Economic and Human Dimensions Research Associates ::.. 5751 North Kolb Road, Suite 40108 Tucson,...

Economic and Human Dimensions Research Associates ::..5751 North Kolb Road, Suite 40108Tucson, Arizona 85750-3773

John A. “Skip” Laitner Marcellus Shale Development and Pennsylvania:

What Lessons Sustainable Energy?

Widener University School of LawHarrisburg, Pennsylvania

September 27, 2013

Economic Imperative of Energy Efficiency:An Energy, Climate Change, and Ethical

Perspective

Economic and Human Dimensions Research Associates ::..Economic and Human Dimensions Research Associates ::..2

The Short Road Ahead• With the thought that “the ethical viewpoint” begins

with a more complete understanding of the “wicked problem” we call energy, we begin with both an opening question and the larger perspective.

• We will then step back to provide the historical context and explore the scale of energy resources that might be available for development.

• Next we will link current consumption patterns with the robustness of the future economy, even as we

• We then explore some (hopefully) useful economic comparisons.

• Last, we close with final thoughts and perspectives.


“We shape the world by the questions we ask”

Physicist John Wheeler


a) an economist?b) an engineer?c) an NGO?d) a federal employee?e) a member of congress?

What exactly would you guess Mr. Binkley to be?

Or should we choose instead, ‘ f ‘ all of the above — to the extent that we all may take ourselves much too seriously so that we don’t really ask the better questions?

Economic and Human Dimensions Research Associates ::..Economic and Human Dimensions Research Associates ::..

A Deeper Perspective• The productivity benefits from the current generation

of industrial technologies are generally diminishing.• Evidence indicates that, among the biggest reasons

for those diminishing returns, is the inefficient use of resources – especially the inefficient use of energy.

• A social and economic transformation is clearly needed to sustain our economy and move it forward – driven by purposeful effort that includes both directed actions and targeted investments which drive improvements in resource productivity.

• Energy efficiency – not necessarily new supply – will provide the productive link between today’s economic activity and tomorrow’s future.

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Useful Perspectives on the Historical Gains in Energy Efficiency• Compared to 1970 technologies and market structure, by 2012

the routine energy efficiency improvements delivered 82 percent of all new energy service demands in the U.S. since 1970. For Pennsylvania, energy efficiency delivered 109 percent!

• The current U.S. level of energy efficiency in 2012 compared to 1970 is:– 1.5 times our total energy production– 8.9 times our total domestic oil production– 4.4 times our total natural gas production– 4.6 times our total energy imports

• So this question, why do we always think we need to find and use more energy, but we almost always assume that the efficiency resources are used up and unavailable?


This is by no means unique to Pennsylvania as there is a similar pattern within the U.S., other OECD nations, and the global economy.

Projected

Historical

Annual Per Capita Economic Growth Rate for Pennsylvania

Source: Economic and Human Dimensions Research Associates calculations based on Woods and Poole 2013


A First Estimate Comparing U.S. Long-Term Energy Resources 2012-2050

Shale Gas Energy Efficiency Renewable Electricity0

200

400

600

800

1000

1200

1400

1600

Res

ourc

e in

TC

F Eq

uiva

lent

9


MOREBY WASTE

THANINGENUITY?

Exploring the full energy efficiency potential: ~1400 trillion cubic feet of natural gas equivalent in the U.S. through the year 2050. . .

How many TCF of energy efficiency for Pennsylvania? About a 12 to 15 year efficiency supply at current levels of energy consumption.

Conventional assumptionsabout the efficiency potential

. . . an anemic 14% energy (in)efficiency


A Comparison of State-Generated Taxes

CA

TX

PA

OH

0 20 40 60 80 100 120 140

105

39

30

24

138

49

45

State Taxes Energy Expendituresin billions of current dollars

117

Sources: U.S. Statistical Abstract, 2012; and Energy Information Administration 2012.Information on all 50 states are available and, while varying, show a similar trend.

to State Energy Expenditures (2010)


The New Normal in Pennsylvania’s Economy?

The Average Annual Growth Rate by Period of Time Period Population Productivity GDP 1980 to 2010 0.23% 1.76% 1.99%

* Drawn from a 2013 long-term forecast by Woods & Poole Econometrics

2010 to 2040* 0.34% 1.46% 1.81%

The worrisome element. . . .

Given the Huge Energy Inefficiencies:

Why worrisome? The smaller rate of productivity improvement could mean an average 300,000 fewer jobs over the next three decades.


Exploring Energy Future Scenarios(perhaps the most important slide of this talk!)

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ReferenceCase Cost of

Energy ServicesCosts in Some Year

Investment Expenditures in Some Year

Reduced Total Cost of Energy

Services in Some Year

Remaining Costs of Energy

Services in Some Year

Mill

ions

of D

olla

rs Policy Expenses in Some

Year

There is an absolute imperative to reduce the real cost of energy services each year!


Preliminary Comparison of First Order Economic and Environmental Impacts*

Category of Impact Metric Natural Gas Efficiency

Employment Direct-Indirect Jobs/$MM ~10 ~17

CO2 Emissions Million Metric Tons per TCF 54 Minimal

Average Cost/User Dollars per Million Btu 5.5 ~0 to 4.76

Water Use Per TCF Equivalent Large Minimal

*Drawn from working estimates using a variety of data and resources


With Caveats and these Closing Thoughts for the Great State of Pennsylvania

• There is no guarantee of absolute impacts and outcomes.

• The data, comparisons, and scenario results are presented for “insights and not precision.”

• There is plenty of room for discussion and ideas on exactly how Pennsylvania might act on the insights presented here.

• At the same time, failure to act on these insights will only ensure a continued weakening of the Pennsylvania and the U.S. economy.

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The difficulty lies not with the new ideas, but in

escaping the old ones. . . .

John Maynard Keynes

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Contact InformationJohn A. “Skip” Laitner

Principal Economist and ConsultantEconomic and Human Dimensions Research Associates

Senior Fellow, CNA Institute for Public ResearchEnergy, Water and Climate Division

Tucson, Arizona 85750c: (571) 332-9434

Email: [email protected]

And also check out our websites:EnergyStressTest.com http://www.energystresstest.com

CNA Energy, Water and Climate http://cna.org/ewc

Economic and Human Dimensions Research Associates ::..19

http://www.energystresstest.com/

http://www.energystresstest.com/

http://cna.org/ewc

http://cna.org/ewc

http://cna.org/ewc

Economic and Human Dimensions Research Associates ::.. 5751 North Kolb Road, Suite 40108 Tucson,...

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