• Reduced dependence on imports, with possible associated effects on international energy prices, the U.S. balance of payments, the international value of the dollar, the cost of imports, and the volume of exports; • Reduced dependence on scarce or constrained domestic fuels, resulting in lower domestic prices for most forms of energy; and • Diversion of capital away from the most productive forms of investment, with consequent reductions in the rate of GNP growth. The relative importance of the first two factors depends on which fuels are replaced by the alternative. If SPS were available today, for instance, it would have its primary impact on the need for oil imports. Assuming the international oil (spot) market is competitive — at least at the margin — the direct consequence of a reduction in U.S. demand (say by 1 quad per year — 1 quad = 10^ Btu) would be a drop in the international spot price of oil, depending on short-run elasticities of demand and supply. Indirect further consequences would include an improved U.S. balance of payments, a stronger dollar, reduced cost of other imports, a lower domestic inflation rate, and more dollars spent in the U.S. for domestically produced goods and services. After the year 2000, however, it seems unlikely that oil from any source would be used as a boiler fuel. In such circumstances, SPS would effectively substitute for coal or uranium. A reasonable (perhaps optimal) strategy in a constrained economy would be to replace all coal used by utilities first, since lower coal prices would then result in lower prices for syngas manufactured for coal and (because of their direct equivalence) for natural gas. Lower costs would also be experienced by the steel industry, which is a major coal user. Supporting Data. The magnitude of the impact depends on the extent of the deployment of SPS. Some rough calculations of the effect for three representative scenarios have been carried out. A set of baseline data for GNP and energy use is shown in Table 4.42. Table 4.43 disaggregates energy use by fuel and lists the prices by scenario for the year 2025. Figures 4.44 through 4.46 display supply and demand data for scenarios CI, UI, and UH, respectively. Table 4.44 summarizes the 2025 baseload generating capacities, SPS deployment, and percentage SPS for the three scenarios. Calculating Net Energy Expenditures. In scenario CI, SPS is deployed at the rate of 3.3 GW per year beginning in the year 2000. At this rate, 83 GW will be in place by the year 2025, about 21% of the total baseload capacity of 391.4 GW. These 83 GW of installed electrical generation capacity, operating at a capacity factor of 0.9, could displace the burning of 5.2 x 10^5 Btu of coal (at a heat rate of 8125 Btu per kWh). Only 3.3 x 10^5 Btu of coal are burned for electricity in scenario CI; an upper bound of the economic benefit of 83 GW of, SPS capacity (2.2 x 10^ Btu) can be calculated assuming that no coal is burned for electricity production, with the remaining SPS generating capacity displacing nuclear electricity production.
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