America's Energy Policy Reality # 1: Natural Gas is Our Fuel of Choice

Electric Power Generation by Fuel Since WWII

The race is on to build market share for wind and solar energy with the states demanding it in renewable portfolio standards and the Federal Government encouraging it with subsidies and treasury tax grants.  This is not a bad goal for our clean energy future, but the battle has already been won and the winner in natural gas.

In fact, we have already built the next generation of power generation and it is natural gas combined cycle built and put in service during the last boom stage of the energy business cycle.  During that boom cycle we feared that too much natural gas power generation would require importing the gas to run it from foreign sources as LNG.  But the dramatic growth of unconventional gas here in North America changed all that.

Natural gas supply is growing worldwide from unconventional natural gas resources, particularly shale gas. The dramatic growth of unconventional natural gas right here at home and lower natural gas prices is restoring America’s industrial and manufacturing competitive position since natural gas is important in many industries from manufacturing, home heating, plastics, transportation fuel and power generation. It is clean, flexible, low-cost and can use used with existing technologies.

Natural gas has been the fuel of choice for power generation for more than a decade.  This is true whether you see it as a ‘bridge fuel to the clean energy future’ or just the benchmark defining grid parity for everything else.  Natural gas has uses beyond power generation for plastics and other manufacturing product purposes.  Cleaner than coal, less costly and easier to permit and site than nuclear baseload generation, natural gas fired combined cycle is the load following alternative to both.  Natural gas is also the logical backup fuel for renewable energy sources.

Recently MIT released a new study called The Future of Natural Gas adding research credence to the conventional wisdom that natural gas is the fuel of our energy future.  The findings from the study say that displacing coal with gas-fired generation can reduce CO2 emissions by up to 50%.

In fact, without natural gas it is impossible to displace coal and thus reduce greenhouse gas emissions without de-industrializing our economy. Fortunately we have already built the next generation of power plants and they are largely gas-fired combined cycle plants many now underutilized until our economy recovers. More fully utilizing these existing plants is the least cost, best fit way to reduce U.S. CO2 emissions by up to 20% in the electric power sector, or 8% overall, with little new capital investment and no new technology requirements according to the MIT study.

AEO 2011 Capacity Additions By Fuel figure_78-sm

Natural gas defines grid parity prices as the benchmark against which other clean power sources must compete to remove the marginal ton of CO2. This quest for grid parity is driving down the cost of wind and solar energy to stay competitive.  Natural gas-fired power generation is also essential to backup intermittent renewable energy, in the absence of a breakthrough that provides affordable utility-scale storage. But renewable power generation will be forced to compete with its natural gas backup for a place in the dispatch order based upon those grid parity prices.

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