As domestic natural gas resources seem to grow with every projection, is this fuel—as Steven Pearlstein said last week in the Washington Post—the silver bullet that could get the U.S. on pace to meet President Obama’s pledge to cut domestic carbon emission by 17 percent in the next 10 years?
Pearlstein’s claim that power plants fueled by natural gas can cut emissions when compared to their coal-fired power plants is valid, simply because CO2 emissions from natural gas use are about 45 percent lower per Btu than coal. But his “modest and focused proposal” to decommission coal plants and replace them largely with existing but underutilized natural gas generators is not a policy. How this all is to come about is not explained beyond offering payoffs to shareholders and workers. Natural gas generators are idle for a reason. They are too expensive to run, even with new and possibly cheaper natural gas resources available, although this situation may change and provide more stimulus to natural gas generation.
The surest and most efficient way to disfavor coal and favor other fuels—natural gas, nuclear or renewable—is to price greenhouse gases and other pollutants through a cap-and-trade or tax system and then let the chips fall where they may.
Indeed, in recent work at Resources for the Future with our version of the Energy Information Administration’s National Energy Modeling System, we find that expanded resources of natural gas provide significant stimulus to gas generation, but can lead to even larger carbon emissions—in the absence of a carbon price—because along with some coal generation, it substitutes for clean energy from renewables and nuclear power and modestly expands electricity generation overall.
The good news is that with a carbon policy in place, the costs of reducing carbon emissions with more abundant natural gas are somewhat lower than they would be without such abundant resources, amounting to about $1 billion in cost savings over the 20-year study period.
Alan Krupnick is research director and a senior fellow at Resources for the Future. His research focuses on analyzing environmental issues, in particular, the benefits, costs, and design of air pollution policies, both in the United States and in developing countries.
