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By Andrew Holland on Jun 25, 2013 with 2 responses

Obama’s Climate Plan Points to Increasing Importance of Natural Gas

An article I wrote was published yesterday, Why a Global Shale Gas Boom is Key to Combating Climate Change. Because I had actually written the article a week ago, I didn’t know that it would come out at the same time as the release of the President’s big speech on climate change. As I demonstrated in the post, the U.S. has been the most successful country over the last decade in reducing its emissions; most of that is due to fuel switching from coal to natural gas. Natural gas generates more than 50% less greenhouse gas emissions than coal, not even including the many harmful particulate pollutants coal emits. To achieve similar benefits around the world, we need to replicate America’s shale gas revolution around the world.

While most of the news about the speech will be about how Obama is planning to accelerate renewable energy, I believe the biggest area of near-term action on reducing emissions will come from some underreported sections that will encourage the replacement of coal with natural gas for energy generation, both in the U.S. and globally.

Emissions Reduction Laundry List

The President’s plan is actually not one thing; it is a laundry list of federal actions, many of which are already being done. It is broken into three parts: (1) mitigating emissions in the US, (2) adapting to inevitable climate change, and (3) using diplomacy to lead international emissions reductions. Each of these has areas that will help accelerate fuel switching.

First, the big news from the speech, and a potential “game changer” in how the U.S. generates its electricity is new EPA regulations. These come in two parts: regulation of emissions from existing power pants and regulation of emissions from new ones. The first has been proposed, but delayed over and over, the second has bee speculated, but never proposed. Both are actually required by law (the Clean Air Act) under a 2007 Supreme Court ruling. The President’s speech only directs that EPA start the rulemaking process, but the markets are showing that they believe these will go through – as coal stocks are taking a beating. EPA regulations will firmly entrench natural gas as the fuel of choice for electricity generation.

Second, the section on adapting to climate change will not, by its nature, do much to encourage fuel switching, but there is one section that discusses a Department of Energy review of how climate change will impact energy generation. Thermal power plants, like coal or nuclear power, require a huge amount of water for steam generation and cooling. Most of that water is returned to the environment, but it has to exist in the first place. In times of drought, which most climate projections anticipate the American West is likely to face more of, coal plants will become very difficult to operate in the summer – when demand is highest. Natural gas power plants do not face this problem.

Exporting Natural Gas

Finally, as I identified in my article, the most important thing that we can do to reduce global carbon emissions is to make sure the shale gas revolution is exported around the world. In the Administration’s plan, they explicitly state a policy to promote “fuel switching from coal and oil to natural gas and renewables” abroad. They cite a State Department program called the Unconventional Gas Technical Engagement Program that helps link American gas producers with potential customers in countries around the world who have large shale gas reserves.

This, combined with other policies amounts to a major initiative to export US shale gas technology and expertise. The other major initiative on gas is a push to encourage the development of “a global market for natural gas.” That is a clear code for the approval of LNG exports. Market forces will eventually encourage a switch from coal to natural gas around the world as gas becomes a true global commodity – and new technology brings new shale gas to market. The US government can help push this forward.

In the end, I don’t think the President’s speech amounts to a single major new proposal. On the other hand, it is a series of worthy actions that will slowly reduce American carbon emissions. Natural gas will play a big part in that switch – and this Administration knows how important it will be.

  1. By ben on June 27, 2013 at 10:32 am

    While I sometimes find his perspectives a tad distant from the rough and tumble of daily commerce, Andrew hit the nail on the head about the president’s “big announcement” on energy. Very little new here. In fact, I’m hard-pressed to identify anything we haven’t already heard/seen out of this White House. Guess this crew is a bit like the old Johnny Carson theory of communication: “Tell them what you plan to tell them, tell them and then tell them what you told them.” Thanks for the overview, Holland.

    Small wonder why the whole thing is met with a collective yawn–except by the environmental activists who, much like the little dog Toto, see beyond the fire, smoke and roar of Oz while poking around behind the curtain for the source of all the silly commotion.

    In the end, the president once again proves that he is a politician first–and a very savvy one at that–and will continue to govern largely from the center of American politics notwithstanding the hysterics of the Right and Left. On balance, this is probably a good thing. It does, however, tend to leave the average citizen pretty much uninspired with the administration, Washington and the whole political process. That’s not his fault, but it will remain his challenge for the next three and a half years. He’ll need lots of luck, moderating energy prices and daily prayers that qualitative easing eventually works some magic in the hope of keeping the wheels on the buggy.
    Ben

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  2. By gotkb on October 13, 2013 at 10:36 am

    Ok I’ve spent enough time on your blog to see you do the fingernail on board screech as well in dumbing down the collective abusing terms of art in public speech. You refer to thermal plants being fuel specific. Worse you in so doing ignore that there higher capex is the result of there less flexibly used fuel in the PAST. Although you point out an advantage in terms of water free it seems if I save this comment it might have some value later even if not on your site in that as fuel choice and efficiency BOTH are going to be priced, and I hope that core efficiency will be taxed as well especially for internal consumption, heat, and the ability to concentrate it, and hte ability to allow consumer’s to make long term purchasing decisions far more important then certain nefarious schemes plaguing rate structure debates rather empower costlier choices and the investment and other goodies arising from them.

    I will be very clear- any compression energy spent that is wasted by the enduser of methane not benefiting from it having been in liqiud or solar form is waste that should be punitively taxed. A Taxi uses a small enough amount that it can recompress should it not use it fast enough or should cost engineering deem recompression better then additional insulation. I tried finding one hit on LNG TAXI… no luck yet. This is the best use for LNG- shared mobility infrastructure. Larger cheaper tanks, faster refueling, a use for the ‘cold’ during summer’s at least and certainly in winter as well becuase it’s stilll much colder then climate and energy can be recovered unaffordable at larger scale by those making decisions. Quite a while ago I heard the nine digit numbers for methane port infrastructure. They are important. A few people are deciding to waste fully a sixth of the gas processed by them instead of attempt to not waste so much of it by doing something with that energy squeezed even though it’s just thermal.

    The analysis is all so stupid. Methane is not chilled into a liquid if thought is to be meaningful! It is compressed and the heat is wasted that it had in it as a gas. The money spent on machines to do this could do so much more! Perhaps it should be extracted just like it is for air- by spraying water into it even though everyone involved is far too emotional to consider such a absurdity. On it’s way to a cold liquid it should be a thousand degrees but for the water vapor holding it down until that vapor gets condensed as superheated liquid. Only then, and perhaps it would be solid? should the methane be moved. Methane block ice can be stored in a vacuum reducing the need for insulation to limit heat gain and resolidificaiton costs. The lack of public funds being used might be why what’s being done is madness instead. Commutes use a very predictable amount of energy. When I hop on my scooter or personal school bus sized ultralight I know how much frozen methane I need to get there- and maybe that means it falls from the sky at every intersection into the hopper where it’s used within minutes.

    Consumer’s need facts. They need to be asked whether they are willing to pay more to do it the right way. That’s not happening. Oil is in rail cars but LNG is on boats- if rail is available then LNG should be in very Walmart sold by the pint or trunkful. No railroad owner is going to not pass fixed costs onto his customer’s by spending more on fuel cell locomoties just like th etrucking industryis not interested in robots, nor airlines interested in solar planes, they only want income, not debt. But the people want to do things the best way possible and don’t care who gets hurt for assuming that would not happen in such fashion so there turn as rich comes to a just end. Until it’s criminal to sell methane in pellet frozen form people can simulate robots and drive each other around in not 80,000 cadillac’s but old station wagons repurposed with driver and passenger’s all winning.

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