEDthousands of
Page 17 and 18: VISIONARIES -$100,000 & AboveRachel
Page 19 and 20: SupportersBarbara & Peter B. Flemin
Page 21 and 22: SupportersDale & Linda F. LevyJim &
Page 23 and 24: RMI StaffChief Executive OfficerAmo

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