Proposals to Eliminate Natural Gas from the Fuel Mix Are Premature

Natural gas is commonly called a “bridge” to a low carbon future. Why this metaphor?

A bridge crosses over an obstacle, like a river or canyon. The metaphor suggests that transitioning from coal to natural gas for electric generation is one of the most cost-effective and scalable opportunities for cutting greenhouse gases on our way to the promised shore of even lower emissions. This is especially true in the US, which has plentiful low-cost natural gas resources. The idea is that natural gas can carry the US economy in the short term while higher impact carbon mitigation solutions are still too expensive on a large scale. At some point, though, we need to reach the other side of the natural gas bridge so we can continue our journey with even lower carbon solutions like renewable energy, next-generation nuclear, or carbon capture and sequestration.

Politico Morning Energy recently reported that a major environmental group, the Sierra Club, doesn’t want to cross the natural gas bridge at all. They are organizing an aggressive campaign to stop the construction of natural gas power plants and pipelines. In the Sierra Club’s view there’s no river or canyon in our way. The US just needs to make the leap directly to a low carbon future, abandoning fossil fuels as quickly as possible. The Sierra Club believes that if the US and other countries cross the natural gas bridge, the world is headed toward a climate catastrophe.

With the impending turnover in the US executive branch, and possible changes in the legislative and judicial branches, policymakers need to critically evaluate these two visions of the future. Is natural gas a bridge to a low carbon future that should be supported? Or will natural gas take us somewhere we don’t want to go – a greenhouse gas point of no return?

Argument 1: We’re Already on the Natural Gas Bridge

MIT’s 2010 Future of Natural Gas report illustrates how the natural gas bridge could work. The authors, led by now-Secretary of Energy Ernest Moniz, developed several scenarios of future energy supply and demand out to 2050. One scenario assumed that price-based policies are used to achieve a 50% reduction in US greenhouse gas emissions by 2050 relative to 2005 levels. This scenario found that natural gas demand would increase through 2040, then begin to slowly decline.

The shift from coal to natural gas has already pushed down US energy-related carbon dioxide emissions by 12% between 2005 and 2015, as Lucas Davis discussed in a recent blog. We’re already on the natural gas bridge.

Changes in the relative market prices of coal and natural gas, driven by the shale gas revolution, provide much of the explanation. However, policy is also influencing the competitive standing of natural gas generation. As evidence, the EIA reports that 30% of the nation’s coal capacity that closed in 2015, shut down in April. That was the month that the EPA’s Mercury and Air Toxics Standards went into effect.

Would the two major presidential candidates continue over the natural gas bridge?

For Donald Trump the concept is moot, since he has no interest in moving to a low carbon future.

Hillary Clinton, on the other hand, supports policies that would take the US further across the natural gas bridge. In particular she wants to implement the Clean Power Plan (CPP). Trump wants to kill it.

Modeling by the EIA estimates that the CPP’s greenhouse gas reduction requirements would boost natural gas generation by 10% by 2040 relative to a scenario with no CPP.

Source: Duke Energy, HF Lee Energy Complex; combined-cycle plant; generating station; power plant; Goldsboro, NC.

Source: Duke Energy, HF Lee Energy Complex; combined-cycle plant; generating station; power plant; Goldsboro, NC.

The Sierra Club, however, wants to take a different path altogether. They enthuse about Clinton’s aggressive renewable goals, such as her pledge that half a billion solar panels will be installed by the end of her first term.

Their preferred path is more consistent with the Deep Decarbonization Pathways laid out in a study conducted by Energy and Environmental Economics (E3), Lawrence Berkeley National Laboratory and Pacific Northwest National Laboratory. This study models reducing US emissions to 80% below 1990 levels by 2050. The study includes four scenarios. In two, natural gas is all but gone from the electricity mix in 2050. In another scenario the market share of gas is cut in half. In the final scenario, natural gas remains important, but only with carbon capture and sequestration.

Proponents point to California as evidence that a rapid transition away from natural gas is realistic. Natural gas consumption for electric generation in California decreased by 3% between 2014 and 2015. This drop occurred despite the state’s drought, which led to a 16% drop in hydroelectric generation. The growth in renewable generation provides much of the explanation.

If the US is headed down one of these paths then the Sierra Club’s strategy to stop the construction of new natural gas power plants and pipelines could save society money. It’s worth considering because it would mean we’re potentially wasting billions of dollars to build a natural gas bridge headed to the wrong place.

Reality: Stopping Natural Gas Could Benefit Coal

I find the Sierra Club strategy troubling.

The displacement of coal generation by natural gas generation is a highly cost effective way to reduce greenhouse gas emissions. Even without a nationwide carbon policy, the US is seeing widespread replacement of coal with natural gas.

