Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to...
Lighting Up the World
Why electricity is good—and more is better.
Importantly, if using fuels to generate electricity was so wasteful, as some have proposed, the magnitude of the electric sector’s fuel consumption (39 percent of our total energy demand) would be driving down U.S. energy efficiency. 41 Instead, the exact opposite is occurring. More economic output is being supported by decreasing amounts of primary fuels. From 1980 to 2005, the United States saw a 76 percent increase in power generation but a 71 percent rise in overall energy efficiency—and a 42 percent decrease in the CO 2 intensity of the economy. 42 And there are at least three main areas in which even more progress in efficiency and productivity is achievable with the continuing evolution of electrotechnologies:
• Lighting: A study by the UN Environment Program and Global Environment Facility (2010) found that replacing incandescent lighting with more efficient electrotechnologies could save the United States $9 billion a year and avoid roughly 50 million tons of CO 2 emissions annually, the equivalent of removing 11 million vehicles from the road. 43 Compact fluorescent lamps use two-thirds less energy than conventional light bulbs, while lasting up to 10 times longer. 44
• Transportation: According to Keulenaer and Grawe (2006), the use of high-speed electric trains instead of air transport reduces primary energy consumption per passenger-kilometer by a factor of three and CO 2 emissions by a factor of four. 45 Electric vehicles are twice as efficient as ICE vehicles, and using electric trains instead of diesel trains decreases primary energy use by a factor of two and CO 2 emissions by a factor of four.
• Industry: The U.S. Department of Energy (2011) notes that the annual fuel utilization efficiency (AFUE) rating for an all-electric furnace or boiler is between 95 and 100 percent. 46 By comparison, mid- and low-efficiency heating systems have AFUE ratings of 68 to 72 percent and 80 to 83 percent respectively.
Electrifying the Planet
Electric power has resulted in a sea change in the American quality of life, and increases in electricity consumption are critical to economic development, energy security, and climate change mitigation. Electricity, as an especially high grade of energy, facilitates technological advancement, and in turn stimulates the economy by increasing productivity. The United States is a growing country and base load capacity derived from fossil fuels and nuclear power will be sorely needed in the decades ahead—these sources generate over 90 percent of our electricity. In fact, as a testament to their competitive advantage, the high reliability of coal and nuclear is unique in that their share of total U.S. generation far exceeds their share of capacity, 58 percent and 90 percent in 2008 respectively. 47 Going forward, the developing nations will need full access to the very same diverse range of fuels that has empowered their industrialized counterparts to raise the living standards for, and extend the lives of, billions of people.
For at least the foreseeable future, mainstream generation technologies will continue to be the least expensive and most scalable sources of electricity in virtually every country in the world. Support for cleaner