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Roundtable: The Future Of Generation

ROUNDTABLE
Fortnightly Magazine - December 2004

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Gary L. Hunt, President, Global Energy Advisers: Even a delayed implementation of the Kyoto Protocol has the practical effect of shutting down almost half of the coal-fired generation in America to comply. That is a profound outcome. It could undermine our energy security dramatically by making us more dependent on natural gas and imported LNG, in order to replace that coal-fired generation.

Randall Swisher, Executive Director, American Wind Energy Association: The cost of taking action [to reduce carbon emissions] has been exaggerated. There are about a zillion things that can be done to control carbon that are not big-ticket items, such as installing more windpower and other renewable energy, and more energy efficiency. The horror stories we've heard in terms of cost are simply scare tactics, bearing no resemblance to reality. There's no reason we can't identify a series of least-cost solutions. Policymakers should set the targets, and then stand back and let the private sector make decisions about how to achieve them. It's been demonstrated how creative the American free-market system is at finding least-cost solutions.

Fortnightly:What other major factors are affecting the power industry's direction?

Swisher, AWEA: Some elements of our current national energy policy are suicidal in nature. When you look at our dependence on imported fossil fuels, we have to look at the steps we can take to reduce that insecurity. Domestic resources like renewable energy make a lot of sense from that perspective.

Hunt,Energy Advisers: We've been focusing on the interplay of supply/demand fundamentals and where the industry might go, considering the changing nature of fuels, environmental considerations, and security uncertainties. In our study, we built three alternative scenarios for the energy industry's future, out to 2020. For example, in the "terrorism and turmoil" scenario, we see an uncertain environment with economic dislocations that could take 10 years to overcome. There is much reason to worry about our security issues, with respect to high-profile, high-value targets.

Fortnightly: What role will renewables play in the future? Some states have set a target to have 20 percent or more of their electricity supplied by renewable sources in the foreseeable future. Are such figures realistic?

Swisher, AWEA: It is feasible both in terms of the size of the resource that is available and the economics of windpower. Wind power now provides more than 20 percent for Denmark and regions of northern Spain and Germany.

It hasn't happened here in the United States yet because the economics had to be right. We've seen the cost of wind power decrease dramatically to the point where new wind generation with the production tax credit comes in around 3 cents a kilowatt hour. The cost depends on the speed of the wind and other things, but it can be cost-competitive with new coal or gas generation.

Over the past five years, installed wind power capacity has grown by an average annual rate of 28 percent, and we expect double-digit growth to continue indefinitely into the future.

Learner, Environmental Law & Policy Center: We are not suffering from an absence of good