Recent research looking at the period from June 2008 to the end of 2012 found that the degree to which natural gas replaced coal varied by region. In areas where more natural gas power plants had been built during the prior five years, greenhouse gases from power generation dropped more since there was more natural gas capacity available to come on-line and compete with coal. The Sierra Club’s “Beyond Natural Gas” strategy would retard the continued displacement of coal by natural gas.

I am also skeptical that the California example is relevant to the US as a whole. The nation is much more reliant on coal than California. California also has unusually attractive solar, wind, and geothermal resources. I expect replicating California’s move away from natural gas would be much less cost-effective elsewhere. Also, electricity intensive industry in other states would strongly oppose policies that pushed electric rates up toward California levels.

Rather that categorically declaring natural gas a loser, the US should stick to market-based policies that prioritize the most cost-effective climate solutions. In the near-term, that likely means the US needs to continue its way across the natural gas bridge. Anyone who suggests otherwise is trying to sell us a … well, you know.

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13 Responses to Proposals to Eliminate Natural Gas from the Fuel Mix Are Premature

  1. Gene Preston says:

    The problem is that natural gas generation is needed to keep the grid reliable and operating as renewables are on the rise. The Sierra Club plan will result in lights out. We can agree with the Sierra Club in wanting to eliminate natural gas since its also a GHG producer. But getting there is not going to work by just eliminating GHG sources.

  2. sidabma says:

    Carbon Capture Utilization is an affordable technology that will remove 95% of the CO2 out of combusted coal exhaust and transform it into useful – saleable products. The Administration is promoting the very expensive technology of Carbon Capture Utilization (Kemper County)
    Trump is going to promote Clean Coal technologies because he realizes that America needs all forms of energy so that we can continue to live the lifestyles we are accustomed to and coal and natural gas is a big part of that.

  3. The US hybrid natural gas generation fleet reached 500 GW capacity last year. California, as well as Florida, is one of the “leaders” of natural gas gen as a portion of their domestic (non-imported) energy mix. With 300 GW of coal generation capacity still holding on [barely], as well as 100 GW of nuclear under very uncertain future times, it’s almost irresponsible to claim the rise of solar & wind could make up the difference on its own – or in short order. This doesn’t even take into account needed increases in electric supply for further electrification of our economy; EV’s, heat/cooling pumps, data centers, etc., where EVs are needed to displace our oil consumption. With utlities’ buying up upstream natural gas collection systems and midstream; sunk costs incurred already for new NG generators; fast ramping (minimal wasted fuel costs) and the hybrid NG fleet (combustion turbines, CCGT and seasonal baseload H-frames) that can meet almost any demand conditions – back of the envelop comparisons between wind/solar costs versus NG is highly misleading and fails to recognize our NG generation capacity is already 50% of our overall capacity, is still growing, and taking in capacity factors, nowhere near 100% utilization. As long as offshore wind is a non-starter for eastern demand centers and winter is what it is east of the Mississippi – natural gas will continue its march into the coal generation heartland of the Ohio & Tennessee valleys. With 2000+ utilities in the US, new transmission & grid (outside ERCOT/Texas) to move Great Plains wind to eastern demand centers is facing more hurdles than pipelines.

    In order for the bridge analogy to hold up to current realities, one needs to start picturing the Grand Canyon covered over one-half of its length with said “bridge” to comprehend the scale of where energy is in the US. The Sierra Club can dream, but very few dreams change reality.

  4. I think it’s worth noting that any study done in 2010 very likely overestimated the cost of solar and wind relative to what a study produced today would assume, so the amount of gas used for power under a cost-optimized 50% reduction scenario under today’s pricing scenario would very likely be less than what MIT found in 2010.

  5. Jerry Ward says:

    Whether one ascribes to the Sierra Club strategy or not, it’s becoming abundantly clear that we are seriously undercounting emissions–especially those related to natural gas well heads.

  6. Michal C. Moore says:

    The Sierra Club and other organizations that are advocating an abrupt transition to renewable energy generation fundamentally misrepresent the distinction between capacity and energy. This is true especially where the intermittent performance of renewables (outside geothermal) demands firming from a source such as hydro, natural gas or a storage system that might include batteries, flywheels or even rapid replacement demand curtailment. The current electric system with its dominant central station characteristics (generation close to load and extensive transmission facilities) represents a significant commitment to the existing generation mix as well as fuel supply. Attracting investment to this new paradigm and avoiding a transitional “bridge” won’t likely attract the new capital necessary to replace the old system and address growth issues in the future. At best this is silly and idealistic thinking, and at worst an expensive side excursion in fantasy to expect not only markets, but regulators to embrace such a vision.

