On one hand, leaders like Fatih Birol, chief economist of the International Energy Agency, make statements like, “If the natural gas market continues to follow its path, then life for renewable energy may be tougher than we think.” While no doubt true, there’s the flip side to that point of view, which Carl Pope, Chairman of the Sierra Club, stated at the Cleantech Investor Summit in Palm Springs, Calif. this week: the biggest missing ingredient in the energy discussion is that the clean power and natural gas groups are not sitting down and creating a dialogue.
Pope says the Sierra Club’s goal is to remove coal from the equation, seeking to take out half of the coal supply by 2025 and the rest by 2030. But as former Shell Oil President John Hofmeister pointed out at the event this week, “We [the U.S.] use 1,200 train car loads of coal every hour. That’s one train car load of coal every three seconds, producing 49 percent of our electrons every day.” If half of our supply for electricity generation would actually be gone, “there will be plenty of market space,” for everyone, both natural gas and renewables said Pope.
One of the reasons that there’s been a disconnect between natural gas and clean power, says Pope, is that there’s a deep, cultural and historical affiliation of the natural gas industry with the oil industry. Many conglomerates that sell oil, sell gas. And these companies haven’t historically been willing to sit down and partner with the solar and wind industries, notes Pope. The solar and wind industries also have unreliable capital supplies, said Pope, which puts them at odds with the more reliable capital supplied oil and natural gas industries. Lastly, Pope said, the renewable sectors have been trying to move so fast to get into the market, that they have perceived working with natural gas sectors as something that could slow them down.
The reality is that natural gas can be a viable replacement for electricity generation from coal, noted Pope, and the other panelists speaking with Pope agreed, which included ikram Rao, Former CTO, Halliburton and current Executive Director of Research Triangle Energy Consortium, and Andrew Littlefair, President and CEO, Clean Energy Fuels (a natural gas vehicle distribution company). Because of recent discoveries of shale natural gas, the U.S. now has an estimated resource of over 2,000 trillion cubic feet of natural gas.
Geophysics professor at Stanford University Mark Zoback told me last Summer that he thinks that the newly discovered natural gas resource will help to stabilize the price for natural gas, making it more attractive for both the gas producers and utilities (fluctuating prices have deterred more use of natural gas for power production). And Zoback pegs that price around $6 per million BTUs. That could help natural gas beat coal on price, meaning natural gas could be an economic replacement for coal power.
Natural gas has significantly fewer carbon (and toxic) emissions than coal. Zoback estimated that by replacing 30 percent of coal-fired generation with gas (without CCS) it would get the U.S. almost to the point of what the current climate bills call for: a 17-20 percent reduction of carbon emissions by 2020. With carbon capture technologies, gas power could cut carbon emissions even more.
The reality is that utilities will mix in clean power — solar and wind — with natural gas. Cheap natural gas might effect the price of clean power, but natural gas is the best opportunity the U.S. has to replace coal. “We need to build a bridge between natural gas and renewables,” summed up Dan Reicher, the moderator of the panel and the new head of Stanford’s new $7 million Steyer-Taylor Center for Energy Policy and Finance.
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