Will the Bonanza of Cheap Natural Gas Postpone the Transition to a Clean Energy Future?

Wednesday, March 27, 2013

By Marilyn Brown, Georgia Institute of Technology

Thanks to breakthroughs in seismic imaging, horizontal drilling and hydraulic fracturing, the US in 2012 reduced its reliance on much dirtier coal by shifting to gas-fired power plants. This trend is expected to continue, spurred by low gas prices and increased regulation on coal. The move to shale gas is being heralded as a key to economic prosperity and a clean energy future. But there are other options for displacing baseload electricity from retired coal plants, the principals being nuclear, renewables and energy efficiency. Will the gas bonanza enable or postpone the transition to these cleaner options?

While natural gas produces half the CO2 emissions of coal and emits relatively smaller amounts of nitrogen oxides, it is more polluting than nuclear power, which provides nearly carbon-free energy, and it is more polluting than most renewables as well as the cleanest source-- energy efficiency. A glut of cheap gas could shelve investments in these alternatives and could encourage consumers to use more energy, slowing the conversion to more efficient appliances, motors, and energy-smart equipment.

While the US is expanding its natural gas industry, it is also advancing its nuclear fleet. Operating reactors are being made safer in the aftermath of the tsunami-triggered disaster at the Fukushima Daiichi plant in Japan, and the industry is investing in a next generation of more secure reactors, led by utilities in the Southeast including the AP1000 project at Plant Vogtle co-owned by Georgia Power. Lacking a federal repository for nuclear waste, utilities must use on-site storage for their spent fuel. A long-term storage solution is still a national need.

The economic and policy uncertainties are considerable. Natural gas prices are volatile,[1] nuclear construction costs are difficult to predict, wind and solar technologies are advancing rapidly, and the demand for electricity could remain flat or heat up. Policymakers may decide that CO2 emissions should continue to go unpriced, or they may regulate or tax them. With so many risk factors, how should utilities respond to the glut of cheap natural gas?

Utilities face the imperatives of affordable electricity, environmental stewardship, and secure and reliable power. Remaining flexible and nimble is going to be a secret to their success. Shrinking the historic dominance of coal by expanding gas, nuclear, renewables and energy efficiency is the multi-source solution. History has shown that single-source energy approaches are fraught with risk.

Selected References:

  • American Nuclear Society. 2012. Fukushima Daiichi: American Nuclear Society Committee Report.
  • Brown, Marilyn A. and B. K. Sovacool. 2011. Climate Change and Global Energy Security: Technology and Policy Options (MIT Press).
  • Deutch, John M., et al. 2009. Update of the MIT 2003 Future of Nuclear Power (MIT). http://web.mit.edu/nuclearpower/pdf /nuclearpower-update2009.pdf
  • Energy Information Administration. 2012. Today in Energy: Monthly coal- and natural gas-fired generation equal for first time in April 2012, July 6. http://www.eia.gov/todayinenergy/det ail.cfm?id=6990
  • Energy Information Administration. 2012. Annual Energy Outlook 2013 Early Release Overview. http://www.eia.gov/forecasts/aeo /er/index.cfm
  • English, Mary. 2013. Base-load Electricity from Natural Gas and Nuclear Power: The Role of Federal and State Policy. (B aker Center for Public Policy, White Paper 2-13).

[1] In 2012, US natural gas electric power prices dropped to a 10-year low of $2.79 per Mcf in April and then increased by about 50% t o $4.36 per Mcf in December (EIA, U.S. Natural Gas Electric Power Price http://www.eia.gov/dnav/ng/hist/n3045us3m.htm ).