  7. My firm is the leading residential Zero Net Energy firm (6000+ solarized residences in California, 1000+ of which are 100% solar offset and all-electric), and what we’ve found is that with the most efficient equipment, gas costs more to operate and more to install. Even before solar comes into play, KB Homes found that it costs $4500 more to install gas in a house, and we’ve found $3000 savings per apartment by not installing gas. High performance electric heat pumps for Space Heating, Air Condition and Domestic Hot Water are cheaper to operate than the most efficient gas equipment, the 96% efficient furnaces and water heaters. Even with California’s relatively high average cost of residential electricity at ~$.015/kwh, all-electric households are cheaper to operate, and they are cheaper to build. With that in mind, it is a detriment to the American economy to continue to waste money on burning gas appliances in homes and businesses. If gas is to be burned at power plants, it should be held to a cost-effectiveness test–wind is more cost-effective in windy regions, and solar is more cost-effective in sunny regions, and there are huge swaths of the nation that are sunny and/or windy at utility scale, as evidenced by the rural electric co-ops of our nation that cover 70% of our land mass, run by penny pinching farmers who put up utility wind turbines to save money, not out of politics.

    The evidence is in–natural gas is a loser in the house, and it looks like a loser in many regions of our nation for utility scale power. Oh, and have you noticed its getting hot outside?🙂

    • Jack Ellis, Tahoe City, CA says:

      Please provide a reference to documents that prove your point, because my back-of-the-envelope calculations suggest otherwise. I live in a part of California with colder, longer winters than are found in most of the state. Electric heat pumps WILL NOT WORK up here.because winter temperatures are often well below 40 degrees. Moreover, there is a significant difference between new homes that can be properly oriented to maximize solar PV production and older homes that simply cannot unless they are torn down.

  8. Scott Sklar says:

    Many papers, such as this one, selectively mines information. About half of all NEW electric generation capacity over the last few years come from the entire portfolio of renewable electric and thermal generation including biomass/biogas, concentrated solar power, geothermal, hydropower and marine energy, photovoltaics, and wind energy, as well as thermal: biomass, geothermal and geoexchange, waste heat and chop, solar water heating. While most new generation has principally been photovoltaics and large wind, the other renewables along with small wind are about to skyrocket. Costs of energy storage principally pumped hydropower and battery banks, have seen steep cost reductions, and the other options including flywheels, compressed air and liquids, and hydrogen will soon follow. So there are many clean energy options rapidly scaling-up and becoming significantly lower in cost. Natural gas has many benefits and some challenges. Unless mine-site and pipeline leaks are sealed and process optimization occurs quickly to reduce methane release impacts for climate change — and a significant part of the fracking infrastructure must either halted or modernized. In the Dakotas, we now flare more gas than Saudi Arabia, Oklahoma has more than 300 tremors per month, and several states are experiencing earthquakes explicitly due to fracking both oil and gas. And more signs of unintended water pollution are springing up. A portion of the natural gas industry sees these challenges and wants to address them responsibly, while another potion just denies they exist. The national goal should be to maximally drive energy efficiency – meaning doing more with less energy inputs since it is ALWYAS less expensive to save energy than generate energy from any source. Then the next step is maximizing the entire suite of renewable energy options. And finally, a key step is to optimize natural gas — from wells-to-generation — to insure no methane emissions, to displace water use and to cease water pollution as well as impacts on geology (halting tremors and earthquakes) – which can be done. Scott Sklar, Adjunct Professor, The George Washington University (GWU), and Chair, Steering Committee, Sustainable Energy Coalition (Washington, DC)

  9. Pingback: Revue des blogs – mardi 18 octobre 2016 – Veille énergie climat

  10. Jim Stack says:

    Look at how dramatically the US electric generation fleet has changed in the last 10 years — and how dramatically the costs of renewable generation technologies have fallen. Now imagine 10 years out from now — where do you think the costs of solar, wind, and energy storage will be? If climate change related impacts (storms, wildfires, flooding) continue to accelerate in the years to come, as they likely will, I think a lot of people will look back with regret on the many billions of dollars of capital invested in new fossil generation during this time.

    • Zach says:

      The question isn’t about cost, the question is about reliability of service. There are exogenous factors that are non-cost based considerations around the decision to circumvent intermediate and baseload generation with renewables. These often have to do with the capability of the system to provide support to the transmission network and, ultimately, reliable service to the end user.

      Imagine you need to go hiking up a mountain. You can buy hiking boots for $200 or flip flops for $20. One is cheaper, yes, but that doesn’t mean it can serve the same purpose.

  11. John R says:

    The Sierra Club’s endgame is to “gather energy” and eliminate the burning of fuel. They say as much. The plan is to power the U.S. economy with 100% renewables and an endless supply of storage, with a lot of pixie dust thrown in. Utopians have a bad reputation for a reason.

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